Foreclosure Properties Prevention Taking Effect in Arizona

Arizona’s foreclosure properties rate ranked the second highest in the country for February 2009. Over 96,000 properties in the state were either in some kind of foreclosure proceedings or owned by banks.

Data from RealtyTrac, a foreclosure listing service firm, showed that 75,000 of foreclosure properties were in Phoenix and Maricopa County. Additionally, 7,100 foreclosure properties were located in Pima County and Tucson.

The overall picture of Arizona foreclosures may seem grim but homeowners are starting to see a light at the end of the tunnel of foreclosure properties brought about by the $75 billion foreclosure prevention program which was announced in February.

As of March 2009, mortgage brokers and housing counselors noted that lenders started to adjust interest rates and loan principals to make them affordable to distressed homeowners.

And also last month, the number of foreclosure properties started to decline in metro Phoenix area. And together with the decline, over 3,000 pending foreclosure activities were canceled.

When President Barack Obama announced his Homeowner Affordability and Stability Plan in February, lenders were slow to follow the foreclosure properties prevention program’s guidelines for either loan modification or refinancing.

Community Housing Resources of Arizona director Joann Hauger said that when distressed borrowers heard about the program, they called their lenders to ask if they were qualified. She said that most lenders were unprepared about the onslaught of questions that they were unable to help homeowners.

Hauger noted that after the initial confusion, lenders started to catch up and modified loans.

Under the loan modification program, distressed homeowners who are facing the threat of foreclosures because their incomes were reduced are eligible to have their loans modified. The modification should be that the monthly mortgage payment is not over 31 percent of the distressed homeowner’s income.

To encourage lenders to modify loans, the Obama Administration is offering incentives of up to $2,000 for each loan they adjust to prevent foreclosure properties.

The modification program also expands the terms of mortgage loans and lowers interest rates and principals. In refinancing, only interest rates are lowered.

According to industry experts, lenders find it difficult to do loan modifications all together because the adjustments are based on every homeowner’s situation. However, loan modifications have started to get a foothold as some lenders and homeowners are finally negotiating.

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• Obama Cites Government Foreclosures Campaign
• Foreclosed Home Market Stabilizing in California’s Monterey