The Arizona Republic reports that an increase in homeowners walking away from their mortgages is causing the Phoenix housing market to recover more slowly and will eventually lead to future homeowners finding it difficult to obtain a loan.

Five banking executives discuss:

• causes behind the housing crash
• the prospect of recovery
• walking away from underwater mortgages
• and buying a house as a long term vs. short term investment

Walking away from mortgages is one of the biggest issues between homebuyers and mortgage lenders.

Thousands of Phoenix-area homeowners owe more than their houses are worth and don’t want to wait as long as five to 10 years for home values to rebound. Others have unsuccessfully tried to work out loan modifications with their lender. Some believe it’s a smart business decision to stop paying on an asset they can’t sell for its current value. So a growing number of homeowners are considering walking away or have already done so, committing what has become known as a “strategic default.”

Not only is walking away a default on the mortgage contract, but it has a domino effect for anyone else buying a home. When many homeowners default on their loans, it creates a greater risk factor and the market must adjust to compensate for that added risk.

“Strategic defaulters hurt us all. We simply have to be able to trust that when a borrower signs their name, they will honor their commitment,” said Candace Wiest, president of Avondale-based West Valley National Bank. “Massive strategic defaults will result in less credit availability. Everyone loses in that scenario.”

The previous housing boom in the Phoenix Market operated by homebuyers banking on consistently rising home values who bought homes for short term profits. In order to maintain market stability, experts say the opposite must occur–homeowners looking for long term investments–if the slowly emerging housing market is to fully recover successfully.

Homeowners Strategic Defaults Threaten Phoenix Housing Market is a post from: mesa-az-mortgage.com

As the state of Arizona continues to attempt to remedy the mortgage and foreclosure crisis at hand, many lenders continue to ignore that fact that the economy is troubled.  According to the Arizona Republic, commercial real estate brokers use the phrase, “extend and pretend,”as a response to their bad lending and million dollar debts.

Currently, most lender in the Phoenix area are continuing to let their clients keep their properties by extending the terms of their loans, ultimately, letting them get deeper in debt and postponing an eventual foreclosure.  Because of this, many property owners, both commercial and personal, are ultimately pouring more money into a property that they are likely to eventually loose.

As published in the Arizona Republic:

In areas where office vacancies exceed 30 percent, such as the Scottsdale Airpark, Phoenix-Mesa Gateway Airport and Glendale’s sports and entertainment district, it’s unlikely that the current owners of such properties will be able to hang on, according to local real-estate brokers, investors, contractors and analysts.

The experts said about 25 percent of outstanding commercial real-estate loans are in good shape, and another 25 percent are doomed to foreclosure. The remaining 50 percent could go either way. It’s the fate of those loans that concern analysts.

The fallout from widespread foreclosures could cause more bank failures and discourage out-of-state employers from coming to Arizona, experts said. The credit crunch on small businesses would worsen, and fewer companies would have the capital to grow.

If these lenders continue to ignore the fact that Arizona is in a foreclosure crisis, the states real estate market will continue to struggle in its attempts to recover. Unfortunately, these lenders have yet to realize the damage they are doing to the economy and the property owners they are lending to.

If you are currently struggling with your mortgage, there are many options available to you. Recently, the government has implemented a new foreclosure prevention plan to help distressed property owners. If you would like to research more about this plan, more information is available to you here.

Are Lenders Ignoring the Foreclosure Crisis? is a post from: mesa-az-mortgage.com

As published in the Arizona Republic, home prices in the United Stated have continued to fall throughout the country during the first part of 2010. The average housing price has decreased 3.1 percent from last year at this time.

The decreasing home prices throughout the valley can be attributed to the steady stream of foreclosures being put on the market. These foreclosure increase the supply of homes available, and at the same time, they are priced much lower than an average sale. These two factors can drastically decrease the average price of housing.

Economist predict that the excess of housing on the market will continue to decrease housing prices. The prices will continue to fall until the foreclosure crisis is solved and the housing market begins to recover. According to the Arizona Republic:

The inventory of homes in foreclosure rose to a record 4.63 percent in the 2010s first quarter from 4.58 percent in the prior period, the Mortgage Bankers Association said in a report last week. The combined share of foreclosures and mortgage delinquencies was 14 percent, or about one in every seven U.S. mortgages.

