With foreclosure rates in the Valley of the Sun reaching an all time high in March of this year, some critics are blaming lenders and banks for dragging their feet, and bogging struggling homeowners down with towers of paperwork. Since March 31st of this year there have only been 10,533 loan modifications completed in the Phoenix Metro area. This may seem like a measurable number, but when you compare it to the estimated 60,000 homes that have been lost to foreclosure it is not enough.

According to the U.S. Treasury Department, which is in charge of the HAMP program, lenders and bankers are to blame for the minimalistic numbers in modified loans. Only 10% of loans that qualify for modification nation-wide have been processed. That same percent is present in the Phoenix Metro area.

The federal government has recognized that Arizona and a few other states who where hardest hit need additional funding to fill the gaps while they seek permanent mortgage relief. There are currently three staging areas when it comes to home loan modification. There is temporary loan modification, trial modification, and the final stage of permanent modification. Federal guidelines state that once a borrower enters into the trial modification stage they have to make modified lower payments for 3 months. After that trial period a borrower is supposed to be place into a permanent modified loan status. The problem is that with many of these homeowners, they get stuck into a temporary modification state and wind up being trapped there in limbo waiting to be accepted by the bank into the actual trail stage.

Even though a borrower may be on the way to permanent loan modification there are still many instances where the home is sold right out from underneath the struggling borrower. The federal government is considering tightening some of these loopholes so that this practice is the exception and not the prevalent rule. The government will be administering an additional $1.5 billion to Arizona and other states. These funds will be used to create local programs that help borrowers during the temporary loan modification process.

Source: The Arizona Republic – 05-16-10 -”Home-loan relief still is faltering” – Catherine Reagor

See also:

Arizona New Home Construction Improves
Solar Retailers in Arizona

The first is a list of organizations that offer grants that are both tax free and don’t have to be paid back for qualified people. These are state grants that come from a variety of offices across the state, and they can help you with both closing costs and down payments. There are forms which you can obtain from the Arizona Department of Housing website that will help get you on your way, as well as many places you can find online that will help you fill out the request forms. Here’s a listing of some of the organizations you can apply to:

Arizona Southwest Housing Foundation Down Payment Gift Program (GIFT) (480) 926-7206
Flagstaff Affordable Housing Coalition Inc Community Homebuyer Assistance Program (CHAP) (520) 214-7456
Glendale Los Vecinos Housing Development, Inc. First Time Homebuyer Program (FTHB) (623) 435-2255
Multi Counties Community Services of Arizona Rural Home Purchase Assistance Program (RHAP) (602) 280-1365
Northern Arizona Council of Government, Rural Home Purchase Assistance Program (RHAP) (928) 773-1135
Phoenix Community Housing Resources of Arizona (CHRA) Homeownership Incentive Program (HIP) (602) 631-9780
Phoenix Neighborhood Housing Services of Phoenix Down Payment Closing Cost Assistance Program (DPCC) (602) 258-1659
Phoenix Valley-CoRP Downpayment Assistance Program (DAP) (602) 247-4764
Pima County Family Housing Resource Wells Homebuyer Assistance Gift (GIFT) (520) 318-0993
Pima County Pima Gold Home Program (520) 882-0018
San Luis Comite de Bien Estar Inc Forgivable Loan Gap Financing Program (FLGF) (928) 627-8559
Southern Arizona Government Organization, Rural Home Purchase Assistance Program (RHAP) (520) 432-5301
Tempe Community Assisted Mortgage Program (480) 350-8961
Tucson TMM Family Services Inc. Federal Home Loan Bank of San Francisco Affordable Housing Program Homeownership Opportunities II (AHP) (520) 322-9557
Tucson TMM Family Services Inc. First Time Home Buyer Grant Program (GRANT) (520) 322-9557
Yuma County Housing America Corporation Rural Home Purchase Assistance Program (RHAP) (928) 627-4221

Next there’s The Arizona Housing Finance Authority, which offers two bond programs and a mortgage credit certificate to assist prospective home buyers in Arizona. This can help you get financing for your home, most of it tax free. The Authority can also help those who are trying to rent apartments with down payments as well.

Finally, there is a program coming from a company called The Lending Company, which offers ways for new and low income home owners to get a home by putting only 1% of the cost of the home as a down payment. They’re also able to offer qualified candidates a gift for as much as 2.5% of the down payments of a home. This one has a minimum FICO credit score of 620 required to qualify for any assistance.

See also:

Home Buyer Tax Credit Extension
Buying New vs. Existing Homes

With a good number of bad loans dropping off of the books, banks stepping up their efforts to help keep borrowers in their homes and unemployment figures stabilizing throughout most of the country, the mortgage crisis is improving almost everywhere.

As proof, the nation has seen the mortgage delinquency rate decrease for a period of 3 straight months. That usually indicates a trend rather than just some minor improvement in the market.

