South Carolina Spends Federal Mortgage Loan Aid

South Carolina state flag in a circle
In South Carolina, 3,500 families have obtained government assistance through a federal mortgage loan assistance program that aids homeowners facing foreclosure.

Since August 31, $36 million have been distributed to families in need within South Carolina alone. This is only 12 percent of the $295.4 million given to South Carolina by the U.S. Treasury’s Hardest Hit Fund.

Despite the high need for this type of aid, many officials confirm that participation is low.

“We know there are a lot more out there who aren’t taking advantage of it,” said Clayton Ingram, the spokesman for the state Housing Finance and Development Authority, in a Businessweek interview.

Ingram suspects that people refuse to take advantage of the federal mortgage loan assistance program’s benefits due to being too embarrassed to seek aid as well as assuming that the free program is too good to be true. Ingram says some even think it’s a scam.

“A lot of people don’t believe it will help them. We’re constantly telling people not to self-exclude. At least apply. The worst that can happen is you’re turned down. The best is, you’ll save your home,” said Ingram to Businessweek.

Despite supportive statements from officials, advocates for low-income earners claim that the South Carolina program is far too limited in who can receive federal mortgage loan aid. A legislator in charge of the House budget for economic development blames poor marketing for the low amount of federal home loan aid recipients.

Due to high jobless rates in 2009 and 2010, South Carolina qualified for a large amount of the $7.6 billion that was awarded to 18 states. South Carolina’s unemployed rate of 9.6 percent in July gives the state the dubious distinction of being the fifth worst location for jobseekers.

In tandem with that unemployment report in July, the month also brought with it 4,000 new foreclosures. This is a whopping 34 percent increase from 2011, highlighting a clear lack of economic recovery within the state. According to data from RealtyTrac Inc., South Carolina ranks ninth in terms of the worst foreclosure rates across the country.

The billion dollar Hardest Hit Fund has helped more than 74,000 homeowners, not including the 35,000 undergoing processing, according to a Businessweek report.

California leads the nation, having assisted 16,303 homeowners so far. Second up is North Carolina—which has aided 7,901 homeowners. Ohio takes the bronze, having aided 7,346 households.

While the individual laws, politics, and economies of each state have caused them to develop and launch their federal mortgage loan aid programs at different times, all states must still spend their funds by December of 2017. A “meeting of the minds” is scheduled for the middle of September in the nation’s Capitol where officials from participating states can share ideas on how to further enhance and develop the federal mortgage loan assistance programs.

Showcasing innovation—and perhaps a desire to aid an ailing economy—South Carolina began SC HELP or the South Carolina Homeownership and Employment Lending Program in January 2011.

SC HELP is limited to homeowners that have actively shown they are trying to pay their bills but have still fallen behind on payments due to job loss, reduced work hours, a death of a spouse, divorce or medical bills. Remarkably, there is no limit on household income, but federal mortgage loan assistance is capped at $36,000 per household.

“If you’re depending on a steady stream of income to make a home payment and all of a sudden it’s no longer there, it doesn’t take long to fall behind and eventually lose your home. It’s not a handout. It’s a bridge program and economic stabilization program,” said Ingram.

SC HELP currently offers a lump sum, monthly payment option, or money for transition to a rental property.

The federal mortgage loan assistance program works with the state’s unemployment agency which allows letters to be sent to the jobless informing them of the program. Information is also dispersed by local nonprofits and banks.

“It’s a hard population to find. It’s hard to find the people who need it, when they need it,” said Ingram.

Sue Berkowitz of Appleseed Legal Justice Center praised SC HELP yet noted that it was far too limiting.

“Lots of folks are falling through the cracks. That’s where the mortgage settlement funds could’ve been used. We as a state blew it,” she said.

Echoing her sentiments was Representative Gary Simrill, the chairman of a Ways and Means subcommittee on economic development.

“We’re not doing the proper job to reach the people. People are unaware there’s help out there,” he said.