Some participants saw the possibility of elevated foreclosures adding to the already very large inventory of vacant homes as posing a downside risk to home prices, thereby limiting the extent of the pickup in residential investment, according to the minutes.

Today’s FHFA report measures changes in real estate values using repeat data on individual properties. It doesn’t include a dollar value for homes. The U.S. median home price was $166,100 in the first quarter, according to NAR.

Although the fact that the average price of a home in Mesa is still decreasing indicates that our economy still has a long way to go before recovery, there is good news! With housing prices decreasing and mortgage interest rates continuing to fall, now is a great time to purchase your first home!

If you would like more information on the current interest rates available, or homes available in the Mesa area, you can contact a mortgage expert in your area. Also, you can research homes currently on the market here.

Home Prices Decrease in Mesa is a post from: mesa-az-mortgage.com

Currently, Arizona is ranked second in the nation for foreclosure rates. Foreclosures  happening around the state are primarily a result of job reductions, and loss of home values throughout the past three years.

According to a recent story in the Arizona Republic, because the foreclosure problem in Arizona is so prevalent, the Arizona Department of Housing has created a $125 million dollar plan to decrease foreclosures within the state.  This plan was due to be submitted to the  United States National Treasury for review this week. There are 5 other states, along with Arizona, which be be rewarded funds from a 1.5 billion dollar national foreclosure prevention fund.

As stated in the Arizona Republic,The plan created by, the state of Arizona has asked for money to help permanently modify responsible homeowners mortgages, assist homeowners with low income due to to job loss, and allow state aid due to hardships. The Arizona Republic states the following:

Permanent Modifications. Applicants must demonstrate personal responsibility. Their inability to pay mortgage is a result of an approved hardship. Must be 60 days delinquent. Modification would consider principal reduction, rate decrease, and/or term extension to achieve a monthly payment that does not exceed 31 percent of the homeowner’s monthly income.

Modest and reduced incomes. Resources would only be utilized to assist households with incomes at or below 120 percent of the area median income. Additionally, households would have to demonstrate that their incomes had been reduced since the home was last financed

Hardships. Applicant must demonstrate an approvable hardship. Those include; reduced income due to underemployment, medical condition, divorce or death.
All program options researched and considered

The United States Treasury is schedule to review this preliminary plan early next week . They will then provide the state with feedback and suggested modifications.  The plan will not be finalized until late summer, at which time funds will be distributed.

If this plan is approved, resources for homeowners will be made available throughout the state and Arizona will be one step closer to fully recovering from its current foreclosure crisis.

If you live in Arizona and are having trouble making your mortgage payments, foreclosure is not your only option. There are loan modification programs and short sale programs available.

Arizona’s Plan to Decrease Foreclosures is a post from: mesa-az-mortgage.com

According to the Charlotte Observer, Bank of America has a plan in the works to allow up to nine months reprieve from mortgage payments for their unemployed customers. The program is being drawn up as a result of the Home Affordable Modification Program (HAMP) efforts not providing the amount of relief initially anticipated.

The $75 billion federal mortgage-aid program, announced in February 2009, has struggled to fulfill President Barack Obama’s estimate of helping millions. Through March, only 230,000 families had received final mortgage modifications under the Home Affordable Modification Program, called HAMP.

Here’s how the program would work:

• Home makes no house payments–zero–for 9 consecutive months
• If work isn’t found at the end of 9 months, the homeowner must agree to sign over their house to Bank of America
• Homeowners would be given at least $2000 to assist with moving expenses

High unemployment has contributed to the many delinquent loans and foreclosures on the market. Some experts think Bank of America has a great idea because:

• It provides families with faster relief
• It allows them the ability to save money
• It provides a workable time table for decision-making and planning
• and Bank of America won’t be spending millions in collection/foreclosure expenses

Additionally, the money saved allows homeowners to stay current on car payments. It’s harder to find and keep work without a car. It may also allow homeowners the ability to pay for childcare while they are out on interviews or looking for work.

The bank has 1.44 million customers who are 60 days or more past due, nearly 14 percent of the 10.4 million mortgages it services. But it hasn’t broken out how many of those might be helped by the proposed plan. Many details, such as eligibility and the application process, also haven’t been finalized because the bank can’t go ahead without regulators’ approval.

Most lenders provide forbearances which provide only a three-month reprieve. Bank of America would provide the first of this streamlined, wide scale kind.

Bank of America Working on New Mortgage Relief Program is a post from: mesa-az-mortgage.com