In the midst of a foreclosure crisis, federal cuts that took effect this month have reduced the number of counselors who help homeowners in trouble keep their homes.
Agencies say fewer counselors mean ailing homeowners will get less time with remaining counselors, may wait longer for help and could be hit with fees for services that were previously free.
Congress approved $88 million for housing counseling nationally for 2011, including $4 million for Georgia. But it did not reapprove the money for 2012 over concerns the efforts were being duplicated elsewhere and that the Department of Housing and Urban Development was too slow in distributing the money.
Homeowners in trouble who get housing counseling are nearly twice as likely to avoid foreclosure as those who don't, according to a study cited in a report this year by the U.S. Government Accountability Office. The same report said some federal counseling programs had not complied with requirements to give complete information and were not tracking success rates to see a final effect on foreclosure rates.
CredAbility, which serves tens of thousands of homeowners a year as the state's largest provider of housing counseling, responded to the loss of its $3 million federal grant by laying off 70 workers in June, leaving 139.
Michelle Jones, the senior vice president for counseling for CredAbility, said demand for the agency's services was trending down but is still much greater than it was before the economic crisis. The agency helped 6,579 homeowners struggling with mortgages in 2006. Demand peaked in 2010, when the agency helped more than 67,000 through September. This year through September CredAbility has helped 61,000. She believes the total dropped in part because many people in Georgia who are in trouble have already seen counselors.
With the loss of counselors, Jones said the workload for those who remain increased..
And instead of free services, consumers who are already in a tight financial spot may have to bear part of the costs, she said.
That has already happened at CredAbility, where counseling for reverse mortgages is a requirement before a homeowner can get one. After the federal grant ran out, consumers began paying $125 for the formerly free counseling.
Thirty-two other, smaller HUD-approved agencies also are struggling, letting staff go as the grants ended in September.
"It's going to affect our ability to assist homeowners," said Keisha Harris, the chief operating officer at D&E, a housing counseling agency in Forest Park.
D&E cut its four housing counselors to two in the past month. It typically sees about 75 families a month, Harris said, and counselors will have less time to spend with each family, helping them renegotiate loans, obtain deferred payments or decide to go into foreclosure.
Foreclosures have been rising steadily since 2005 in the metro region. There were 44,971 foreclosure notices sent out in 2006. That grew to 79,484 by 2008 and to 127,140 in 2010. There have been 65,008 notices through July of this year. Often when those who default get a notice, they seek outside help. Others try to go it alone without the advice of counselors.
Kim Whitehead of Atlanta tried to get the loan for her condo modified before finally turning to CredAbility. Whitehead became ill with cancer in 2010 and knew she was going to have trouble paying the mortgage due to medical bills and lost work. She spoke with her lender several times over six months to try to get her mortgage modified without luck. The logjam broke after she went to CredAbility.
Whitehead said the counselor guided her through the morass of paperwork and bank bureaucracy and knew how to keep the process from stagnating. Still, it took months.
"The day before my birthday, I found out I got my modification," Whitehead said.
It is saving her nearly $300 a month.
The Obama administration has pushed for foreclosure help in many forms to shore up the economy, the banking industry, home prices and neighborhoods, and the Senate has included $60 million for counseling in the next budget at the president's request. HUD has also promised to find ways to streamline the grant process and make other improvements, according to the online news site ProPublica.
Ed Jennings Jr., HUD's regional administrator for 10 Southeastern states, said he is hopeful the money will be restored, though the U.S. House did not include the grant money in its budget proposals.
"Until the full 2012 appropriation is approved by Congress we won't know what they are going to come out with," he said.
Jennings said there is money under community development block grants that can be used for counseling. He added that banks, nonprofits and others are also contributing money, so the end of grants is not equal to an end to counseling altogether.
HUD doesn't allow agencies to charge for foreclosure counseling.
To find HUD-approved foreclosure counselors, go to www.hud.gov/offices/hsg/sfh/hcc/fc/index.cfm.
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