Arizona's subprime loans and foreclosures are reaching record levels in Arizona and across the country.  Arizona ranks second behind Nevada for the most subprime per capita loans in the country.  With many hybrid mortgages with adjustable interest rates scheduled to adjust to higher rates this year and next, our foreclosure crisis will only get worse.

Arizona reached a five-year high last month in notices of trustee sales, the precursors to foreclosures.  Default notices climbed to almost 2,500 in August, in the Phoenix metro area alone.  Efforts across the country to address this crisis are attempting to stave off an economic catastrophe.

I am a member of a working group of 10 state Attorneys General and state banking department officials addressing this important issue.  We will be meeting with representatives from the mortgage and loan servicing industry at the end of September to determine what can be done to relieve desperate homeowners.

It is in everyone's best interests, industry and government, to seek creative solutions to the mortgage crisis.  We intend to:

1.   Learn about and encourage expansion of loss mitigation programs offered by lenders and servicers.
2.   Review industry actions to address unaffordable mortgages in a more comprehensive manner.
3.   Identify barriers to loan modification.
4.   Improve communication with homeowners saddled with unaffordable loans.

In addition to the national effort by the state Attorneys General, my Office is also a member of the Arizona Foreclosure Prevention Workgroup/Coalition.  This coalition is comprised of state agencies, industry representatives and community organizations in an effort to address this crisis locally.

In Arizona, the dramatic increase in default notices has led to a large number of “foreclosure rescue” scams where the self-proclaimed “rescuer” declares to the desperate homeowner that they are going to protect the homeowner’s interest.  In actuality, they trick the homeowner into selling their home and renting it back.  Last year, the Arizona Legislature failed to take action to protect homeowners from this scam.

Owning one’s own home is a key to a strong economy.  The consequences of tens of thousands of homeowners losing their homes in foreclosures would be devastating.  I am making every effort to ensure the lending industry addresses this issue, and that together we find solutions that will keep homeowners in their homes.

Terry Goddard