The state of Arizona will be receiving over $120 million from the federal government as part of the hardest hit fund. It is expected that thousands of families across the state will be able to receive foreclosure and mortgage help. The funding will be used to pay for permanent mortgage modifications, homeowner advocacy through HUD counselors, pay the mortgage for the unemployed, second home loan settlements, as well as temporary and short term mortgage assistance and grants.
The majority of the funding will go towards reducing loan balances for borrowers who are underwater. In order to receive a principal reduction from the Arizona Department of Housing, the principal on the mortgage needs to exceed 120 percent of present market value of the home. If the borrower qualifies, they can receive a maximum contribution of $50,000 that is to be used for principal reduction and that will be matched by the bank or lender. The amount that is offered to the homeowner will be forgiven over a period of time.
Some of the other components of the Arizona Hardest Hit Fund include another $12 million to help subsidize monthly mortgage payments for unemployed or underemployed borrowers, over $7.5 million will be provided to help extinguish second mortgages on borrowers homes, and $10 million is being provided towards housing counselors so that free foreclosure assistance and advice can be offered.
Arizona will be using over $90 to eliminate and/or reduce the principal mortgage balance of homeowners who are upside down on their home loans. It is anticipated that several thousands homeowners could benefit from this component of the program. The principal reductions will be aimed at people who did not take foolish risks and the program will try to target borrowers who have had just bad luck or timing on their home purchase. For example, if you took out a second mortgage, spent lavishly and have high debt levels, this program more than likely will not benefit you. That being said, Arizona will also be providing several million dollars to help people pay off a second mortgage, if there was a valid reason for the second home loan to have been taken out in the first place..
Another component of the program is to assist thousands of people across the state who have either lost their job, or had a reduction in income from say a job loss or something outside of their control. About $12 million will be provided from the Arizona Hardest Hit Fund to help subsidize or pay for the monthly mortgage payments for unemployed or people who are faced with a financial hardship. Even a significant reduction in work hours may qualify a resident. A borrower may be able to qualify for up to 24 months of assistance to pay their mortgage.
The Arizona Department of Housing has developed a set of criteria and guidelines to help ensure that the agency helps those homeowners who have demonstrated personal responsibility in their home purchase decisions. It is not intended to help those who live and spend money foolishly. Call your bank or lender, or the Arizona Department of Housing (602.771.1000), and ask about applying for the Arizona Hardest Hit Fund.
In order to be eligible for assistance, a homeowner must be facing an imminent foreclosure. All other options and resources must have been pursued by the borrower as well. Also keep in mind that the Arizona Hardest Hit Fund can be used only for loans on a borrowers primary residence. Some of the other criteria to apply include the applicant must also demonstrate an approvable financial hardship, such as reduced income due to underemployment or a job loss, death, a medical condition, or divorce.
If you apply for the hardest hit fund and are found to be qualified, the money and grants that are provided to you will go towards a homeowners permanent loan modification program. The guidelines will be similar to the federal government’s Home Affordable Modification Program (HAMP). In addition, additional funds will go towards a program to settle a second mortgage lien and to also pay for a program to provide up to 24 months of financial assistance to the under or unemployed.
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