For more than a year, a state grant meant to provide down-payment assistance for low- and moderate-income first-time homeowners in Flowery Branch has sat nearly unspent.

Meanwhile, the number of people coming in for foreclosure counseling at a Gainesville nonprofit agency has increased dramatically.

Call it a sign of the times in today’s credit-crunched, mortgage meltdown economy.

Only one $3,500 loan for down-payment assistance has been spent from the $189,000 grant that the Georgia Department of Community Affairs awarded Flowery Branch in September 2007 through its Community Home Investment Program, according to Mary Ledbetter, executive director of Home Development Resources Inc. Home Development Resources is a Gainesville nonprofit agency that provides homeowner assistance through government grants.

The unspent money stays in the Department of Community Affairs accounts, Ledbetter said. Her agency has another year to distribute the loans.

Forgivable loans of up to $7,500 for home down payments are available for those who live at 80 percent or below Hall County’s median family income, which for a single person is about $32,000.

But hardly anyone has availed themselves of the loans, meant for first-time homebuyers or those making repairs to their homes.

"I’m not sure the targeted people are hearing about it," Ledbetter said.

Ledbetter said she doesn’t believe the mortgage crisis fallout has directly affected the grant programs yet, "but I anticipate it will, in having fewer first-time home purchasers."

One sure sign that times are bad is the amount of people using the agency’s default counseling program, in which a financial counselor helps mediate between homeowners and mortgage holders. Though Home Development Resources once was seeing about three people a month, it has counseled 99 clients in eight months.

"Our phones are ringing off the hook," said Jane Owens, a financial counselor with Home Development Resources. "The paperwork is stacked up on my desk."

Owens said several clients who lost jobs are learning new skills in order to get back on their feet. In some cases, arrangements between homeowners in default and lenders can be worked out, she said.

"In many cases, they will refinance and extend the length of the loan if they can work out a solution," she said.

Phil Cottone, director of homeownership for the Georgia Department of Community Affairs, said demand for his agency’s down-payment assistance is actually up. But the numbers are high for foreclosure counseling, too.

"We’ve seen over 1,000 people across the state, and it’s just growing," Cottone said. "We get reports from our agencies periodically, and they’re going full blast."

Cottone said a Housing and Urban Development grant of $700,000 pays for much of the free financial counseling. Georgia will look to re-up on the grant next year, as homes continue to go into foreclosure.

"We aren’t stopping this (counseling)," Cottone said. "We’re in the first year of the grant and we’re applying for the second year of the grant. This isn’t going to be over any time soon."

Both Cottone and Owens say people interested in free financial counseling need to sign up for appointments as soon as possible.

"The longer they wait, the further they are in the hole," Cottone said.

And conversely, they say first-time homeowners should avail themselves of prepurchase counseling. Those who do are much less likely to go into default down the road, Owens said.

And if you’re eligible, the money is there to help get a home, Ledbetter said.

"Now’s a good time to buy," she said.