Arizona seeking federal foreclosure-help funds

by Catherine Reagor The Arizona Republic - May. 5, 2010 12:00 AM

The number of Phoenix-area homeowners losing houses to foreclosure fell 20 percent in April, a drop that could signal more successful, or at least temporary, loan modifications.

There still are many people facing foreclosure, even though pre-foreclosures dropped as well. Last month, lenders started foreclosure proceedings on 7,064 Valley homes, down 12 percent from March. Foreclosures for April hit 4,446.

Arizona's plan to spend $125.1 million in federal foreclosure funds could help as many as 4,350 of the state's struggling homeowners this year. The Arizona Housing Department finalized its plan and sent it to the U.S. Treasury Department a few weeks ago. The state agency has a conference call with federal officials to discuss the plan Thursday. If approved, the money could be available in June.

Here are key parts of Arizona's 25-page proposal for the Help for the Hardest Hit Housing Markets fund. The Save My Home AZ Program has three parts.

• Permanent modifications to help homeowners who are underwater on their mortgages. Applicants must show they can't afford their mortgage because of an approved hardship. Qualifying homeowners can receive $50,000 in federal funding to pay down their principal, but it must be matched by their lenders. About 1,848 Arizona households are expected to be helped by this program, which is being funded with $92.4 million in federal money.

• Second-mortgage settlements to help homeowners who need those loans to go away so they can receive a loan modification on their main, or primary, mortgage. An additional 1,500 households could be helped by this $7.5 million program.

• Temporary modifications/mortgage-payment relief that will prepay some mortgages for as long as 24 months to help underemployed and unemployed homeowners. As many as 1,000 households can receive a share of the $12 million funding for this program.

To qualify, homeowners must show that foreclosure is imminent, they're living in modest primary residences, their incomes are at or below 120 percent of the area's median, they've taken responsibility for their past financial decisions, and a hardship due to unemployment, a medical condition, divorce or death.

The remaining 11 percent of the federal funding is slated to be spent on support and administrative costs, which include funding for state non-profits offering housing counseling and the Arizona Foreclosure Prevention Hotline 877-448-1211.

After a federal plan is approved, homeowners will be able to apply for aid at www.savemyhomeaz.gov.


Arizona seeking federal foreclosure-help funds