A state agency in Arizona, originally founded to help homeowners resist foreclosure, has turned instead to helping people sell their homes at reduced prices through short sales. Insiders claim that this turn is due chiefly to a lack of funding and resources, which has forced them to find other means of assisting struggling homeowners, besides foreclosure prevention.
Representatives from the Arizona Department of Housing have called the entire effort a failure. They now actually name short sales as the most effective tool for aiding homeowners struggling through the current economic crisis.
Lack of Cooperation Led to Program Failure
In its first year, the program, which is managed by the Arizona Department of Housing, only helped three homeowners to reduce the principal amount on their properties and only facilitated the settlement of a second mortgage for a further 11 people. While the program still retains the majority of its $268 million budget allotted for the modification of loans, it is still having difficulty due to a lack of cooperation from lenders.
The greatest issue comes from banks that refuse to modify mortgages in order to reduce the amount owed, either due to a lack of willingness or a lack of ability. Notably, the most significant transgressors are the federally-operated Freddie Mac and Fannie Mae, which own the majority of Arizona mortgages.
Therefore, the short sale has become the program’s fallback plan. While it is not the optimum result, it still helps homeowners to avoid foreclosure by ensuring that homes may be sold quickly and securely.