Arizona City Suffers the Wrath of Foreclosure

Mesa, Arizona’s third-largest city which has a population of 452,933, has been hit hardest by foreclosures.

Coldwell Banker Residential real estate broker Lynn Murtagh explained that 25 percent of approximately 3,149 homes currently on the for-sale listings are owned by banks. These bank-owned properties were either foreclosed or surrendered by borrowers who could not meet the required monthly mortgage payments.

Murtagh added that 2 percent of the for-sale homes are short sales. This means that mortgage lenders have agreed to accept payments the amount of which is less than the original mortgage loan.

Data from RealtyTrac, which monitors the real estate market and foreclosures, showed that over 6 percent of homeowners in the metropolitan areas of Phoenix are in some form of foreclosure process.

In January 2009, about 1,079 foreclosures have been filed in Mesa, reflecting a 33 percent increase from the previous year, and a 318 percent rise from January 2007.

Because of the increasing number of distressed properties in Mesa, home prices slumped to 8.2 percent during the last quarter of 2008 to $164,869 median price. For 2008, home prices declined by 22.9 percent. The highest recorded decline in home prices was 37 percent.

Murtagh pointed out that some homeowners purchased a home for about $225,000 three years ago only to find out that its current market value dropped to $75,000.

The drastic decline in home prices has left homeowners in the grip of despair as their mortgages ballooned to more than the market value of their homes. And as their mortgages pile up, distressed homeowners have become more vulnerable to foreclosure.

Since 2005, over 60 percent of homeowners have mortgages more than the total market value of their homes.

Murtagh explained that many borrowers in Mesa used mortgage products such as adjustable rate mortgage, interest-only loans and hybrid adjustable rate mortgage during the peak of the real estate market. She added that these mortgage products have brought down the market and those homeowners who purchased them.

Because of the grim picture brought by foreclosure on the city, President Barack Obama chose Mesa as the venue for the unveiling of his foreclosure prevention plan.

His rescue plan includes a $275 billion funding to reduce mortgage payments, modify loans and help owners of foreclosed homes.

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