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Arizona's 'Save My Home AZ' Plan Funded by Federal Government

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By : Paul Escobedo    99 or more times read
A program that was approved in June to help homeowners in imminent danger of foreclosure in the state of Arizona will go into effect in September.

The plan named "Save My Home AZ," was proposed in effort to help a small number of homeowners in Arizona by issuing loans to borrowers that will be applied to their mortgage balances, give up to a $5,000 incentive to lenders who settle second mortgages for borrowers, and give temporary aid to borrowers facing financial difficulties.

The funding for this program comes from the $125.1 million allocated for Arizona from the United States Treasury Department. In February, the United States Treasury Department issued $1.5 billion in aid to states with the hardest hit housing markets. This aid was known as the State Housing Finance Agencies "Hardest Hit Fund," This funding was distributed among Arizona, California, Florida, Michigan and Nevada.

Arizona has chosen to use their funding to help those homeowners who have exhausted all other means to avoid foreclosure. Under the "Save My Home AZ" plan, homeowners that meet the strict eligibility requirements will be able to get loans of amounts up to $50,000 that are to be applied to their mortgage balance. Lenders will be expected to exceed or match the amount of the loan. Currently, under the third revision of the plan, these loans will most likely not need to be repaid. However, part of the loan must be repaid if the home increased in value or was sold within 10 years of the issuance of the loan. There will also be temporary aid available up to $12,000 for borrowers with significantly reduced incomes due to unemployment, medical conditions, divorce or death.

Some of the eligibility requirements under the third revision of the "Proposal for use of HFA Hardest-Hit-Fund" from the Arizona Department of Housing include:

  • Households must have exhausted all options for remaining current on payments.

  • Assistance may only be used for borrowers' primary residences, and may only help households with incomes at or below 120 percent of the area's median income.

  • Money may not go to borrowers who face foreclosure for "self-inflicted" reasons, such as refinancing to take out equity or basing mortgages on undocumented income.
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