Georgia lags in foreclosure help

By The Numbers

As of June 30, HomeSafe Georgia had:

Source: U.S. Department of Treasury

Georgia, given $340 million in federal money three years ago to help at-risk homeowners, has spent only a quarter of the money, according to a newly released Inspector General’s report critical of the state’s efforts to ease the foreclosure crisis.

Only Indiana and Alabama have dispensed proportionately less.

About 5,900 Georgians — fewer than one-third the number initially estimated — have received assistance intended to save homes and neighborhoods.

“It’s very concerning that we’re more than half way through the program and the funds will have go back to the Treasury if not used by 2017,” said Kristen Tullos, an attorney with Atlanta Legal Aid Society, which assists homeowners facing foreclosure. “We are not on track at this point.”

But the state Department of Community Affairs, which administers the so-called “hardest hit fund,” said this week that Georgia will meet its foreclosure target.

“We’ve turned the corner and we’re definitely on track to spend all the funds by Dec. 31, 2017,” said Brenda McGee, the program’s director.

The Great Recession killed hundreds of thousands of Georgia jobs and left homeowners unable to pay mortgages. Nearly a quarter million metro Atlanta households plunged into foreclosure since 2006.

Homes sat vacant and neighborhoods primarily across the region’s Southern tier, as well as in Gwinnett County, deteriorated as vandalism, blight and weeds took root. 2010 was the foreclosure nadir across metro Atlanta with 93,000 foreclosure notices.

As the economy improved, and unemployment dropped, foreclosures plummeted. Metro Atlanta should see fewer than 20,000 foreclosures this year as the region returns to pre-recession levels of housing distress. But the scars – to communities and homeowners — remain. And Georgia maintains the nation’s highest unemployment rate.

Dineo Brinson bought a home in an under-construction subdivision off Cascade Road in Southwest Atlanta in 2007. She worked 13 years as an associate director of alumnae affairs at Spelman College until she was laid off in August 2013.

The monthly mortgage, $1,380, accumulated as the job search lengthened. Foreclosure neared. Brinson, 41, needed help. Washington, and its hardest-hit fund, came through.

“Some people think this is a hand-out. It’s not. It’s for people who are unemployed or under-employed through no fault of their own,” Brinson said. “Just like there were laws created to help banks survive, there are laws setting aside funds to assist people who are affected by the (bad) economy.”

Financial institutions, automakers and homeowners received nearly a half trillion dollars from the congressionally authorized Troubled Asset Relief Program beginning in 2008 to stave off an economic collapse. Two years later, the Treasury Department tapped unemployment-wracked Georgia, 18 other states and the District of Columbia to receive $7.6 billion to fight foreclosures.

Georgia’s $340 million share was targeted to keep 18,000 homeowners free of foreclosure. The HomeSafe Georgia program offered mortgage help – up to 18 months – while homeowners sought new or better jobs. Approved borrowers would get their outstanding mortgages paid up. To qualify, they must have been current on their mortgages before losing their job and no more than six months delinquent at the time of the application.

More than a year into the program, though, only 900 people — one twentieth of the target — had been helped by HomeSafe.

“Clearly, they were late out of the gate,” said John O’Callaghan, president of the not-for-profit Atlanta Neighborhood Development Partnership (ANDP) focused on preventing foreclosures. “It probably would’ve been wiser to have a broader program from the onset that wasn’t just about high rates of unemployment and declines in values. It took folks a while to see that the problem was the biggest real estate collapse in single-family neighborhoods since the Depression.”

McGee, the HomeSafe director, conceded the program “got off to a slow start.” A marketing campaign, and cooperation with ANDP, Legal Aid and other community groups, widened the client pool.

More important, the state added mortgage programs in 2012 and included people stressed financially by disability, illness or death of a family member or by hardship brought on by extended military service. HomeSafe also extended mortgage assistance to 24 months.

“They’re moving in the right direction,” said Legal Aid’s Tullos. “We’ve seen more clients access HomeSafe under the new program changes than before which is encouraging. More people are now eligible.”

Not enough to satisfy the IG.

“Georgia is not getting a significant amount of these funds out the door to help homeowners,” the Inspector General’s Oct. 29 report reads.

Georgia, as of June 30, had spent $82 million, or 24 percent of its federal money. Nationwide, 41 percent of the money from the hardest-hit fund had been spent.

Georgia initially said 18,300 homeowners would receive foreclosure assistance. Only 5,148 homeowners, though, had been helped through June, Treasury says.

Community Affairs,when it extended assistance to homeowners to 24 months, reduced the number of people targeted for assistance to 15,100.

And, since June, Georgia has ratcheted up approvals. Nearly 5,900 Georgians have been helped. And $127 million in mortgage assistance has been “committed” — some of it authorized, though not yet allocated.

“I was just excited that there was a program out there for someone like me. I needed it until I get that next job,” Brinson said. “The economy and the dynamics of the world today have changed significantly. There are a significant number of us who need that stopgap assistance.”