While the economy continues torecover, credit unions and counseling agencies have seen firsthandhow some homeowners are still grappling with mortgage payments.

Dave Adams, president/CEO of the Michigan Credit Union League, said there is still a need forassistance.

“Credit union mortgage delinquencies jumped up 53% in the fourthquarter of 2013 after decreasing or holding steady for most of theyear, likely due to economic factors like higher unemployment, theharsh winter weather we experienced and holiday spending,” Adamssaid.

On a positive note, home sales and prices have risen andforeclosures have dropped in many states. Lenders may be tempted toworry less about opening the mail to find a set of keys and a notesaying the borrower has walked away from his or her home.

Even so, hard-hit states like Michigan and Ohio are examples ofcontinuing problems. In 2010, both received money from the federalEmergency Economic Stabilization Act or Troubled Asset ReliefProgram.

In Michigan, the Homeowner Assistance Nonprofit HousingCorporation was created by the Michigan State Housing DevelopmentAuthority to oversee these hardest hit funds.

The four programs bundled under Step Forward Michigan include amortgage subsidy program for unemployed homeowners that providepayment assistance directly to the lender.

There is also a loan rescue program that helps homeowners behindon their mortgage, property taxes or both, a modification plan that canpay delinquent amounts, contribute to the unpaid principal toreduce the negative equity, or both, and a program to helphomeowners with negative equity. If the lender agrees, funds can beapplied to the unpaid balance to reduce the negative equity.

So far, some 72,000 people have registered for help, accordingto Carol Brito, program and business development manager for theHomeownership Division of the Michigan State Housing DevelopmentAuthority in Lansing Charter Township, Mich. The numbers may sparkconcern, although there is a bit of good news, she noted.

“We haven't seen growth in the past year,” Brito said. “But wehave increased our call center staff from four to 14. Communitiesas well as lenders and homeowners benefit because it's helping tomaintain tax revenues.”

When the program started, Brito's office reached out to lendersand other partners through an e-mail that asked them to submit arequest for services and become approved. There are now 350 lenderslisted, including some 90 credit unions, Brito said. If a homeownerasks for help and the lender isn't listed, Step Forward Michiganwill contact the lender and ask if it would like toparticipate.

“It's a relief to homeowners to have something they can applyfor,” Brito said. “There are a lot of billboard, radio andtelevision ads.”

Participating credit unions and other partners such ascondominium homeowners associations and county treasurers candownload a variety of materials including a logo, a web ad, poster,card and copy for newsletters and email.

Counseling is provided in a variety of settings throughseminars, phone conversations and one-on-one meetings. Step ForwardMichigan has a list of approved agencies that can work withhomeowners.

The biggest problem those homeowners face is simply lack ofincome. Although Michigan's unemployment figures have declined,there are still significant numbers of long-term unemployed whoseinsurance may have long run out. There are also situations where anew job, comes with a significant cut in pay. The former income mayhave been adequate to handle the mortgage but the new paycheckisn't enough.

Meanwhile, Adams said Michigan credit unions are financing moremortgages for their members as well as providing more auto, studentand business loans. That fills a void created when banks pulledback on lending.

Brito has some advice for credit unions who want to providemortgage counseling to members.

“Make sure your credit union is signed up with availableprograms,” she urged. “If a member doesn't see you on the list,they may assume they can't get help. Be as proactive as possible.You don't have to put all the stress on your staff. Outsidecounseling is available.”

Patrick Harris, director of legislative affairs at the Ohio Credit Union League, said credit unions in the BuckeyeState are also stepping up to assist homeowners.

“Credit unions and other institutions would rather keep amortgage loan on the books rather than go into a default process,”Harris said. “We have heard from our credit unions that they havereworked mortgages over the past few years as members have run intodifficulty. Of course, they would welcome any outside programs thatare available to their members as well.”

Harris said Ohio's unemployment rate has been hovering prettyconsistently at 7% to 8%. With some counties still in doubledigits, it's likely that some Ohioans are having a difficult timekeeping up with their mortgage payments.

At the same time, the latest figures available show Ohio creditunions originated $784 million in first mortgages during the thirdquarter of 2013, according to league data. That was one of thehighest quarters on record pushing first mortgages on credit unionbalance sheets up 10.6% to a total of $5.1 billion.

“Although nationally the research is saying things are getting alot better and the job market is picking up, we’re still seeing ademand for counseling services,” said Stephanie Casey Pierce,director of homeownership preservation at the Ohio Housing FinanceAgency in Columbus, Ohio. “We’re getting upward of 2,000 calls aweek. Even if unemployment is going down, that doesn't reflect thepeople who have given up looking for a job.”

Pierce said there are also people looking for work who no longerqualify for unemployment benefits and her agency is seeing peoplewho have gone back to work but for less pay. As of the end ofJanuary, the OHFA had provided assistance to 16,560 people with themajority receiving a combination of assistance.

“They may have been in good financial condition at the time theybought their home, but even though they’re back to work they’re nolonger in such good financial shape,” Pierce said. “At the sametime the need is there, funds are shrinking.”

More than 450 lenders are enrolled in the Ohio program,including 62 credit unions, according to Pierce. As in Michigan, ifa homeowner contacts the agency and their lender isn't listed as aparticipant, the OHFA will contact the lender and can walk themthrough the process of enrolling.

The most common counseling venue is one-on-one provided by some100 counselors at more than 30 agencies, Pierce said. There arealso eight telephone counselors and some group sessions. Counselorsfind themselves assessing a variety of concerns.

“It's usually not just one issue,” she noticed. “It's acombination of a number of things that have piled up. Trying tosort through the situation is complicated. Your lifestyle may haveto change because your financial situation is different than itwas. There are people who can simply no longer afford their homesand the best situation for them is to exit their homes.”

Most lenders would agree it's better to work with the homeownersto come up with some sort of solution than to foreclose and putanother vacant property on the market, Pierce suggested.

“Another key point is that homeowners may not understand all thejargon. People in that situation are highly stressed so it's evenmore difficult to grasp what may be a foreign concept to them. Theymay struggle with producing the documentation they need. We’retrying to simplify the process through our program and I think somelenders have tried to simplify their documentation requirements aswell.”

Adams at the Michigan league applauded financial reliefefforts.

“Credit unions are working hard to help their members staycurrent on their loans and stay in their homes.”