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WINSTON-SALEM — Paul Ouellette was on vacation in Asheville in November when his boss called with the news: The electronics company where he had worked for the past 17 years was about to close.

“At first I said, 'OK ... things happen; you’ve got to live with it,’” said Ouellette, 62. “By the time I got home from the weekend, I had some concern. I thought, 'And I can do what from here?’”

Among the problems he faced was paying the mortgage on the town house where he had lived for 23 years. The answer, at least for the short term, came during a meeting for plant employees before it closed.

The then-newly formed N.C. Foreclosure Prevention Fund would take over mortgage payments for workers who were laid off through no fault of their own while they looked for new work or retrained for a different career.

“I actually thought I would have been back to work long before now,” said Ouellette, who is hoping to find another job in logistics or train as a short-haul truck driver.

Ouellette is typical of the latest wave of laid-off workers who drove North Carolina’s unemployment rate to 10.4 percent in August. He also faces the biggest question for the federally funded foreclosure effort: Will the economy turn around and workers find new jobs before the mortgage assistance program expires?

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In Guilford County, one in every 627 single-family homes is in some stage of foreclosure, according to RealtyTrac, a firm that tracks foreclosed properties nationwide.

The number reflects a situation less dire than the national average but much more severe than the statewide figure of one in 1,680.

On average, foreclosures cost lenders and homeowners $50,000 between legal costs and lost equity, not to mention battered credit ratings and forcing one-time homeowners to find somewhere else to live.

Home values in neighborhoods with concentrations of foreclosed homes suffer. Foreclosed properties contribute to a backlog of unsold housing, further depressing new home construction — a drag on the wider economy.

As part of an effort to turn back the foreclosure tide, the U.S. Treasury Department began paying for programs in 18 states and the District of Columbia through the “Hardest Hit Fund” in late 2010.

North Carolina’s foreclosure prevention fund has $480 million and will help 20,000 families across the state, according to the N.C. Housing Finance Agency.

As of Sept. 20, the program had made commitments to 2,216 families.

If a homeowner is approved, the program pays the mortgage for up to 24 months in most locations, including Guilford and Forsyth counties, and for 36 months in the hardest hit counties, such as Rockingham.

Homeowners use that time to look for work or train for a new career. If homeowners complete the program and stay in their homes for another 10 years, it can be completely forgiven. If the homeowner sells before then, they will have to repay some or all of the loan at no interest, but only if the home sale realizes enough profit.

“We were ecstatic to see this program come along because there was money attached,” said Kathy Banks, director of counseling for the Consumer Credit Counseling Service of Forsyth County.

Until the foreclosure prevention fund came, she said, nobody had put much money toward the growing problem. Counselors could work with homeowners and their banks to modify loans so payments would be more manageable, but lenders won’t make those deals with homeowners who are out of work, Banks said.

“I cannot fix the fact that you’re out of work,” said Sofia Crisp, director of the Guilford County Homeownership Center.

Crisp’s and Banks’ nonprofits are two of the 40 agencies across the state through which homeowners can apply for the foreclosure prevention funds. But the program can’t help everyone.

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Judith Forlines, 59, a widow, has lived in an old farmhouse in Danbury since 1989.

In February 2010, Sam’s Club laid her off from her job as a market representative. Facing mounting bills and limited prospects for work, Forlines said she’d be “out on the street” if the foreclosure prevention program hadn’t come along.

That said, it wasn’t easy to enroll. She had to scrape together enough money to get current on her payments before she qualified. And she’s still relying on friends and church members to keep up the house.

She’s training for a new job in the hotel industry, but jobs are still hard to come by.

Forlines and Ouellette are part of a third wave of the mortgage and economic crisis that began in the last decade, according to housing counselors and others who track mortgage failures.

Around 2007, as the subprime mortgage crisis began to crest, housing assistance agencies saw mainly borrowers in bad loans with sky-high interest rates and fees. A year or two later, borrowers with adjustable-rate mortgages began to appear.

But in the past year or two, homeowners in traditional 30-year, fixed-rate mortgages began seeking help, Crisp said.

Unlike homeowners who took on more debt than they could afford or who got loans with bad terms, this third wave struggled with the sour economy that resulted from the subprime crisis.

“The issue of unemployment has affected every ZIP code I can think of,” Crisp said.

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So far, 75 people statewide have moved to the final stage of the foreclosure prevention loan and taken over their mortgage payments again.

According to RealtyTrac, North Carolina has seen a drop-off in the number of foreclosures over the past year. It’s unclear how much of that is because of the foreclosure prevention program.

“Our belief is it is making a difference,” said Bob Kucab, executive director of the N.C. Housing Finance Agency. “It is reducing foreclosures. It is avoiding those concentrations of foreclosures in communities where there have been plant closings.”

Other factors, such as a scandal involving robotic signatures on mortgage documents, have slowed foreclosures, said Daren Blomquist, a spokesman for RealtyTrac.

The larger question may be what happens in two or three years when this program runs out of money.

“It’s going to be a little bit tougher road to shake this foreclosure problem because of unemployment and the overall slow economy,” Blomquist said.

Also problematic is a mismatch between those who have lost jobs and where new jobs may be created. That’s why the time the foreclosure prevention program gives workers for retraining is critical, Kucab said.

“This is obviously a program that does help homeowners who are in difficult circumstances, but it is also a very sweet deal for the banks,” said Congressman Brad Miller, a Raleigh Democrat who has been active on housing issues.

He said the federal government has avoided pushing banks to suffer the consequences of the over-valued loans or to suffer the actual losses they could be facing.

Until banks grapple with real losses on mortgages — and until a number of factors in the wider economy help build solid demand for houses — the problem will persist, Miller said.

“(This program) is helping people in some circumstances, but it’s not going to be a fix to the housing problem,” he said.

Nor will it cure the unemployment problem. When borrowers like Forlines and Ouellette reach the end of their eligibility for assistance in the next 15 months, there’s no guarantee they will have jobs that let them graduate successfully from the assistance program.

“We don’t know what will happen down the road,” Kucab said, executive director of the N.C. Housing Finance Agency. “The belief is that employment opportunities will be expanding as the economy recovers.”

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com