J. Craig Anderson in today’s Arizona Republic:
The Obama administration’s $75 billion mortgage-relief effort is projected to help as many as 9 million overextended borrowers, including thousands in Arizona.
If recent history is a guide, though, financial relief for some could be short-lived.
More than half of the past-due loans modified in the first half of 2008 were back in default six months later, according to a recent report by federal bank-oversight officials.
While many have lauded President Barack Obama’s plan as a worthwhile effort to help struggling homeowners, local and national experts said there are clear signs that loan modifications that reduce payments, interest and even principal won’t significantly curb foreclosures.
In the Phoenix area, modifications are even less likely to prevent foreclosures than they are nationwide, experts said. Borrowers who owe far more than the current value of their homes may quit paying their loans regardless of how affordable the payment is.
As always of late, this is bad news for homeowners, very bad news for sellers, but it is good news for buyers and investors. Moreover: The sun will come out. Maybe not tomorrow, but someday soon. All we have to do is soak up our excess inventory and the Phoenix real estate market will turn, regardless of what happens in the rest of the country.
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