Arizona Home Loan Foreclosures Soaring

The fallout from the country’s real estate slump continues to hit hard in Arizona and across the nation as more homeowners and lenders turn to foreclosure to solve their financial woes.

Data released Monday show that foreclosure filings on Arizona mortgages jumped during the first half of 2007, compared with the same period a year ago, meaning that an increasing number of residents have been unable to keep up with home loan payments.

The depressing home mortgage news, while not unexpected, is the latest indication that the Arizona housing market has not yet stabilized.

Experts say it will likely take time before things get better.

“By any calculation, things are going to look bad compared to 2004 and 2005,” local economist Elliott Pollack said.

“There will be a transition period over the next couple of years as those people who took home loans that maybe they shouldn’t have taken have to deal with the issue.”

Numbers released Monday by RealtyTrac show that foreclosure-related filings in Arizona increased by 128 percent in the first half of 2007, over the same period a year ago.

In Maricopa County, for example, there were 19,394 properties in some stage of foreclosure in the first half of the year, up from 7,671 during the year-ago period, the company said.

Nationally, the increase in filings was 55 percent, with other Sun Belt states like California and Florida seeing the biggest jumps.

In total, RealtyTrac has estimated that one of every 92 homes in Arizona is in some stage of foreclosure, meaning the situation is likely affecting both speculators and average homeowners.

Data from Glendale-based Information Market are different but reflect the same upward trend. That firm shows that 2,952 homes were foreclosed on in Maricopa County from January through June, up from 208 during 2006.

The two firms’ numbers differ because RealtyTrac includes properties in various stages of foreclosures, including those in which the borrower has defaulted but is working to get the Arizona mortgage out of delinquency, and the loans in which the property has been repossessed.

In some instances, that means the same property is counted twice.

By comparison, the data from Information Market reflect only those properties in which the mortgage lender actually foreclosed upon the home.

Regardless of which figure are used, industry analysts say the calculations signal the same growing problem: Foreclosures are on the rise.

“They are at an all-time high, but it’s also following a period of very high sales back in 2005,” said Tom Ruff, a principal with Information Market. “I just look at it as a market correction, myself.”

Many experts say the increase in foreclosures was not unexpected.

During the heyday of the 2004-2005 housing market boom, people who normally wouldn’t have purchased a home were able to do so, thanks to extraordinarily low mortgage interest rates and specialty financing like adjustable rate and subprime (bad credit home loan) products.

Those factors have come back to haunt borrowers.

Many are facing higher payments or balloon payments as part of their financing terms, and have been unable to qualify for mortgage refinancing or sell because of the slumping housing market.

The result? Poor credit scores for overextended homeowners and depressed property values in neighborhoods with large pockets of foreclosed homes.

SOURCE: Arizona Republic