Featuring Joseph Maggiore
Phoenix Business Journal, Dec 2008
Arizona and California are in the same sinking ship when it comes to the rise in foreclosures and the subprime mortgage mess. But the two states are oceans apart in how they are dealing with those distressed mortgages.
California is taking a very aggressive approach. Gov. Arnold Schwarzenegger recently announced his state has inked deals with number of lenders, including Countrywide Financial and GMAC, to fast-track loan modifications for distressed subprime borrowers.
California also is using state housing money to offer some bridge loans to help consumers rework their mortgages, and the state has created consumer protections related to foreclosures and lending. In addition, a number of California lawmakers back foreclosure moratoriums.
Arizona’s approach, in contrast, involves very little government intervention.
Fred Karnas, director of the Arizona Department of Housing, said the state does not have the funds to give out money to rework loans.
Arizona has gotten more than $121 million in federal housing aid to deal with foreclosures. Karnas said that money is going to consumer groups that help homeowners, and to first-time and lower-income home buyers to help them work out mortgages so they can buy foreclosed houses. California has a similar program.
Karnas said Arizona has not inked any mortgage modification deals with lenders like Schwarzenegger has. But he noted some lenders have voluntarily slowed or stopped foreclosures and are looking to rework distressed loans.
“We’re all sort of in the same boat — getting the lenders to make deals,” he said.
Joseph Maggiore, a Realtor with Realty Executives in Scottsdale, said there is no widespread awareness of what is being done in Arizona on the mortgage front.
“There have not really been any actions taken or systems put in place to help distressed homeowners,” he said.
Economists and the real estate industry are split on whether government intervention is the right medicine. Supporters of government action argue no one really wins when homes are foreclosed, and loan modifications offer better results for lenders and borrowers alike.
Others, including Maggiore, say government involvement delays the market from bottoming out and turning around.
“It does not seem like any actions taken by the California government have had a significant impact on home values or homeowners in distressed situations,” Maggiore said. “I am of the belief that there is no quick fix out there to repair damages done by a lot of personal and corporate greed and uninformed overspending.”