Nov
06

Mortgage relief for AZ jobless available

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The state’s Housing Department is looking to help thousands of Arizona homeowners struggling to pay their mortgages.

The department received $267 million from the federal government to keep people in their houses, and the bulk of that money is still up for grabs, said Reginald Givens, the Housing Department’s foreclosure assistance administrator.

So far, it has doled out a little more than $10 million, Givens said.

The state planned to use the money to pay down the principal for homeowners who are “underwater” on their mortgage, meaning they owe more than their home is worth. But it encountered resistance from lenders that weren’t interested in matching the government contribution with a principal reduction.

Financial institutions are reluctant to lower principals because it could chill future lending, said Brad German, a spokesman for Freddie Mac. A bank isn’t going to jump into writing a $100,000 loan if it fears it’ll only get paid $50,000 if property values drop, he said.

Because of the challenges with principal reduction, the state has broadened the program, called Save Our Home AZ. It now provides assistance to unemployed and – since the beginning of October – under-employed individuals facing foreclosure. That assistance provides up to $50,000 to qualifying homeowners to help them pay up to two years of mortgage payments.

Those who’ve quit their job and can’t find a new one won’t qualify for the help, Givens said.

“It has to be a true hardship, meaning not self-inflicted,” he said.

“I started letting go”

The state’s aim is to help 1,400 unemployed or under-employed homeowners, Givens said.

So far, it has helped 216 homeowners, Givens said. One of them is Victor Del Cid, a 46-year-old Tucson resident. Del Cid, a mason, had his hours cut when housing crashed and construction slowed.

Then his pay was cut.

Then, in December 2009, he was laid off. He burned through his savings to stay current on his mortgage. When he first had his hours and wages cut he struggled to pay his mortgage but his lender, Bank of America, told him he couldn’t get a loan modification because he was current on his payments.

By the time he stopped making payments, he’d lost his job and BofA told him he couldn’t qualify for a modification because he was unemployed. He then received notice he was delinquent on his loan, which had an original balance of $134,000, and his home near South Kolb and East Irvington roads had been scheduled for auction March 18, Pima County Recorder’s Office documents show.

Though he’d fought to keep his home, the reality of losing it began to settle in. “I started letting go, little by little,” Del Cid said.

Through the Pio Decimo Center, a Catholic housing counseling agency, Givens said he learned he might qualify for assistance through Save Our Home AZ. With that help, he was able to get current on his payments and the auction was canceled.

“They took a ton of weight off my shoulders,” Givens said.

Have application ready

Another homeowner, Crystal Basile, 37, said when she first heard about the program she thought it sounded too good to be true.

As of yet, for Basile, her instinct has proven right.

Basile, who lives in Oro Valley, owned a tile installation company with her husband, Mark. They ran the company for almost a decade, but with the slowdown in construction, they were forced to shut down the business.

The Basiles, who have two young daughters, also struggled with medical issues.

“We were still paying our mortgage … but we knew foreclosure was inevitable,” Basile said.

The couple worked with a housing counselor, who told them they might qualify for assistance through Save Our Home AZ.

But after not hearing back from the counselor for weeks, they learned they couldn’t yet apply for assistance because they’d been working toward a temporary loan modification through the federal Home Affordable Modification Program.

Givens, of the Arizona Housing Department, confirmed that those in the temporary modification program cannot qualify for the assistance. But homeowners who are denied a permanent modification can qualify, so it’s good to have that application ready for submittal, he said. Also, homeowners approved for a modification who experience an additional hardship might still qualify for the program, he said.

So far, most homeowners who’ve applied for assistance through the unemployment program have received it, Givens said. In the cases where the applicant is denied, it’s because another member of the household has a job or the homeowner refinanced the home to get a cash loan.

Goal: Pay down principals

Save Our Homes AZ hasn’t found an effective way to pay down cash-strapped homeowners’ principal balances to levels that better reflect property values, but Givens said they’re working toward that goal.

The program plans to help 4,000 homeowners with principal reduction, he said. So far it’s only been able to do so for a handful of homeowners.

For its part, Freddie Mac will accept money to pay down principals as long as it’s not required to match the payment, said German, the lender’s spokesman. The principal payment also shouldn’t come with the requirement that Freddie Mac approve a modification it otherwise wouldn’t, he said.

Lenders are trying to accept principal reduction, but in a way that won’t continue to drive down property values, German said.

Do you qualify?

To find out if you’re eligible for the Save Our Home AZ program, go to www.savemyhomeaz.gov and complete the self assessment. After filling out the application, you will be contacted by a housing counselor approved by the U.S. Department of Housing and Urban Development.

For more information – or if you don’t have access to the Internet – contact the Arizona Foreclosure Help Line at 877-448-1211.

Available programs include:

• Principal reduction up to $50,000 for homeowners who owe more than their home is worth.

• Mortgage payment assistance up to $50,000 for those who are unemployed and under-employed.

• Short-sale assistance to help pay closing costs if a qualified homeowner wants to sell rather than stay in a house.

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Comments

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