Settlement offers hope for area homeowners

kpittman@charlotteobserver.com

As big banks' multibillion-dollar foreclosure deal plays out in North Carolina, Charlotte-area residents stand to pick up a significant chunk of the state's settlement money.

Nearly 59,000 homes in the Charlotte region - 16 percent of all residential properties with mortgages - were underwater in the third quarter of 2011, meaning their owners owed more than the homes were worth, according to the latest data from national research firm CoreLogic.

That's up from 14 percent during the same period in 2010 and less than 10 percent in 2009, the first year the firm tracked the data.

Almost 34,000 additional borrowers had less than 5 percent equity in their homes. That means fully a quarter of the Charlotte-Gastonia-Rock Hill region's homeowners were underwater or close to it, CoreLogic found. Homes in the Charlotte region sold for an average of $188,000 in January, down from $219,000 in January 2007, before the recession began, Charlotte Regional Realtor Association data show.

Mortgage servicers are expected to reach out to underwater and struggling borrowers in the next few weeks, N.C. Attorney General Roy Cooper said. Banks have three years to fulfill the terms of the settlement.

"If they can actually get the bank to help people that really need it, it will be a blessing," said one Cornelius homeowner, who has been out of work for more than two years and has struggled with her mortgage payments in recent months. But in dealing with her bank, she found "the left hand doesn't know what the right hand is doing. You get shuffled around and get different answers from different people."

The homeowner, 61, didn't want her name used because she landed a temporary job and didn't want to jeopardize the opportunity. She was laid off about 2-1/2 years ago from her job selling new homes for a builder. She bought her home six months before that.

As her unemployment benefits dwindled, she went back and forth with her bank but didn't have any luck, she said. The homeowner was recently approved for funding under a program that makes homeowners' mortgage payments in areas hit hard by unemployment, she said.

She's hopeful the new settlement will hold lenders' feet to the fire, she said - but "for a lot of people, I think it's too little, too late."

Housing advocates across the state, meanwhile, praised the deal as a way to bring hope to struggling borrowers.

"If you're unemployed and losing your home, it's a horrible place to be," said Susan Perry Cole, president of the N.C. Association of Community Development Corps. in Raleigh. "I think a settlement like this gives people hope that they can move on and continue to rebuild their lives ... and save their family homes."

Peter Skillern, executive director of Durham-based Reinvestment Partners, which advocates against predatory lending practices, said this is the first time a settlement might get some real traction, despite its logistical challenges.

That's because the agreement offers immediate relief in the form of principal reduction and compensation for homeowners and carries stronger enforcement standards than past government programs and settlements, many of which have permitted banks to participate voluntarily, he said.

"Will this solve the foreclosure crisis? No," he said. "Will it help? Yes."