Erin, a mortgage counselor at a nonprofit organization, experiences the economic crisis up-close and personal every day. For the past six years, she’s helped people behind on their mortgages fight to stay in their homes — or at least held their hand through the foreclosure process. Now, as the need for services is spiking, Erin’s agency is losing funding and she could face a layoff herself.

Erin is 37 with a 21/2 year old daughter. Her husband does administrative work for an investment firm — not the best employer for job security these days. Together they make a decent middle-class income.

During the housing boom, “anyone with a pulse,” in Erin’s words, could get a mortgage. And many people jumped at their one shot at the American dream of home ownership. Too many of those people reached too far and have now lost everything they invested.

Most of the people Erin counsels live in Snohomish, King or Pierce counties. Things are especially bad in Pierce County, where according to RealtyTrac.com, September foreclosure filings represented one of every 580 housing units. For Snohomish County the rate was about half that, and for King about one-third. Not only is the foreclosure rate lowest in King County, but houses there are still holding most of their value. In Snohomish and Pierce counties, more and more families find themselves with “upside down” mortgages, Erin reports, owing more than the house is worth. With next to nothing moving on the real estate market, families don’t have the option of selling.

Erin always assumed she’d own a home with a yard by this point in her life, but she had talked to too many families who stretched themselves a bit too far, then saw everything fall apart when an illness or disability, relationship break-up or job loss slashed their income. With childcare costing $1,000 a month and all of their combined income just going to pay the bills each month, Erin didn’t want to take the risk. So she and her husband still rent.

Out of all the people who call the mortgage hotline Erin staffs, her agency historically has only been able to help 17 percent actually renegotiate terms and stay in their homes. For the rest, that’s impossible because changed circumstances left them with too little income.

The good news is that lenders are now forced to be more flexible. People who still have income but have fallen a few months behind or whose adjustable mortgage rates shot up beyond their ability to pay have been able to renegotiate terms. For example, Erin recently helped a Lynnwood man with a sub-prime mortgage lower his interest rate from 9 percent to 5 percent for the next five years.

The number of calls from Snohomish County alone has more than doubled in the past year, but the public dollars that fund Erin’s program are dwindling rapidly. Federal contributions from the Department of Housing and Urban Development in 2008 were less than one third the 2005 level. King County’s projected budget includes a two-thirds reduction in funding for Erin’s program. She’s not sure how much longer she’ll have a job.

Erin’s story epitomizes the economic conundrum we’re collectively facing. Working families were already struggling, even in the midst of the so-called boom. Now with job losses rising and home values falling, more families are forced to seek assistance from nonprofits or government agencies. But nonprofits and state and local governments (with the notable exceptions of Everett and Marysville) are seeing their own revenues falling, forcing them to lay off staff and cut services.

One of the top priorities of the lame duck Congress should be to send financial aid to state and local governments. We can’t wait until President-elect Obama takes office in January for federal assistance. Direct aid to local governments will have the multiple benefits of saving family-wage jobs, allowing those workers to continue investing in the local economy, and supporting the services that families need now more than ever.

Saving “Main Street” means saving jobs like Erin’s. And saving jobs like Erin’s means helping people save their homes.

Marilyn Watkins, policy director of the Economic Opportunity Instititue, writes every other Wednesday. Her e-mail address is marilyn@eoionline.org.