Valley housing officials support Obama plan


The Arizona Republic -- Players in the Phoenix-area housing economy generally said they support President Barack Obama's $75 billion effort to reduce home foreclosures, although many expressed doubts about the plan's likely impact.

Michael Ripson, chief executive officer of Scottsdale-based Ripson Homes, said Obama's speech Wednesday in Mesa by itself accomplished an important goal: boosting consumers' damaged mojo. "We believe that the foreclosure crisis has fueled a crisis in confidence," Ripson said. "It's critical for a lot of this positive news to start permeating the marketplace."

Kevin Murphy, executive director of Labor's Community Service Agency, said he doesn't believe the measure will have a positive psychological effect on consumers unless it proves effective in reducing foreclosures.

"It's either going to help people, or not," said Murphy, whose organization helps negotiate loan modifications for struggling borrowers.

Some observers simply liked the fact the government was making its intentions clear.

"It's important that the rules of engagement become known, so people can start making decisions again," said Phoenix money-manager Barbara Walchli, who runs the Aquila Rocky Mountain Equity Fund.

Murphy agreed, saying many lenders effectively had put loan modifications on hold in anticipation of Obama's announcement.

"They weren't prepared to write off these loans . . . until they heard what Washington was going to do," he said.

Others, such as Scottsdale real-estate agent Tiffany Young, called the foreclosure-relief package a source of hope but had serious questions about the details.

Young, a RE/MAX Fine Properties affiliate who specializes in short sales, said applying government pressure to help mortgage borrowers in certain circumstances could have the reverse effect on those who don't meet the Obama administration's criteria.

For instance, while loan-servicing agents are scrambling to modify loans for prime-loan borrowers who are under water but have not missed any payments, others who are in greater danger of foreclosure could end up in the back of the line.

"The government won't be able to help everybody," she said.

Another overlooked niche is renters caught in the middle.

Mark Digan, a property manager at Arizona Rentals and Concierge Services in Surprise, said the plan doesn't seem to help tenants who have become the unwitting victims in about one-fifth of foreclosures.

"They could lose all their refundable deposits and face the added cost of moving," Digan said.

Meanwhile, banking, lending and investment executives all offered support for various provisions of the plan.

James Dimon, chief executive of JPMorgan Chase, said his company would voluntarily participate in the modification program, and that executives at other large banks told him they also planned to participate. "We have to see the details, but what we see today looks terrific," Dimon told the Washington Post.

"We have been urging the government to have a national modification program for us to follow."

Robert Sarver, chairman and CEO of Nevada-based Western Alliance Bancorporation, parent of Alliance Bank of Arizona, applauded the government's decision to bolster Fannie Mae and Freddie Mac.

He called the two mortgage-finance giants key backstops, along with the Federal Home Loan Bank system, in efforts to perk up the mortgage market and the broad economy.

"The key to getting the economy back on track involves stabilizing home values," Sarver said.

Phoenix Certified Mortgage Planner José Martinez, like many in the loan business, said the foreclosure plan is bound to do more good than harm, even if it doesn't help everyone.

Keeping interest rates low, making it easier for homeowners to refinance and creating incentives for home purchases, such as an $8,000 tax credit for first-time buyers, will stimulate market activity and chip away at the area's excess housing inventory, he said.

"He's trying to fill up a bunch of those empty homes that we have sitting out there," said Martinez, of The Optus Group.

Harry Papp, an investment adviser at L. Roy Papp and Associates in Phoenix, noted that the mortgage-subsidy angle and other help lacks fairness in the sense the efforts are directed at certain borrowers only.

Still, Papp called the plan a helpful effort that could help improve the general tone.

"If we can break the cycle of forced sales and reduce the number of houses on the market, that will help everyone," he said.

Glendale homeowner Steve Einstman said that since he was laid off in October, he's been struggling to get a loan modification from his lender, Countrywide, now owned by Bank of America.

Although his wife still has her job, money has been tight, he said, and the bank won't budge.

Einstman said the biggest obstacle has been his insistence on continuing to pay the mortgage on time, despite the hardship it has caused him.

"I've had a yard sale every week for seven weeks," he said.

Because Obama's plan to improve loan modifications for struggling borrowers only applies to mortgages held by government-sponsored lending giants Fannie Mae and Freddie Mac, Einstman said he is not eligible for any help and isn't expecting any.

"I've run out of time already," he said.

The Arizona Republic
Link to story on AZ Central Website
Reported by: J. Craig Anderson and Russ Wiles
Last Update: Feb. 19, 2009 12:00 AM