Here’s a shocker. Arizona has been given millions from the federal government to help distressed homeowners. Guess who won’t play ball? Hint: it’s not the homeowner.
Arizona Republic, Arizona Trying New Ways to Assist Homeowners by Catherine Reagor, full article here:
Officials and housing advocates say mortgage lenders are the reason for the breakdown: Much of the aid was intended to be used to pay off a portion of what a struggling homeowner owed, as long at their lenders agreed to forgive an equal amount.
But large banks and the federal mortgage agencies that back many loans have been slow to respond or have not agreed to loan modifications, despite the federal backing for the program, officials say. Though dozens of applicants qualified for that form of aid, only three had their banks agree to the loan modifications.
“We have done and are doing everything we can to spend this money on homeowners who desperately need it,” said Michael Trailor, director of the Arizona Department of Housing. “Lenders are making promises and commitments they aren’t keeping.”
Read more: http://www.azcentral.com/news/articles/2011/09/30/20110930arizona-trying-new-ways-assist-homeowners.html#ixzz1ZRpNdEu1
In March, Bank of America committed to working with Arizona’s housing agency to finalize thousands of loan modifications, reducing what borrowers owed in exchange for a partial payoff.
The program can reduce a homeowner’s principal by as much as $100,000 if the bank agrees to forgive half. That can translate into a monthly payment reduced by more than $1,000.
The state agency estimates at least 30,000 BofA borrowers in Arizona could be eligible for the aid.
But the lender has yet to complete one of the program’s loan modifications, housing officials said. The bank didn’t return calls to comment. Similar problems have stalled efforts to help borrowers with other banks or with federally backed mortgages.
So far, the program has completed three loan modifications and spent $63,000.
“It’s been more than disappointing working with the major lenders, but we aren’t giving up,” said Reginald Givens, foreclosure assistance administrator for the state agency.
The first loan modification under the state program was done in January with National Bank of Arizona. Kim Hensley, a counselor with Genesis Housing Services, a non-profit housing counseling service, worked with a Phoenix homeowner to obtain an $80,000 principal reduction.
“The Housing Department has worked to create some really good programs, and they are really trying to help people,” she said.
She noted that so far, counselors have found success reducing principal only on loans made by small banks. “I have found to do one of these loan mods, you have to stay away from the big lenders,” she said. “They aren’t interested and are just wasting everyone’s time.”
She has also been able to help homeowners with some of the Housing Department’s other programs funded by the federal money, including assistance in paying off a second mortgage. About $42,000 of the state’s federal money has been spent on second-mortgage assistance.