SEATTLE – The City of Seattle is offering a helping hand to homeowners facing foreclosure.

The pilot program would offer $5,000 loans to 40 families.

"When a home forecloses on a block, within hours the value of the homes on that block are reduced by $5,000 each," said Mayor Greg Nickels.

The city mirrors a statewide trend.  According to Reality Trak, Washington ranked No. 21 in the nation for the number of foreclosures, rising 28 percent in 2007.  The most filings were in King County.  The fewest were in Snohomish County.

Families like the Becks had to farm out their kids when their lender foreclosed on their home.

"I still don't have a home to call my own. They took my house and I can't get it back," said Rosa Beck back in December.

"When a family faces foreclosure, they don't tend to reach out. They tend to hunker down. They don't answer their phone. They don't open their mail because they're afraid it will be bad news. Devastating news. We need to reach out to those families and help them understand what tools are available to them," said Nickels

The loans carry no interest and would be repaid to the city when the house is sold.  The loans will be combined with homeowner counseling to help them restructure the mortgage.

"What we found is that we really needed to bring people current in order to bring the mortgage lenders to the table," said Adrienne Quinn, Director of the Office of Housing.

Families interested in the loans should contact the city's partners – the Urban League, along with the housing advocacy group Solid Ground.

A federal study by Freddie Mac in 2004 found that stabilization loans combined with counseling reduce foreclosures by 80 percent among all borrowers.