Stress test

The region's higher rate of home foreclosures has yet to slow, and the prolonged anxiety hanging over thousands of local households is starting to take its toll.

Lenders continued to file foreclosure proceedings against area homeowners at a near-record pace during the third quarter, according to an analysis of court filings by The Post and Courier. A portion of those owners simply walked away from their properties, saying the uncertainty and financial strain was too much to endure.

"People do say to us they just can't stand it anymore," said Debbie Kidd, who oversees foreclosure counseling for the North Charleston-based nonprofit group Family Services Inc. "They're not going to wait for the lenders to make the decision. They're going to make the decision themselves by walking away."

Despite efforts by lenders to negotiate concessions and a widely publicized federal loan modification program, the number of local home foreclosures filed in the third quarter eclipsed the pre-recession pace.

Mortgage lenders brought a total of 1,247 foreclosure actions against homeowners in the three-county area from July through September. That's roughly the same amount compared with the previous quarter but a 27 percent increase compared with the corresponding period last year.

Berkeley County foreclosures grew 10.7 percent to 339 filings, while Charleston County filings fell 4.2 percent to 659. Dorchester County foreclosures remained unchanged at about 250 filings.

In May, the state Supreme Court put into place an order that prohibits lenders from filing a foreclosure lawsuit against a homeowner without first seeing if they qualify for the federal Making Home Affordable Modification Program, a $75 billion homeowner rescue effort introduced in the spring.

Through the program, more than 500,000 homeowners have been offered trial loan modifications, which temporarily lower monthly mortgage payments.

But that program doesn't apply to many homeowners who don't have a steady stream of income, those who are trying to save their second homes or homeowners who face readjusting monthly payments while owing more than their property is worth.

Higher level

During the past few years, counselors at Family Services say they have watched the changing profiles of local homeowners. Lately, they're working with a growing number of upper-class homeowners from Mount Pleasant, downtown Charleston and the Isle of Palms who have fallen on hard times.

Attorney Cheryl Fletcher of the Daniel Island Collaborative Law Center, who has consulted nearly a dozen financially struggling families on Daniel Island, said these borrowers tend to ask for help later than less-affluent homeowners because they have savings to keep them afloat.

"These are not people who live paycheck to paycheck. They had resources and money aside for emergencies ... but they just ran out," Fletcher said.

Other once-affluent homeowners who ran into trouble might just now be realizing that help is available to them, she added. People in this socioeconomic class tend to see the word "help" on a brochure or advertisement and assume it doesn't apply to them because of their incomes, savings or home values.

Fletcher predicts that some homeowners one day will see pursuing a loan modification or letting a second property go as a smart business decision, rather than an embarrassing financial blunder.

"I think there will come a time when people will be more open about it just because so many people will be going through it," she said.

Broke, not working

The increase in foreclosures is being exacerbated by South Carolina's unemployment rate, which at 11.6 percent in September was the fifth-highest in the country. And at last count, roughly 252,000 residents were looking for a job but couldn't find one.

Without a steady stream of income, homeowners might not qualify for the federal loan modification program, and lenders are more hesitant to grant concessions.

That's the situation facing Wanda Bradosky of Murrells Inlet.

She and her husband, who worked for a large engineering firm, had requested a loan modification earlier this year after his salary and bonuses were greatly cut back. Four weeks ago, he was laid off.

The couple hoped their clean financial record would count for something, but lenders, she said, don't seem to care. "We were never laid off before, and we had never missed a payment," she said.

Bradosky now considers herself an activist for unemployed homeowners. She's written lawmakers and spoken with local media outlets, expressing her disappointment that otherwise loyal mortgage payers haven't been given a break through some new government aid program.

"I'm planning to go out fighting because there's really got to be something done," she said.

Other homeowners aren't as determined.

Family Services is running into more borrowers who are frustrated that their lenders haven't made a final decision regarding their loan modifications. Some filed the paperwork more than eight months ago.

Meanwhile, Kidd said, the pressures of an uncertain future are constant.

"Is this the last holiday they'll have in the house? Is this the last time the kids will trick-or-treat on the street?" Kidd said. "This is what they're going through at home."

The stress has caused a growing number of couples to break up, said Kidd, whose counselors report they are seeing more separated clients. With only one income earner left in the household, those owners have far fewer options and may have to sell.

"You can always get another house, but you can't rebuild a family," she said.

It's this prolonged financial stress, Kidd added, that will cause a portion of local homeowners to simply walk away.

Reach Katy Stech at 937-5549 or kstech@postandcourier.com.