Foreclosure crisis may rise with continued unemployment

First the job disappears, then the house.

While a national report Thursday cautioned that one in 10 American households with a mortgage was at risk of losing its home, metro Atlanta remained at the forefront of the economic angst.

The 13 counties in and around the city reported a 59-percent spike in foreclosure notices from July to August, increasing from 8,264 to 13,130.

Previously, the housing troubles, nationally and locally, were tied to lending scams; now it’s all about job loss.

“We’re seeing a lot of unemployment as reasons for [people] needing help with their mortgage; that’s the No. 1 reason at this time,” said Sylvia Robinson, community outreach manager for Atlanta’s HomeFree-USA, a free counseling provider for troubled homeowners. “It seems as though this foreclosure tsunami is not ending anytime soon.”

William Brennan, director of the Home Defense Program of the Atlanta Legal Aid Society, likewise has seen a noticeable increase in unemployed homeowners or furloughed homeowners forced to accept far less pay, creating mortgage despair.

“Those folks don’t necessarily have predatory loans at all,” Brennan said. “They have good loans, FHA loans, but perhaps they’ve been laid off and they can no longer pay.”

The Mortgage Bankers Association, a national group that represents the real estate industry, provided the stark one-in-10 mortgage forecast, and said Thursday that the national foreclosure crisis could worsen if jobs remain scarce. About 9.9 percent of homeowners had missed at least one mortgage payment through June 30. That number, adjusted for seasonal factors, was barely down from a record high of more than 10 percent as of April 30.

Metro Atlanta’s sizable one-month spike in foreclosure notices was reported by Equity Depot, which tracks the region’s short sales and foreclosures activity. Only 20 percent to 30 percent of these listings, which are legally required before a bank can sell a foreclosed property at auction, actually make it to the courthouse steps, but the numbers still are disturbing, said Equity Depot president Barry Bramlett.

“With so many people under water, everything is feeding foreclosure,” Bramlett said. “You’ve got the depressed housing prices and every factor that could possibly be there, is there. “

The lack of jobs, however, is more painful than most. The number of unemployed workers in metro Atlanta rose in July to 288,561, up 108,020 from July of 2008. The number of payroll jobs in the region was 2,295,000, a loss of 119,100, or 4.9 percent, from July of 2008, the Georgia Labor Department said.

The number of Americans who are missing payments and falling into foreclosure has followed the upward trend in unemployment. The national jobless rate has remained near double digits all year.

“Ultimately, the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story,” Jay Brinkmann, the Mortgage Bankers Association’s top economist, said in a statement. “Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers.”

Dawn Clayton, 42, of Stockbridge, has run the gamut of this employment-mortgage dilemma. She moved into a rental property she owned, was forced to take a lower-paying job, was injured and has faced foreclosure. Her monthly income dropped from $4,000 to $2,000, leaving her scrambling to make her month payment. She’s now behind on seven payments.

Clayton’s request for a loan modification was denied because she didn’t make enough money to qualify, but her benefits excluded her from government assistance. Either way, she’s in trouble. And she’s not alone.

“I hope we come out of this soon,” Clayton said. “I’m not the first and I know I won’t be the last.”

The Associated Press contributed to this article.