Distressed homeowners could reduce by up to $100,000 the amount they owe on their house through a federal program available in five states, including Arizona.
The Save Our Home AZ program rolled out in October 2010 with more than $267 million to help homeowners retain their homes, but only about 1,100 households have been approved for the program, said Reginald Givens, foreclosure assistance administrator with the Arizona Department of Housing.
The qualifications are strict, he said, and many homeowners don't apply once they see what is required.
The program still has more than $200 million available.
"We have until Dec. 31, 2017, to use it," Givens said. "Then we have to hand over what's left to the U.S. Treasury."
The program has multiple components from principal mortgage reduction to temporary help for unemployed or underemployed homeowners.
Each household can get up to $100,000 in assistance. Homeowners must be proactive, Givens said, and fill out the assessment forms to see if they qualify.
"The consumer remains responsible for their situation," Givens said. "We're here to help, not do it for them."
The program was authorized in February 2010 in five states with high foreclosure rates: Arizona, California, Florida, Michigan and Nevada.
Givens estimates between 120,000 and 150,000 Pima County homeowners are potentially eligible.
The program became operational in October 2010 with $267.8 million from the U.S. Treasury as part of the Troubled Asset Relief Program.
How it works
The money is granted in the form of a five-year loan. If the homeowner stays current on the mortgage and is still in the home after five years, the loan is forgiven.
If the homeowner sells the house before the five years is up, they will repay the loan amount only if the value of the home has appreciated. If the home did not appreciate, the loan is forgiven.
"Retention is our primary objective," Givens said.
He said some homeowners need temporary assistance while they find full-time work; others need the full mortgage payment until they find a job.
The new component to the program, which was added in October, is the recalculation - not a refinancing - of a mortgage.
"The program had to evolve because of all the negative equity in our state," Givens said.
For example, someone who owes $250,000 on a home that has a current value of $175,000 could qualify for $75,000 from Save Our Home AZ and get a recalculated mortgage at a lower monthly cost.
Givens said it takes about 60 days to receive the assistance once a homeowner is deemed eligible.
• The home has to be in Arizona and be the primary residence.
• The first mortgage must be less than $729,750.
• Household income cannot be more than 150 percent of the area's household median income, which is $59,600 in Pima County.
• The unemployment or reduction of work hours cannot be self-inflicted.
• The income after reduction of hours must have dropped by 10 percent or more.
• The mortgage payment must be more than 31 percent of gross household income after reduction of hours.
• The program only covers decreased income, not increased expenses such as medical bills or student loans.
• Homeowners cannot owe more than 150 percent of the home's original purchase price.
"We don't want to reward individuals who used their homes as ATM machines," said Daniel Romm, legislative liaison and public information officer for the housing department.
How to apply
Go online to azhousing.gov and fill out the assessment form.
Those without access to a computer can get assistance at partnering agencies:
• Administration of Resources and Choices (ARC), 3003 S. Country Club Road No. 207, 623-9383.
• Catholic Community Services, Pio Decimo Center, 848 S. Seventh Ave., 622-2801.
• Chicanos Por La Causa, 2550 E. Ft. Lowell Road, 882-0018.
"The consumer remains responsible for their situation. We're here to help, not do it for them."
Reginald Givens, foreclosure assistance administrator with the Arizona Department of Housing
Save Our Home AZ
To qualify for the program, household incomes cannot be more than 150 percent of the area's household median income, which in Pima County is $59,600.
Qualifying incomes by household size:
8 or more $118,125
Source: Arizona Department of Housing
Contact reporter Gabriela Rico at email@example.com