An offer to help “underwater” homeowners in Georgia drew nearly 1,000 applications in less than two days, officials said.

Requests for help – which could mean up to $50,000 per household – came from 67 counties after the announcement of a $110 million program aimed at keeping people in their homes when their mortgage debt is greater than the house's current value.

"We anticipated tremendous interest and have not been disappointed," said Carmen Chubb, deputy commissioner of housing for the state Department of Community Affairs. "Mostly, we are pleased to see applications coming in from all corners of the state. Not surprisingly, there has been a huge response from metro (Atlanta) counties where there's a concentration of underwater homes."

The response reflects the damage and pain still peppering the housing market, nine years after the housing bubble burst and four years after the market started to rebound.

The average selling price of a house in metro Atlanta is now only about 3 percent below the 2007 peak, according to the S&P/Case-Shiller Index. Yet in many areas – especially on the south side of metro Atlanta – the recovery has been slow and prices have lagged.

Many homeowners are “underwater,” or unable to pay off their mortgage by selling the house.

That makes a sale impossible without taking a substantial loss and eliminates the option of refinancing or borrowing against equity to cover a unexpected expense, such as a medical bill. That makes it more likely that a homeowner would face foreclosure or simply walk away from a home.

The aid program is aimed at people for whom a decent-sized payment would make a sale possible in the near future.

The money is given to the homeowner officially as a loan, with one-fifth forgiven each year.

There are conditions to prevent a homeowner from reaping a windfall if the home jumps in value, Chubb said.

“The goal is to help people stay in their homes and restore their financial footing, but if the property sells for a profit within the first five years, there is a formula that requires partial loan repayment.”

The money that the department has been given comes from the U.S. Treasury Department's "Hardest Hit" fund and may be inadequate to the need, Chubb acknowledged.

Georgia is one of 18 states that have received funding from the department to help homeowners during the past several years.

Some of the Treasury money was given to Georgia for use in its Home Safe program, which makes monthly mortgage payments, mostly for people who have been laid off. However, state officials said the underwater fund is now separate.

Georgia officials said before creating the underwater program, they studied similar underwater programs in California and Florida.

Georgia’s share of the program is expected to aid up to 3,000 homeowners, she said. “However, we want to encourage all homeowners who think they may be eligible to apply. We will continue to accept and review applications until funds are exhausted.”

Applications will be taken until Oct. 18, officials said, and the process can be started online at www.underwatergeorgia.org/ or by calling toll-free, 1-877-519-4443.

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