Federal assistance for struggling homeowners finds few takers in S.C.
COLUMBIA — Despite an above average foreclosure rate, South Carolina is having surprising difficulty finding takers for a huge pot of federal aid for struggling homeowners.
Hardest Hit Fund
For information on applying for the Hardest Hit Fund, go to scmortgagehelp.com
The program, called the Hardest Hit Fund, was launched by the Obama administration in 2010 to help homeowners in states battered by the economic and housing-market downturn.
South Carolina has received about $295 million from the program and began offering aid in January 2011.
Through June, the S.C. Housing Authority had used less than $30 million of that total on about 3,000 South Carolinians hoping to avoid losing their homes.
States including North Carolina, Ohio, Oregon and Michigan have provided assistance to more than twice as many households.
But like South Carolina, some other states' Hardest Hit programs have helped few participants relative to the scope of the foreclosure crisis.
For instance, only 168 New Jersey households had received assistance through the first quarter of 2012.
So what's to blame for South Carolina's struggles?
The main culprit is a lack of awareness that the help is available, according to the Housing Authority and Charleston-area providers.
“It's a hard population to find, quite frankly,” said Clayton Ingram, spokesman for the Housing Authority. “I think there are a lot of people who are self-excluding. They think it's a scam or don't think it will help. A lot of people may have been turned down for help before.”
Local organizations field inquiries about the program, although all applications must ultimately be submitted online.
State doing enough?
Debbie Kidd, director of the Homeownership Resource Center for the nonprofit Family Services Inc. in North Charleston, blames insufficient advertising by the state for the low volume of assistance to S.C. homeowners.
“I'm sure they believe they're doing enough,” she said. But “there's no marketing. I'm out marketing it all the time. Family Services spends a great deal of our own money on advertising.”
Kidd said, “Your neighbor could be suffering in silence and really not know it's out there.”
Dorothia Bernique, executive director of Raising Hope in North Charleston, commends the Housing Authority for advertising the Hardest Hit Fund on billboards and radio.
But she said that effort has come up short.
“Even as well as the Housing Authority does, there are so many problems with awareness,” she said.
Ingram said the Housing Authority has done a comprehensive campaign that included advertising in newspapers, and on the radio and online.
“Really just everything that we could to get the word out,” he said.
The federal government also bears some blame for the Hardest Hit Fund's struggles in some states, according to a federal watchdog report.
The April report by the special inspector general for the Troubled Asset Relief Program faulted the Treasury Department for a lack of planning on how to implement the Hardest Hit program.
Ingram said much of the onus to publicize the program now falls on local providers, because they are the closest to their communities.
The Housing Authority recently began collaborating with the S.C. agency that distributes unemployment benefits, the Department of Employment and Workforce, in an effort to reach more prospective Hardest Hit applicants.
About 100,000 South Carolinians are on unemployment at any one time.
Every two weeks, the Housing Authority sends 20,000 recipients information on the program, cycling through the list until all households have been contacted.
“Not all are homeowners, but all are unemployed, so it's a start,” Ingram said.
Targeting the jobless
The federal government let states decide how to aim their Hardest Hit funds, the unused portions of which will have to be returned to the U.S. Treasury in 2017.
States such as California put a focus on helping homeowners already underwater on their mortgages, while South Carolina decided to primarily target the unemployed.
To qualify for the program in the Palmetto State, applicants must be homeowners who are “responsible borrowers.”
That means borrowers who are facing possible foreclosure due to circumstances beyond their control, such as unemployment, catastrophic medical expenses, divorce or the death of a spouse in addition to other criteria, according to the Housing Authority.
Up to $36,000 in mortgage payments is available per household.
Through June, about 29 percent of Hardest Hit applicants in South Carolina had been approved for assistance. About 36 percent were denied Hardest Hit help. Many applications are still being processed.
The program has provided assistance to only 182 households in Charleston County, where an average of one in every 457 households were in foreclosure in July, according to RealtyTrac.
Fifty-six households applied for Hardest Hit assistance in the second quarter of this year, according to Housing Authority totals.
Nonetheless, Kidd said Family Services' phones are flooded with inquiries.
Even if applicants don't qualify for the federal assistance, the organization can help advocate for loan modification with a homeowner's lender, she said.
Complicating matters for some Hardest Hit applicants is the refusal of some S.C. banks to accept the federal government's payments.
Many of the banks that don't participate in the program in South Carolina are smaller lenders that have said they don't have the infrastructure to deal with the program, Ingram said.
But one of the country's largest banks, TD Bank, also has declined to take part.
A company spokeswoman said the bank has its own method of helping struggling homeowners.
“We have a good quality book of business and high quality credit standards,” Gabriel Weissman said in a statement. “TD Bank is a customer-focused bank that already has comprehensive programs in place designed to help our customers facing hardship. We would encourage any of our customers who are experiencing any difficulty to come in and talk to us as we are committed to working with them on financial solutions.”
She said the bank does not participate in Hardest Hit programs in other states either.
As a Canadian bank, TD Bank was not eligible for TARP assistance, which helped bail out big banks in the U.S. starting in 2008.
The Hardest Hit program is part of the broader TARP.
Ingram did not have an estimate for how many Hardest Hit applicants have their mortgages through TD Bank.
Kidd said the lender's stance is “very disappointing.”
“It's hard for us when we say there is this great program and we can't help them,” she said.
Reach Stephen Largen at 864-641-8172 and follow him on Twitter @stephenlargen.