Federal Foreclosure Assistance Goes Unused in South Carolina
The Hardest Hit Fund was created by the Obama administration in 2010 to help those homeowners struggling with missed payments and foreclosure. South Carolina has received about $295 million from the federal government to fund the program, yet only about $30 million has been used so far. So what’s the problem? Why are these funds, available to help make mortgage payments so people don’t lose their homes in foreclosure, going unused?
The Hardest Hit Fund was used to create SC Help, also accessed as www.scmortgagehelp.com, and focuses on homeowners who are unemployed, or who have gotten behind in mortgage payments through circumstances beyond their control, such as medical bills. The federal program allows each state to use the money as it sees fit, targeting the most significant problems in its communities.
Perhaps the biggest problem is that people don’t know about the program. When the program first started, I thought that they would be overwhelmed with applications, and feared that the money would run out. I remember I advised clients not to delay applying, because once the money is gone, its gone. But I’ve seen and heard very little about the program in the South Carolina media, so the word just hasn’t gotten out.
Perhaps another problem is that people think that SC Help is the same as, or part of, the HAMP program, and believe that when they have applied for HAMP, they’ve applied for this assistance, too. But the only thing the two programs have in common is that they are created by the federal government. The HAMP program provides incentives for mortgage lenders to modify your mortgage. In other words, when the lender agrees to lower your interest, they receive some compensation for the loss they are taking. The SC Help program actually provides money to make your regular payments, usually while you are unemployed. It does not require a mortgage modification, and is therefore a better fit for many who don’t qualify for mortgage modification.
Unfortunately, like HAMP, your mortgage lender has to agree to accept payments through SC Help, and that may be another reason the program is not using the money it has. Most of the lenders who don’t accept payments from SC Help are small, local lenders, who may not be set up to handle the administrative requirements, but one large lender, TD Bank, also refuses to participate, for reasons I find mysterious.
I also wonder if another reason more people haven’t applied for help is that the application has to be filled out online. As strange as it may seem to most of us, there are still people out there who don’t own a computer, and who don’t turn to Google as their first source of information on any given subject. I still talk to a few people in my practice who don’t have e-mail, or who don’t have easy access to it for financial reasons. Of course, if you are reading this blog, you obviously have access to an online application, but if you know someone who doesn’t, offer to help, or refer them to the various consumer assistance and homeowner counseling services that can help with the application process.
It has also been suggested that the program us not used because people think it’s a scam, and I totally get this. If you heard on the street that there is this fund of federal money and they were giving it away to make your mortgage payments for you, you could be forgiven for skepticism. But, it is a real, honest-to-goodness program, administered by the state, funded with federal dollars, that might benefit you if you have fallen behind in your mortgage payments because of circumstances that are beyond your control. If you haven’t already done so, apply for help. It may be just the thing you need to help you avoid foreclosure.