Because foreclosure homes continue to enter the housing market, the median price for all types of homes, including foreclosed homes, new homes and existing homes, fell to $131,000 in August compared to $170,000 in August last year.

According to Jay Butler, more houses are being sold in August in the West Valley compared to last year and more foreclosures have been accounting for total sales. Out of every 3 previously owned homes sold in the West Valley, one was a foreclosure property.

While the 33-percent share was a decrease from the 44 percent share in August 2008, the share was still much higher than the three- to five-percent share in a normal housing market.

In addition, Butler said that the ratio of foreclosure sales should first go down to about one foreclosed home out of every 20 non-foreclosed home resales before the housing market becomes normal. Also, owner-occupants should be the ones driving activity in the market and not investors looking for cheap foreclosed homes that have strong profit potentials.

In Surprise, out of 510 houses sold in August, 180 units were foreclosed properties, a drop from 200 units sold in August last year. With 230 foreclosures, Glendale again led other cities in the West Valley in total number of foreclosed properties.

In El Mirage, 50 homes were foreclosed in August, pushing down the median home sales price to $73,250, which is far below the median price of $116,000 in August last year.

Based on data from ASU, out of approximately 6,000 existing homes sold in the Valley in August, about 3,100 were foreclosed units. This indicated that around 34 percent of all pre-owned homes sold were foreclosures in August. During the same month last year, out of 4,300 existing homes sold, around 3,300 units were foreclosures, representing 44 percent of total home resales.

However, Butler said that the foreclosure percentage in August is not as accurate as he wants it to be because about 50 percent of conventional home sales were made by banks selling residential properties they have previously repossessed from foreclosure auctions. He therefore contended that about 67 percent of all home sales in August were foreclosures.

According to a real estate research firm, a prospective home buyer can find cheap foreclosed homes in Surprise because there are currently more than 3,500 foreclosure homes in Surprise which are available at an average of $126,530.

The handbook, from the Arizona Foreclosure Prevention Task Force, offers guidance to distressed homeowners facing mortgage troubles.

Because Arizona has become a hot bed of repo houses for sale, it is no wonder then that the state has become the prime target of con artists. The handbook will also help homeowners avoid becoming victims of unscrupulous people who will take advantage of their desperation to save their properties from foreclosures.

State Attorney General Terry Goddard has filed a lawsuit against several mortgage brokers, rent-to-own real property companies and real estate agents for alleged conspiracy to falsify mortgage loan documents and defrauding investors and individuals who thought they were leasing homes that they would own later. The borrowers discovered that they are not eligible for legitimate loans.

According to Goddard, out-of-state con artists are flocking to Arizona and offering their fraudulent repo houses for sale prevention services to desperate homeowners. These con artists are good in convincing homeowners that they need someone to deal with mortgage loan servicers to modify the terms of their loans to make them affordable. And all these services are done for a fee and achieve no results.

Goddard said that nonprofit community housing agencies are available to assist distressed homeowners for free, including helping them go through the mortgage process. The Arizona Foreclosure Information Workbook contains contact information about legitimate agencies that could help distressed homeowners.

The handbook also contains explanation of mortgage default, what homeowners can expect after defaulting on their monthly payments, how to understand the repossession and auction process. It also explains when a borrower can opt for a mortgage modification to adjust loan terms to make monthly payments affordable.

Furthermore, the handbook provides budgeting worksheets which homeowners can use to track their monthly expenses and create means to allocate more money toward home payments. Lastly, the handbook will explain to homeowners how to manage repo houses for sale and how to recover financially after a foreclosure.

However, two months after the receipt of the fund, Phoenix has yet to purchase a single property on listings of bank owned homes using the NSP federal funds.

The NSP federal program is designed to help communities severely affected by abandoned, vacant and foreclosed properties. Under the program, individuals and families who qualify may avail of a loan for a maximum of $15,000 to pay for deposit and closings costs of properties on listings of bank owned homes.

The NSP was approved in July last year by the U.S. Congress. Following the approval was the release of $3.2 billion into communities hardest hit by the foreclosure crisis. An additional $2 billion was allocated for the program in May.

The main goal of the NSP is to stabilize and strengthen the housing market decimated by the economic and foreclosure crisis.

Arizona ranked fourth in states with high foreclosure rates in May and industry experts were hoping that the NSP funding would make a big difference in the state’s fight to prevent continuing increase in the number of properties on listings of bank owned homes.

However, most homeowners eligible for the NSP funds are still trying to overcome the hurdles of the unfamiliar process.

The program is offered only for homeowners with income of between $55,350 and $104,400, according to the Department of Housing and Urban Development (HUD), adding that the income restrictions vary from one region to another.

To be eligible, applicants must undergo and complete financial counseling and financial courses in home ownership and budgeting and invest $1,000 from their personal funds.

Under the program, the HUD requires lending institutions to give 15 percent discount to homebuyers. Furthermore, loans must be paid in full when homeowners refinance or sell the properties. However, lending institutions are not required to accept a reduced or discounted offer.

Meanwhile, industry experts warned that the NSP is not enough to contain the number of properties on listings of bank owned homes in Phoenix, adding that there is a need to find other solutions that can help stabilize communities hardest hit by the foreclosure crisis.

As with the rest of the country, Arizona Foreclosure Properties figures have been increasing. In fact, Arizona has a projected 1 in 4 homeowners who will be affected by foreclosures. As of mid-November, almost 80,000 residents have already called the hotline seeking help.

For expert guidance regarding Arizona foreclosures, any resident may call 1-800-448-1211.

A homeowner who has mortgage trouble may also follow these tips:

• Act on problems promptly. Contact the lender and discuss possible options as soon as possible.
• Keep in touch with the lender. The first notices will help one explore options for foreclosure prevention while the latter ones may already give notices of pending legal action. Failing to open communication with lenders will not be justifiable in court.
• Know a homeowner’s mortgage rights. Keep loan documents and be familiar with the legalities, especially in conditions where payments cannot be made.
• Cut spending on unimportant things. Optional expenses like memberships and entertainment may be removed until the mortgage is paid.
• Take advantage of assets. Selling a second car or having a family member get a job demonstrates a willingness to deal with the problem.
• Use free HUD-approved services for help. You may also contact your lender for options, but avoid foreclosure prevention companies as these charge huge fees for services which you may get at no cost.
• Get advice from a lawyer before signing documents. A firm may claim to be able to stop a housing problem, but these may all be a ruse to make a homeowner a renter or in worst-case scenarios, homeless.

Following simple tips and calling the free helpline will go a long way in dealing with foreclosure problems.

Related Information:

• Foreclosure Properties
• USA Foreclosure Listings