State officials today will announce a $110 million program aimed at helping thousands of homeowners struggling to stay in their homes.
The program – funded with federal dollars – will provide up to $50,000 to people who are “underwater,” that is, who owe more on their mortgages than their homes are currently worth, officials told the Journal-Constitution.
Checks will be written for up to 3,000 homeowners, said Carmen Chubb, deputy commissioner of housing for the Department of Community Affairs. “The program is officially for three weeks, but we will accept applications as long as we have funds available.”
Nine years after the burst of the housing bubble and four years after the housing market began to steadily improve, an estimated 150,000 Georgia homeowners are still underwater. The state, one of the hardest-hit by the housing crash, ranks third in the nation for homeowners who have negative equity.
According to the most recent data from CoreLogic, nearly 9 percent of homes with mortgages are still underwater. And most of the problem is concentrated in 20 ZIP codes within metro Atlanta, according to Chubb.
Being underwater typically prevents homeowners from taking money out of the home through refinancing. Moreover, it is a large obstacle to selling the home, since the seller would have to bring cash to the closing to pay off the loan.
The average price of Atlanta homes bottomed out in mid-2012 and has risen dramatically since. But in many areas, the recovery has lagged.
So long as the neighboring market is improving, there is hope of catching up. But when home values are not rebounding, a homeowner can be virtually trapped in a house, responsible for taxes and repairs while making a monthly payment like a renter with little hope of a return on his or her investment.
During the worst of the recession, many underwater homeowners simply walked away. That tainted their credit, while dumping another underpriced home into the for-sale pool.
The result was that the underwater epidemic was not only painful for homeowners, it also damaged and distorted the housing market.
“We want to get people to a loan-to-value that is reasonable for them,” Chubb said.
The money – officially a loan — will go to reducing debt, but the state will forgive 20 percent of that loan each year, she said.
Certain conditions and restrictions will apply. For example, if the value of the home goes up significantly, the homeowner might have to repay some or all of the loan.
Starting today, the state is accepting preliminary applications online. The program formally runs through Oct. 18, she said.
Areas with the most homes “underwater”
ZIP code … Number of homes
30012 …. 1,452
30016 …. 3,847
30032 …. 2,159
30035 …. 1,645
30058 …. 5,159
30088 …. 2,203
30134 …. 2,543
30168 …. 1,498
30213 …. 3,128
30288 …. 788
30291 …. 1,834
30294 …. 4,396
30296 …. 2,702
30314 …. 555
30331 …. 4,136
30344 …. 1,753
30349 …. 6,556
30363 …. 111
31903 …. 355
31907 …. 3,756
TOTAL …. 50,576