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Federal Assistance to Avoid Foreclosures Is Coming to State

State loans for unemployed homeowners available, interest-free


David Styles was just two months shy of working 30 years at a textiles manufacturing plant in Marion where he supervised 15 other employees, when the company shut down.

After exhausting his unemployment benefits and using his 401(k) plan to go to school to become a certified nursing assistant, Styles was struggling to pay his mortgage.

Even with his wife taking a job at a local school cafeteria, "it was going to get dicey," he said.

Enter the North Carolina Housing Finance Agency and its Home Protection Program.

Administered by private financial counseling agencies, the Home Protection Program provides up to $1,000 a month for two years to assist with the cost of a mortgage, taxes and insurance. It gives borrowers 15 years to pay the money back, interest-free. Homeowners who sell or refinance their homes during that time must repay the entire amount. There are no income or asset restrictions.

The program is designed to help laid-off homeowners while they are searching for new jobs or getting back on their feet, said Charlene Smith, who handles mortgage services for the agency.

Styles gets $563 a month, which covers his mortgage, taxes and insurance.

The Home Protection Program dates back to 2004, a year after Pillowtex, a textile manufacturer, shut down, leaving 5,500 people unemployed in the Piedmont area.

"The idea was to help people who lost their jobs because of something like that or some other big change in the economy beyond their control," said Margaret Matrone, the housing agency's director of government relations and communications. "It was intended to give them a bridge so they would not lose their house because they lost their job."

What started as a pilot program in eight counties affected by the Pillowtex closing is now a statewide program that has helped more than 550 homeowners and had funding of $3 million last year.

Another program, run by the state Banking Commission, puts homeowners in touch with HUD-approved counselors to help them with mortgages that are in arrears, and makes referrals to the Housing Finance Agency. The State Home Foreclosure Prevention Program has helped prevent more than 4,000 foreclosures since 2008.

As the statewide unemployment rate inched toward 11 percent, foreclosures also climbed. North Carolina had about 63,000 foreclosures last year, up from 54,000 in 2008. If this year's trend continues, foreclosures could top 70,000.

In McDowell County, where Styles lives, the 108 foreclosures starts through May were 57 percent more than the same period last year. Thanks to the state program, however, Styles is confident he won't become one of those statistics.

Styles expects to receive assistance through the end of 2010 while he continues training for his new career. "It's hard to go back to school after 30 years," said Styles, who turns 50 in September.

Because of the state's soaring unemployment, an additional $159 million in federal assistance is on the way under the Troubled Asset Relief Program to help prevent foreclosures and stabilize housing markets. North Carolina is one of five states sharing $600 million allocated to states where 25 percent of the population live in counties with unemployment of 12 percent or more.

"We are charged to create innovative measures to help families stay in their homes or otherwise avoid foreclosure," Matrone said. "The idea is that each state understands the problems in its area and will address those as effectively as it can."

The program is expected to be in place by fall.

For more information on the Home Protection Program, visit the North Carolina Housing Finance Agency's website or call 919-877-5700 or 800-393-0988.

The State Home Foreclosure Prevention Project, created to reduce subprime foreclosures in the state, offers a county-by-county map of HUD-approved housing counseling agencies and a toll-free number, 866-234-4857.

Sue Price Johnson is a freelance journalist based in Raleigh, N.C.

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