ARC-AZ Helping Homeowners in times of Crisis

 

David Jackson gave his wife four beautiful children, a nice house, and then an unexpected divorce.

In one fell swoop, Lisa Jackson became a single mother and the sole provider for her family. She scrambled to make ends meet but grew farther behind on her mortgage each month. Without money for rent and a security deposit, she couldn’t get an apartment. Losing her house would mean living on the street with the kids. As her worries grew, she began to have panic attacks and stress-induced hives.

Fortunately, when she most needed a helping hand, she discovered ARC.

The Administration for Resources and Choices (ARC) is a HUD-approved non-profit agency that works statewide to provide housing miracles by preventing foreclosures. For homeowners unable to pay their mortgages, they can help a family get up-to-date on back payments, reduce loan principal, offer temporary mortgage payments, and help to refinance loans to reduce monthly payments to a more manageable level.  

Amazingly, these are only a few of the resources ARC provides.  

Debbie Chandler, ARC’s executive director, explains the purpose of ARC this way; “We are committed to housing stability. As a HUD-certified agency, we’ve helped thousands of people with homeownership, be it home readiness preparation or help with mortgage challenges. We’re at the heart of helping people and we’re kind of the best kept secret.”  

During troubled times, Chandler believes housing help is imperative. “When the home piece is disrupted, nothing works. Kids can’t go to school, people can’t hold jobs, there’s stress at such a high level because there’s uncertainty about where a family will live. All of that stress breaks down everything. Housing is the first stable block to build and stabilize families and communities.”

Lisa Jackson would probably agree. ARC helped her catch up on her delinquent payments, paid off her second mortgage, helped to refinance her first mortgage, and then offered mortgage assistance for 24 months while Jackson went to nursing school. ARC did all of this work free of charge. Now eight years later, Jackson is still in her home, her kids are doing well, and she recently received Employee of the Month at the hospital where she works.

Jackson is not alone in her housing worries. In July 2020, 43.4 million Americans, or about 25.3% of the adult population, missed their last month’s rent or mortgage payment, or stated they believed they could not pay this month’s expense.

To help in these unprecedented times, the government has established forbearance programs that allow people to temporarily delay mortgage payments. Unfortunately, forbearance does not cancel the money owed. The loan principal and interest still accrue, and these get tacked on to the mortgage total – which can increase the loan amount significantly and, consequently, disqualify a person for refinancing in the future. 

Additionally, while a person is in forbearance, escrow and taxes are still accumulating and not being paid by the mortgage company. These expenses can be a shock for homeowners who don’t understand that forbearance is only for mortgage payments with a bank, while escrow and taxes are due to the county and their insurance company.  

ARC’s program is different from forbearance. “It’s better!” says Chandler. ARC provides services that can actually pay down your mortgage principal rather than increase it with delayed payments.

This can result in lower monthly payments and increased equity, benefits that will continue after the pandemic lifts. Also, because the homeowner continues to make mortgage payments, their escrow account will pay their property taxes and insurance, and they won’t be hit with surprise bills.

Funds are Available Now

“This is a really, really good opportunity for people to take advantage of the program and make sure that their home payment is affordable for the long term. These funds are available right now,” Chandler says.  

ARC was started in 2008 with federal money sent to the states hardest hit by the housing crisis. Unfortunately, this funding is coming to a close. ARC will stop taking applications after April 30. ARC will continue to help people with other programs and resources after this date, but the money available for homeowners in crisis right now will not be available after April.

Chandler says, “If you are on forbearance with your mortgage or waiting to see what happens, don’t! Take action now. There’s no hook to this. there’s no cost. This is money given to you for mortgage assistance. If you qualify, you get it.”

One person who took advantage of the program was Dr. Peter Gonzales.  

A longtime favorite professor at ASU, Dr. Gonzales’s teaching excellence did not help him when the recession of 2008-2010 caused his home’s value to depreciate and his consulting work to collapse. Being both upside down on his mortgage (he owed more than the house was worth) and unable to make his $1,500 monthly payments, he felt panicked and humiliated as he moved closer to losing his Tempe home. Fortunately, a friend mentioned ARC. 

ARC stepped in and helped to pay his arrears, reduced Dr. Gonzales’s principal by $100,000 and helped him re-amortize his loan, which reduced his monthly payment to only $700. ARC even covered the closing costs on the new loan. The $100,000 principal reduction was forgiven after he remained in his house for five years.  

So what situations make a person eligible for ARC assistance?

“It’s simply this,” Chandler says. ” Your payment is unaffordable.”  

A housing payment that’s more than 30% of the homeowner’s income is considered unaffordable. It doesn’t matter why – an income change, loss of an income source, unemployment, medical bills, and so on. Whatever the cause of the financial hardship, a homeowner could be eligible.

Chandler says, “There’s no guarantee, but our job is to analyze each situation and make recommendations. If you’re even remotely eligible, talk to us and let us help you. Don’t self-disqualify.” 

Abbie Yazzie would agree. She’s disabled, and her husband is in prison. But her world really collapsed when she lost her 24-year-old son in an auto accident. She could not pay her mortgage using her disability funds alone. ARC was able to help Yazzie reduce her principal by $58,000 and then refinance to an affordable $447 per month on the $20,000 she still owed. ARC also helped her take advantage of a program few people know about that waives property tax payments for widows or widowers and the disabled. This meant Yazzie could stay in her home.

Araceli Jimenez-Gonzalez is an ARC counselor with 15 years’ experience helping people with home ownership. She loves her work and can tell countless success stories. “People come in all stressed out and then the ending is so happy because now they have affordable payments,” Jimenez-Gonzalez says. She helps homeowners in crisis but also explained a program for renters seeking help with homebuyer readiness. 

According to Jimenez-Gonzalez, many young people believe they would never qualify to buy a house, and consequently they’re paying high rents. But in today’s market, many of these people might actually be able to buy a house and wind up with lower mortgage payments than their current rent.

Jimenez-Gonzalez says, “We help people get ready: to build a budget, to get savings to use as a down payment, to work on their credit and even build a little credit, and then they qualify to buy a house. They are paying less each month on housing and building equity at the same time.”

Chandler urges people to take advantage of their services as soon as possible, particularly before April 30, while this exceptional funding remains available. “If you’re in a situation for whatever reason that your payment is unaffordable, you should call us,” Chandler says. “There’s no reason not to. There’s no cost, everything is free. There’s not a downside. The worst case scenario is nothing changes, but we could get you great benefits.”

For more information about ARC, call 602-374-2226 or access their website . ARC is an Arizona Charitable Organization, so donations to the organization can be used as tax credits (paid in place of taxes you will owe). All of the stories in the article are based on actual clients, but identifying details have been changed to protect confidentiality.