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Georgia risks passing up millions of dollars in funding to stop foreclosures

Housing advocates say program requirements are too strict, state not on track to meet 2017 deadline

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Mark Harris always wanted a house with a two-car garage and a fireplace. In 1996, the U.S. Army veteran and commercial truck driver finally got his wish when he left Cascade Heights and moved into a ranch-style home on Dunwick Drive in Avondale Estates.

"My home is my pride and joy," Harris says. "It's literally my symbol of success. It's my security blanket. When you enter into homeownership you look at it as a long-term life-changing experience."

Late last year, Harris lost his job as a delivery truck driver and started falling behind on his mortgage payments. While visiting the Georgia Department of Labor, he learned about a federally funded state program called HomeSafe Georgia that was created to help the unemployed and underemployed pay their mortgages and fend off foreclosure for up to 18 months while they look for work. When his lender started foreclosing on his house last May, he applied to HomeSafe. Five months later, he says, his application had not been approved. The lender moved ahead with the foreclosure.

"The requirements are crazy," says Harris, who, despite fighting the mortgage company in court, was evicted last week, arrested trying to occupy his home, and, as CL went to press, was planning on staying at a homeless shelter for veterans. "Just like with any other government program, it sounds good until you apply for it and there's all this red tape."

HomeSafe, which launched in April 2011, has attempted to keep people sheltered during the toughest economic period the United States has seen since the Great Depression. But according to housing activists, it's extremely restrictive. The federal government has set aside $339.3 million for Georgia's program through 2017. At that time, any unused funds must be sent back to Washington, D.C. Judging from Georgia's own reports, the state runs the risk of returning millions.

In 2011, the federal government allocated $7.6 billion to help people in 18 states and Washington, D.C., stem the tide of foreclosures. Georgia, which last year had the fifth highest foreclosure rate in the country, desperately needed the assistance. Known as the Hardest Hit Fund, the pot of cash was split up among states based on declines in home prices and unemployment rates.

Each state was given the freedom to craft its own program. The Georgia Department of Community Affairs (DCA) was tasked with doling out $339.3 million to thousands of people unable to pay their mortgages. The goal was to provide enough financial assistance to help 18,300 homeowners stay in their houses.

But Georgia and some other states selected for the program have experienced problems allocating the cash. Last April, Christy Romero, the special inspector general who monitors how the federal government manages programs aimed at easing the recession, released a report scolding the Treasury Department for "significant delays" in spending the money.

Two years after it was created, about $214 million — only 3 percent — of the Hardest Hit Fund's total budget had been distributed to the 18 states and Washington, D.C.

Romero wagged a finger at Georgia's program, which, as of last spring, had only allocated $23 million dollars to fewer than 1,000 people — far short of its goals. In an April 2012 AJC interview, Romero said the state was "sort of maintaining status quo and watching disappointing numbers come in quarter after quarter."

There are many hoops to jump through to receive HomeSafe funds. Qualified applicants must be currently unemployed or underemployed. They cannot have voluntarily quit their jobs, receive Social Security, or sign up for disability benefits. If a homeowner wasn't current on their mortgage before losing employment, or is currently six months or more behind, he or she is not eligible. If a foreclosure or bankruptcy process has begun, HomeSafe won't help you.

There's also an exhaustive list of financial requirements that includes having no tax liens, bankruptcy filings, or more than $5,000 in liquid assets. In addition, homeowners must be legal Georgia residents and their mortgage lender must participate in the program. Homeowners then need to submit an application complete with a hardship letter, financial worksheets, past work documents, and supporting tax records. The median length of an application approval is 164 days, more than five months.

HomeSafe's critics contend that the strict eligibility criteria have prevented hundreds, perhaps even thousands, of people from avoiding foreclosure. The requirements, they argue, could be loosened to include such factors as major illnesses, disability, death of a spouse, and divorce. Kristen Tullos of Atlanta Legal Aid thinks the state program could also cast a wider net to include financial loan modification, refinancing, or expanding eligibility to include those who are more than six months behind on their mortgages.

More people could qualify and the federal dollars would actually be put to use rather than sit idle.

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