Foreclosure Prevention Program in North Carolina

If you want to save your home from foreclosure—and you live in North Carolina—check out the state’s Hardest Hit Fund program. You might qualify for financial assistance.

North Carolina’s Hardest Hit Fund program—the N.C. Foreclosure Prevention Fund—provides financial support to homeowners who meet eligibility criteria so they can save their home from foreclosure.

If you qualify for the program, you can get money to make your mortgage payments or reduce the principal balance of your loan. To learn more about these options, read on.

What’s the Hardest Hit Fund?

The U.S. Department of the Treasury established the federal Hardest Hit Fund in 2010 to give money to various states that were severely impacted by the foreclosure crisis happening at that time. As part of this program, the government allocated $7.6 billion in aid to 18 states, including North Carolina, along with Washington D.C., which suffered significant home price declines and high unemployment rates because of the economic downturn.

With the funding, North Carolina set up the N.C. Foreclosure Prevention Fund.

Stop Foreclosure: Get Help From the N.C. Foreclosure Prevention Fund

The N.C. Foreclosure Prevention Fund offers two kinds of assistance to help homeowners prevent a foreclosure.

Mortgage Payment Assistance

This program provides up to $36,000 to cover your mortgage payment and related expenses for up to 36 months while you search for or train for a new job.

Money is provided in one of three ways:

  • one-time assistance to reinstate your mortgage (bring it current)
  • short-term aid while you're looking for a job, or
  • long-term help while you participate in an approved job retraining program.

To qualify, you must be delinquent on your loan, at risk of falling behind on your payments, or in foreclosure.

Loan Recast Program

This program provides money to homeowners to reduce the principal balance of their outstanding mortgage balance. The loan is then recast so that the payments are more affordable.

In addition to meeting other requirements, you must demonstrate a need for assistance by having a current housing payment that’s more than 25% of your household income.

General Eligibility Criteria

To be eligible for the N.C. Foreclosure Prevention Fund programs, you must meet certain criteria.

  • You must be a legal U.S. resident.
  • You must own the home.
  • You must occupy the home as your primary residence.
  • You currently owe no more than $300,000 on all your mortgages.
  • You've lost your job or experienced a reduction in income through no fault of your own, or are facing a temporary financial hardship such as a divorce, serious illness, or death of a co-signer and must find new employment, or are temporarily unemployed after a natural disaster.
  • You lost your job or your temporary financial hardship occurred or you were honorably discharged from the military after January 1, 2008.
  • Your mortgage payment history was good prior to your recent unemployment, income loss, or financial hardship.
  • You’re re-employed or have secured a fixed income after an eligible hardship but are earning less and unable to afford your mortgage payment.

You’re not eligible for assistance from the N.C. Foreclosure Prevention Fund if you’ve been convicted of a felony connected with a mortgage or real estate transaction including larceny, arson, theft, fraud, forgery, money laundering, or tax evasion.

Keep in mind that eligibility criteria can change. For the latest requirements, check the N.C. Foreclosure Prevention Fund’s eligibility website.

How Assistance Works

Assistance is in the form of a zero-percent interest, forgivable loan. If you stay at the property for ten years, the loan is forgiven, which means you don’t have to pay it back.

Here's how the forgiveness plan works: After five years, the loan is reduced by 20% each year until you don’t owe anything. But you have to repay the loan if you sell or refinance the home in the first five years, and the sale proceeds are sufficient to repay the debt.

Learn More

To learn more about the N.C. Foreclosure Prevention Fund program, call 888-623-8631 or visit the N.C. Foreclosure Prevention Fund website.

Also, if you’re facing foreclosure, consider calling the State Home Foreclosure Prevention Project at 888-442-8188. This program offers free help, including counseling, assistance in dealing with your servicer, and, in some cases, access to legal services.

Getting Additional Help

If you need information about the foreclosure process in North Carolina or want to learn about possible defenses to a foreclosure in your situation, consider talking to a foreclosure attorney.

If you want to learn more about different alternatives to foreclosure, including loan modifications, short sales, and deeds in lieu of foreclosure, make an appointment to talk with a HUD-approved housing counselor.

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