July 1, 2010 at 10:04 pm Leave a comment

By: Maria Hass

A June 24, 2010, Arizona Republic article explains a new federal program that will help homeowners reduce their principal mortgage. Under this initiative, the government has approved a $125 million mortgage relief fund for homeowners to help them stay in their homes and avoid foreclosure.

This funding is supposed to help an insignificant number of homeowners who will qualify under restrictive guidelines. It is directed to foreclosure hard hit states like Arizona.

Among the terms of the plan:
The state will issue borrowers loans of up to $50,000 to apply to their mortgage balances. Their lenders will be expected to match or exceed that amount. Homeowners may pay a portion of the loan unless they DO NOT SELL IN 10 YEARS.
Lenders will be given incentives of up to $5,000 to settle second mortgages for up to 1,500 homeowners.
Up to $12,000 in temporary aid will be provided to as many as 1,000 households that have suffered reduced incomes.
Most important of all — this plan is OPTIONAL. Lenders are NOT REQUIRED TO PARTICIPATE – And many of those big, greedy banks will not do so.
The program, called “Save My Home AZ,” is scheduled to be launched in September 2010. Whether this program will bear fruit will depend on the big banks – Bank of America, Chase, Wells Fargo, and investors like Fannie Mae and Freddie Mac’s willingness to reduce the principal mortgage of homeowners. In the past, ALL government housing relief efforts have FAILED including the HARP (Home Affordable Refinancing Program) and HAMP (Home Affordable Modification Program). The Home Affordable Foreclosure Alternative (HAFA) is in the works and could only help about a quarter of the loans because Fannie Mae and Freddie Mac are not participating in the program. Now, this new program looks destined to FAIL just like the rest. These banks are good at claiming that they are “committed to helping homeowners avoid foreclosure” but they are UNWILLING to reduce the principal mortgages. Until and unless these banks and investors reduce homeowners’ principal mortgages, foreclosures and short sales will continue. A majority of homeowners in Arizona are upside-down. Anyone who bought a house in 2001 or later is at risk of losing equity. A home can be a worthless investment given these conditions, and people are inclined to cut their losses now and rebuild rather than continue to feed a dead horse.

For the complete Arizona Republic article, please go to:

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate. Tags: , , , .

Fannie Mae To Deny Loans to Homeowners Who Walk Away. CITY OF CHANDLER DOES IT AGAIN!

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