Underwater mortgage, want help? You’re not alone in Atlanta — or Georgia

An offer to help struggling homeowners drew nearly 1,000 applications in less than two days, officials said.

Requests for help – which could mean up to $50,000 per household – came from 67 counties across the state after the announcement of a $110 million program aimed at keeping people in their homes when their mortgage debt is greater than the house’s current value.

“We anticipated tremendous interest and have not been disappointed,” said Carmen Chubb, deputy commissioner of housing for the Department of Community Affairs. “Mostly, we are pleased to see applications coming in from all corners of the state. Not surprisingly, there has been a huge response from metro (Atlanta) counties where there’s a concentration of underwater homes.”

If nothing else, the flood of applications was a sign of the damage and pain still peppering the housing market, nine years after the burst of the housing bubble and four years after the overall market started to rebound.

The average selling price of a house in metro Atlanta has been growing steadily and is only about 3 percent below the peak price reached in 2007, according to the S&P/Case-Shiller Index. Yet in many areas – especially on the south side of metro Atlanta – the recovery has been slow and prices have lagged.

Many homeowners are “underwater,” that is, unable to pay off their mortgage by selling their house.

That situation is bad for homeowners because it virtually pins them in a home, making a sale impossible – at least without taking a substantial loss. It also means they can take no money from their home by refinancing to cover some unexpected expense, like a medical expense.

As reported in the AJC, the new underwater program is aimed at people who are at least close to the surface, so that a decent-sized payment would make a sale possible in the near future. That is, either the home price has rebounded some or the homeowner’s equity is substantial.

The money is given to the homeowner officially as a loan, with one-fifth of the loan forgiven each year.

But there are conditions to prevent a homeowner from reaping a windfall if the home jumps in value, Chubb said. “The goal is to help people stay in their homes and restore their financial footing, but if the property sells for a profit within the first five years, there is a formula that requires partial loan repayment.”

The money that the department has been given comes from a U.S. Treasury Department fund and may be inadequate to the need, Chubb acknowledged.

“We expect the response may ebb and flow, so it’s really too early to speculate how many applications we’ll receive in total, much less how much funding may go to each one,” she said.

The underwater program is expected to have enough money for up to 3,000 homeowners, she said. “However, we want to encourage all homeowners who think they may be eligible to apply. We will continue to accept and review applications until funds are exhausted.”

The burst of the housing bubble – along with the deep recession it spurred – led to foreclosures of an estimated quarter-of-a-million homes in metro Atlanta. Perhaps even more people kept making their monthly payments even though they remained underwater – that is, owing more on their mortgage than their home could bring on the market.

Applications will be taken until Oct. 18, officials said.

They can be made online at http://www.underwatergeorgia.org/ or by calling toll-free, 1-877-519-4443.

Simpler still, click here.

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