Arizona has been ground zero of the foreclosure crisis for five years.
Foreclosures have swept away the perceived wealth of Arizonans, wiping out housing values, ruining credit scores for potential borrowers and killing jobs in the construction and mortgage lending industries.
These are long-term downward pressures on our economy, the aftereffects of which will be felt for years. Countless Arizona families are living with these pressures every day, but you can also see the scars in the stalled developments that ring Tucson and Phoenix or dot the countryside in Pinal County.
One of the legacies of the housing crisis is a failure to provide meaningful assistance to the millions of homeowners across the country who lost big on their homes. We bailed out Wall Street, but did nothing for borrowers, who often waited for loan modifications that never came. That's one reason we strongly disagree with the diversion of $50 million from a fund that was supposed to be applied to foreclosure assistance, but instead is being used for the state budget.
The funds are part of a $26 billion settlement announced earlier this year between five major lenders and a number of states, including Arizona, which claimed lenders acted improperly in their supposed assistance to struggling borrowers. We believe the $26 billion was a pittance for the price homeowners have paid, but the bulk of the money was supposed to go directly to borrowers as either assistance for underwater homeowners or payments for people who lost their homes.
Arizona received $1.6 billion. Besides the assistance to borrowers, $99.7 million was directed to Attorney General Tom Horne's office. The money was supposed to be used for things like foreclosure prevention and mitigation as well as the prosecution of financial fraud, which has been another missing piece of the housing crisis's aftermath.
But the Arizona Legislature has applied $50 million of these funds to the budget.
"There's a lot of pressure on the budget," House Speaker Andy Tobin said.
This simply is not the case.
At the same time they were raiding the foreclosure fund, Arizona lawmakers stashed $450 million in the state's rainy-day fund. The money was there for social welfare programs without taking it from the foreclosure settlement.
Senate President Steve Pierce said the intended purposes of the foreclosure fund were not state priorities.
It is true that the housing market is showing signs of recovery. It's no longer terrible. It's just incredibly bad. The March report from the Tucson Association of Realtors shows sales of homes are up, and median sale prices have increased slightly. Meanwhile, the real estate tracking firm CoreLogic recently reported a decrease in the number of completed foreclosures nationally for the first quarter of the year when compared with the first quarter of 2011.
But the report also notes that 1.4 million homes across the nation were in some stage of foreclosure in March, which compares similarly to both March of 2011 and February 2012. The report also said Arizona remained as one of the most active states for foreclosures, with 58,000 homes that had gone through completed foreclosures for the 12 months between March 2011 and March 2012.
A little more than 6 percent of all borrowers in Arizona were more than 90 days delinquent in March, and the Phoenix metro area still has one of the highest delinquency rates in the country, the report says.
Foreclosure tracking firm RealtyTrac recently reported that the state had the highest foreclosure rate in the country for the first quarter of the year.
The numbers demonstrate there are plenty of struggling homeowners, and that this issue is by no means past us. It's alive and well for families across the state.
Part of being fiscally conservative is using money as it is intended. Lawmakers should be using funds from the foreclosure settlement for foreclosure prevention and mitigation, as well as prosecution of financial fraud - not for balancing the budget when there is other money available to do just that.
Arizona Daily Star
One of the legacies of the housing crisis is a failure to provide meaningful assistance to the millions of homeowners across the country who lost big on their homes. We bailed out Wall Street, but did nothing for borrowers, who often waited for loan modifications that never came.