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Homesafe Georgia: Helping families avert foreclosures

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Moderated by Rick Badie

Nationwide, states have been scrutinized for their use of money from the “Hardest Hit Fund,” established by the U.S. Treasury in 2010 to help 18 states tailor programs to help struggling homeowners avoid foreclosure. Results have been a mixed bag, which fueled eligibility changes here and elsewhere. Today, we’re given an update on Georgia’s $339 million allocation, coupled with an essay about millennials’ attitudes toward home ownership in general.

HomeSafe Georgia saving homes

By Gretchen Corbin

When Dwight and Keshunda Millbrook of College Park lost their jobs in 2011, they were scared they would lose their home to foreclosure. To save their home, they applied for aid from HomeSafe Georgia, a free program that helps unemployed and under-employed homeowners pay their mortgage for up to 24 months.

Their strategy worked. The program helped the Millbrooks make their mortgage payments while they sought new employment. Today, the couple is back on their feet with new jobs that enable them to pay their mortgage.

HomeSafe Georgia is part of the U.S. Treasury Department’s Hardest Hit Fund. As part of a bill passed by Congress, several states ravaged by the Great Recession received funds to help homeowners who lost jobs avoid foreclosure. The Department of Community Affairs administers the $339 million Georgia received. That money is available only through the next three years.

The program’s intent is to help hard-working people keep their homes while searching for a new job. If you’ve ever lost a job, you understand the challenge of keeping up with your mortgage payment. Even if you’ve only lived in the home for a few years, it’s likely your family’s largest asset.

The program is working for many Georgians in financial distress. HomeSafe Georgia has helped more than 5,300 homeowners avoid foreclosure in 124 counties. We’ve used $110 million of the funds allotted our state, and we’re on track to utilize the remainder.

While unemployment and foreclosures are slowing, the need for the program remains strong. In 2014’s second quarter, 1,183 HomeSafe Georgia applications were submitted, a 12 percent increase compared to the previous quarter. Of those new applications, 478 were filed in June, the highest number for any single month so far this year.

While this jump may have been helped by our increased marketing outreach, we have also expanded the program’s eligibility requirements. We now extend help to homeowners who are currently able to make their mortgage payments, but who fell behind within the past three years due to financial hardships beyond their control: medical emergencies, a death in the family, or a drop in income during the transition from military service to civilian life. These homeowners may qualify for a one-time sum to cover up to 12 months of mortgage payments.

Another new feature helps homeowners with a permanent drop in income reduce their mortgage principal by up to $30,000, making the mortgage affordable and allowing them to stay in their homes.

While HomeSafe Georgia is a godsend for individual homeowners, it’s also helping communities around the state keep their neighborhoods intact. Even a single foreclosure can lower property values or pose a hazard for an entire neighborhood.

If you believe you may qualify, please apply at http://www.HomeSafeGeorgia.com, or call 1-877-519-4443.

Gretchen Corbin is commissioner of the Georgia Department of Community Affairs, which oversees the HomeSafe Georgia program.

Finances curb millennial 1st-time homeownership

By Cheryl Russell

First-time homebuyers are the heart of the housing market. Their purchase of starter homes puts the market in motion. First-time buyers allow middle-aged homeowners to move to bigger and better homes as their families expand.

In turn, the purchase of larger homes by expanding families allows older homeowners to downsize. Without first-time buyers, this circulation comes to a halt. Homeowners are stuck, mobility declines and property values fall.

That’s where we are today. The supply of first-time homebuyers has dwindled, and the housing market has stagnated. Although home buying has increased from the lows of the Great Recession and prices have risen, investors rather than first-time buyers are responsible for much of the increase. According to the National Association of Realtors, first-time buyers account for only 28 percent of homebuyers today. Prior to the Great Recession, they were 40 percent.To function properly, the housing market needs a sufficient supply of first-time homebuyers. For decades, that buyer has been a 30- to 34-year-old, the age at which the homeownership rate historically first surpassed 50 percent. The financial woes of the millennial generation have shut millions out of the housing market, lowering the homeownership rate of young adults and driving the age of first-time home buying into the 35-to-39 group.

Between its peak year of 2004 and 2013, the nation’s homeownership rate fell from 69 to 65 percent. Metro Atlanta experienced a 6-percentage-point drop since the peak.

The homeownership rate of households headed by 30- to 34-year-olds fell by more than 9 percentage points, from a 57 percent majority in 2004 to a 48 percent minority in 2013. Among 35- to 39-year-olds, the rate fell by an even larger 10 percentage points during those years, from 66 to 56 percent.

The homeownership rate of young adults has fallen, in part, because of debt. Most college graduates have education debt. Many young adults without a college degree also have student loans. The Federal Reserve Bank of New York reports student loans are now the largest form of consumer debt after mortgages.

A substantial 40 percent of households under 35 have education debt, according to the Federal Reserve Board’s Survey of Consumer Finances. Households under 35 are more likely to have student loans than mortgage debt, vehicle debt or credit-card debt.

Debt is not the only problem. The incomes of young adults are declining. Between 2000 and 2007, the median income of households headed by 25- to 34-year-olds fell 5 percent. Between 2007 and 2012, the decline was 9 percent. The median household income of 25- to 34-year-olds was just $51,381 in 2012, nearly $8,000 less than the $59,219 of 2000, after inflation adjustments.

A growing share of that shrinking income is diverted to student loan payments, leaving little for home buying and shutting down circulation in the housing market.

Cheryl Russell is a demographer and editorial director of New Strategist Press.

 

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