The number of Arizona homeowners falling behind on mortgage payments continued to swing upward in recent months as tighter lending guidelines limited refinancing options.
In the second quarter 2007, 3.55 percent of Arizona mortgages were past due, roughly a half a percent increase from the first three months of the year, a survey by the Mortgage Bankers Association shows. That’s also up from a 2.44 percent delinquency rate during the same period last year.
The rise in delinquencies stems in part from stricter lending standards, dropping home values and adjustable-rate loans now resetting to higher interest rates, according to industry experts.
“Some people are waking up and finding that their mortgage payments are double or even triple,” said Jason Meyers, a spokesman for Desert Schools Federal Credit Union.
Others owe more than their homes are now worth.
In the past month, the credit union has received a couple hundred phone calls from distressed Valley borrowers in danger of defaulting on mortgages they received from other lenders, Meyers said.
Some financially stretched borrowers were counting on their equity to keep increasing. Others didn’t realize that their loans had hefty penalties — as much as $20,000 in one case —for paying off the loans early.
“A lot of these lenders have basically made it impossible for people to get out of these bad loans,” Meyers said.
Investors have also played a roll in the delinquency problem, said Greg Geenen, vice president of the Arizona Mortgage Lenders Association. Arizona has a disproportionate number of investors, and they’re more likely to walk away from properties, Geenen said.
Arizona’s delinquency rate still remains below the national rate of 5.12 percent.
“It’s not as black and bleak as it seems,” said Leonard Richards a loan officer with Mesa Mortgage.
The number of loans in default is still a small percentage of the total, Richards said.
Experts say, though, that the problem is likely to get worse before it gets better.
“We’re just scratching the surface of the potential ramifications of all of these foreclosures,” Geenen said. “It’s going to spread.”