Thomas McConnell didn't know what to do when the heating and air conditioning quit working in his North Brainerd home last year.

His disability retirement from U.S. Pipe & Foundry Co. didn't give him enough to pay for the repairs. He was in danger of falling further behind in his mortgage payments and possibly losing the home where he has lived for the past 32 years.

Unbeknownst to the 71-yearold homeowner, he had somehow missed a mortgage payment a couple of years ago. The accumulating interest and penalties from the late payment threatened to put Mr. McConnell two months behind on his mortgage - and possibly subject to foreclosure.

At the urging of his niece, Mr. McConnell reached out to Chattanooga Neighborhood Enterprise, a government-backed housing agency that helped Mr. McConnell keep and fix up his house.

"We're getting by, but I couldn't have done it without CNE," Mr. McConnell said, pointing to the new siding, roof and porch installed on his Nantena Drive home.

Mr. McConnell is among more than 200 families CNE has worked with since launching its foreclosure prevention program last year.

"Of the 219 families we saw in 2009, only seven have lost their homes, so we know we're making a real difference in this community," CNE President David Johnson said.

CNE is among 48 local agencies in Tennessee and 101 in Georgia counseling financially troubled homeowners under a 2-year-old foreclosure prevention effort by the federal Neighborhood Works program. The U.S. Department of Housing and Urban Development estimates those who got such counseling were 60 percent more likely to keep their homes last year than those who got no such counseling.

Despite such programs, however, a growing number of Chattanooga homeowners are still losing their houses to foreclosures. With economic activity and home values down, the number of property foreclosures in Hamilton County has nearly tripled in the past decade, including a 14.6 percent jump last year.

During 2009, nearly four houses a day were lost to foreclosures in Hamilton County, according to the Hamilton County Register of Deeds.

TROUBLING TRENDS

Although the economy appears to have bottomed out, the number of Chattanooga properties getting foreclosure notices in early 2010 is still well above yearago levels, according to data from First American Core-Logic.

In January, 1.67 percent of all mortgage loans in Chattanooga were in the foreclosure process and 7.21 percent of all home loans in Chattanooga were 90 days or more delinquent, First American Core-Logic reported last week.

Despite the increase, however, Chattanooga's foreclosure rate was only about half the U.S. rate.

"There are a lot of homeowners who have fallen behind in their mortgage payments because of job cutbacks or losses or unexpected medical bills," said Jeremy Fitzsimmons, a foreclosure specialist at CNE's Homeownership Center. "The most important thing you can do when you get behind is to contact your loan servicer or reach out to agencies like ours for help."

Ted Fellman, executive director for the Tennessee Housing Development Agency, said many lenders initially held off last year on property foreclosures. But with those moratoriums over, foreclosures are likely to rise even higher in 2010.

Across Tennessee, 3,911 homes entered foreclosure in January, up 6.7 percent from the same period a year earlier, according to THDA.

"I don't think we'll see a dramatic increase this year, but I'm afraid we will end up with more foreclosures in 2010," said Mr. Fellman, whose agency has allocated more than $3 million for foreclosure prevention programs across the state over the past two years. "The economy is so rough right now, it's hard to predict. But we do know that when people come forth early and try to work with their lenders and get some credit counseling, they are more apt to be able to hang on to their home."

The National Association of Realtors reports that the median home price in Chattanooga has dropped by $8,300, or 6.1 percent, over the past two years. The decline in home values has left some homeowners owing more on their mortgage than their homes are worth and made it more difficult for homeowners to refinance their houses.

RELIEF EFFORTS

The federal Home Affordable Refinance Program, or HARP, provides some refinancing options for borrowers, usually with lower rates and monthly payments than existing loans. Counselors also are able to negotiate repayment terms with lenders eager to recover most, if not all, of their unpaid loans.

"There are a lot of costs for the lender to go through a foreclosure so they want to avoid that route, if possible," Mr. Johnson said. "We need to let more people know that foreclosure intervention help is available and the sooner you ask for help the better."

But counselors say it's never too late to ask for assistance.

Tangie Schwartz, a 42-year-old Chattanooga homeowner, was within a week of losing her house when she asked CNE for help. She lost her job last August and, after initially getting forbearance to give her time for retraining, she received her first foreclosure notice on Christmas Eve.

"I completed my training to be a certified medical assistant last fall, but I was a basket case because I didn't want to lose my home," the single mother said. "I went to CNE at the last minute to see what they could do."

Faced with late penalties and foreclosure attorney fees, the lender wanted $7,000 for Ms. Schwartz to save her house. CNE specialists worked with the mortgage holder to add those costs on to the back end of the loan and work out a new repayment plan.

"CNE helped me to keep my house so I can't say enough good things about them," Ms. Schwartz said.

AVOIDING FORECLOSURE

Locate and read your mortgage documents. Confirm your payment requirements.

Read all the documents to confirm your payment requirements. The details of your mortgage payment are found on the note. If you don't understand, talk to your servicer (the company to which you send your mortgage payment) or a certified counselor.

Be aware some loans are "fixed" only for a short time. Adjustable rate mortgages have a low initial interest rate that may be fixed for only two or three years. It can then change as described in the promissory note you signed at the closing of your loan. Can you afford the new payment?

Monthly payments for fixed and adjustable mortgages can also change because of changes in local property taxes and insurance rates. Part of each monthly payment is set aside in an escrow account to pay property taxes and insurance.

More options are available before any payments are missed. Start the conversation with your lender or servicer early.

Source: Tennessee Housing Development Authority

BEWARE OF SCAMS

Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.

Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.

Beware of people who pressure you to sign papers immediately, or who try to convince you that they can "save" your home if you sign or transfer over the deed to your house.

Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.

Never make a mortgage payment to anyone other than your mortgage company without its approval.

Source: U.S. Department of Housing and Urban Development