Obama foreclosure plan likely a boon to struggling Georgians

Washington — Each Saturday, 400 or 500 struggling homeowners pour into the seminars Michael King holds around Atlanta.

Some cry. Others plea for help. Still others come to simply share their sad stories. Almost all are searching for ways to avoid foreclosure in the wake of shrinking paychecks and homes that are now worth less than they paid for them.

“People are looking for hope,” said King, a home-saving specialist in the Decatur office of the Neighborhood Assistance Corp. of America, or NACA, a nonprofit group that helps homeowners work through mortgage problems.

Wednesday, they may have gotten some.

Under the plan announced by President Barack Obama, thousands of Georgians facing foreclosure could get new help refinancing their mortgages.

Last month, more than 8,400 homeowners in the 13-county metro Atlanta area faced foreclosure, according to figures from Alpharetta foreclosure tracking company Equity Depot. That was about 1,400 more than a year earlier and the highest month on record.

Statewide, nearly 10,000 Georgians were in one step or another of the foreclosure process last month, estimates RealtyTrac, whose online site follows real estate foreclosures.

One of the most significant provisions of the foreclosure program would allow certain families who owe more than 80 percent of the value of their homes get refinancing — something they generally couldn’t do before. The White House estimates that provision alone could help as many as 5 million homeowners who are “under water” on their mortgages — meaning their homes are worth less than they owe on them — to get refinancing. That could let them stay in their homes and save thousands of dollars a year, provided the loans are held by Fannie Mae or Freddie Mac.

Georgia is often among the 10 worst states for foreclosures in RealtyTrac’s monthly rankings. But since Georgia home values haven’t fallen as much as they have in places like Florida, California and Arizona, struggling Georgia homeowners may be some of the biggest beneficiaries of the program, said RealtyTrac senior vice president Rick Sharga.

“Those are exactly the kind of people some of the stipulations in [this] proposal are designed to help,” Sharga said. Homeowners in states where values have fallen more dramatically may get less help out of the program because of equity limits contained in it.

At an estimated $75 billion, the foreclosure program announced Wednesday is as expensive as it is ambitious, and detractors worry that it may be too little, too late to help the languishing housing market.

It also won’t help every struggling homeowner keep his or her house.

Getting better terms on their mortgage doesn’t do much good for someone who doesn’t have a steady income, said Mark Sulimirski, chief operating officer at Equity Depot.

“It’s going to help some people, without a doubt,” Sulimirski said. “But are they going to give a loan to someone who doesn’t have a job?

“For the people who can’t make their payments regardless,” he said, “it’s not going to make a difference.”

That said, many of the people NACA’s King works with each day have jobs — they just make less money than they used to and their homes are less valuable than they were.

The program unveiled by Obama Wednesday isn’t perfect, King said, but it is a good start.

“It’s the first effort from the government that I’ve seen that’s aimed directly at helping homeowners,” he said. “It’s a big step forward.”

Georgia Republican Sen. Johnny Isakson, who has stressed reviving the housing industry as the most important part of any economic bailout, applauded the Obama program on first glance Wednesday.

“It appears to me that they’re striking the right chords” in many areas, he said. Isakson, a former Cobb County real estate broker, is pushing a proposal that would give anybody a $15,000 tax credit for buying a new home to help jump-start the housing business.

One portion of the plan Isakson said he doesn’t like involves how judges could change mortgage terms in bankruptcy proceedings. But “there’s no question we have to address foreclosure mitigation and refinancing … and I see some good things in this,” Isakson said.