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Loading ...The increasing number of foreclosed homes is a major contributor on the current economic turmoil in Arizona and the rest of the country, according to state Attorney General Terry Goddard.
In his open letter, Goddard said that it is difficult to determine the extent of the Arizona foreclosures problem. He added that the wave of foreclosures has spread to the rest of the country.
According to the attorney general, an estimated 4.6 million homeowners or one in every 10 households in the country, are delinquent in their mortgage payments or in some form of foreclosure proceedings. He also pointed out that a significant number of Americans have filed for bankruptcy.
Goddard noted that Arizona foreclosure crisis is one of the biggest in the country.
Meanwhile, Goddard cited the ineffectiveness of mortgage servicers’ voluntary efforts to help homeowners who are at risk of losing their properties. He said that securitizing of mortgages has complicated efforts to help struggling homeowners. He added that this complication has made negotiated modifications difficult to pursue.
He believes that what is needed to address the foreclosure crisis is a home loan modification program that will be fair to both mortgage holders and homeowners.
He calls on lawmakers to overhaul the U.S. Bankruptcy Code. The law will permit federal judges to improve the terms of mortgage loans provided to homeowners.
Goddard said that revising the law would give authority to judges to reduce the loan principal to align it with the current market value of a property, reduce the interest rate of the mortgage loan or extend the terms of the mortgage loan.
Furthermore, Goddard believes that in loan modifications, lenders would stand to get lower payments, but more than the amount they would likely receive if a property was foreclosed and remain vacant for a long time.
According to Goddard, foreclosure prevention is the only way to stabilize the housing market and help the economy back on its feet.