Currently, the forbearing outlook on the job situation and a weak housing market for Arizona is going to continue to put a large strain on homeowners just trying to get by. TransUnion predicts that Arizona is going to be one of 5 states that they expect to have a rising number of homeowners that are going to be 60 or more days delinquent on their mortgage payments.

TransUnion predicts that delinquencies on mortgages will climb from the posted third quarter number of 10.37 percent to 12.09 percent sometime in 2010. According to third quarter figures released by TransUnion, Arizona is ranked third highest in both 60-days or more mortgage delinquencies and 90-days or more credit card delinquencies. Nevada is ranked highest in both of these categories with 14.53 percent 60-days or more mortgage delinquencies and 1.98 percent on 90-days or more credit card delinquencies. Florida is ranked second with 13.34 percent for mortgage delinquencies and 1.47 percent for credit card delinquencies.

TransUnion expects mortgage delinquencies to drop 3 percent in 2010 to break 3 straight years of rising delinquent mortgage figures.

TransUnion predicts that at the end of 2010, Arizona will be ranked behind Nevada and Florida for the highest rate of mortgage and credit card delinquencies.

TransUnion 3rd Quarter Postings

Mortgage Delinquencies (60-days or more)
1. NV 14.53%
2. FL 13.34%
3. AZ 10.37%
4. CA 10.18%
5. GA 7.06%

U.S. Average 6.25%

Credit Card Delinquencies (90-days or more)
1. NV 1.98%
2. Florida 1.47%
3. AZ 1.35%
4. CA 1.33%
5. GA, MS – 1.23%

U.S. average 1.10%

See More:

Arizona Debt Delinquencies

U.S. Mortgage Delinquencies

*     This isn’t like cramming for a test.  Purchasing a home is one of the biggest investments most of us will make and it deserves the appropriate amount of consideration.  You need to check out neighborhoods, schools, floor plans and more.  Do not assume you’ll find the perfect match if you start looking in March.  You might make the deadline for getting a home under contract, but will it be the right home for you and your family?

*     The 2009 tax credit worked.  It brought out lots of buyers in our metro Phoenix market.  That credit was set to expire on November 30, 2009 and buyers were trying like crazy to get something in escrow by mid to end of October in order to close by the deadline.  That rush of buyers caused bidding wars on some homes.  We saw bids more than $8,000 over asking price from people who wanted to take advantage of the $8,000 tax credit!  Tie something up early, avoid the rush!

*     The new tax credit has an additional feature, it allows up to a $6,500 tax credit for people who are NOT FIRST TIME HOME BUYERS.  That means increased competition – more people in the market for the same homes.  You might think that will also increase the supply if those move-up buyers are listing their homes for sale, but the truth is, they don’t have to, they can rent out their existing home, purchase another home and still receive the tax credit.

*     Escrows don’t always close on time.  Lenders and title companies were very concerned about how many closings could be jammed into the last few days of November to make the original deadline.  If too many people are trying to close escrow on the same day, some will not make it.  If the tax credit had not been extended, the closings that roll over to December 1^st would not be eligible for the tax credit – a huge disappointment to buyers counting on that money.  Give yourself buffer time, find a home early and get the closing scheduled for well before the deadline to allow for any potential delays.

 *     Some experts predict that interest rates will begin to increase sometime in the first 6 moths of 2010.  Interest rates are incredibly low now, if rates creep up your buying power decreases, for example a purchase price of $150,000 with an FHA loan for 30 years at 5.25% interest rate equals a principle & interest payment of approximately $828.  But if the interest rate increases even by 1% to 6.25% your P & I payment increases to approximately $923 – almost a $100.00 increase (* Please note, these payments do not include taxes and insurance which should each be quoted on an individual basis – please contact a mortgage broker for exact figures.  If you don’t have one, call me for a recommendation).

*     Be realistic about short sales.   If you are considering purchasing a short sale, you need to be aware that it can take many months to get bank approval.  You are at the mercy of the bank and you could miss the tax credit deadline altogether.  The longer you wait the more you should consider traditional sales or bank owned properties.

If these reasons aren’t enough to motivate you to start looking now, call me.  We can share more of our experiences with you!   The National Association of Home Builders has a great webpage with more details on these programs - Click Here to View and be sure to check out the details of the tax credit and the income limitations.

Anyone who may be interested in home ownership in the next few years should be taking a hard look at this now.  Prices and interest rates are historically low and a dollar for dollar tax credit is the icing on the cake.  This is a “Trifecta” of home buying advantages – don’t miss out.  “He who refuses to embrace a unique opportunity loses the prize as surely as if he had failed.”  – William James.

Call  me anytime – we are always happy to help!

Teresa Dempsey – Associate Broker, Keller Williams Legacy One Realty

480-634-7975 – Direct