An attorney for two Arizonans at risk of losing their homes asked a judge today to block lawmakers from taking 50 million dollars out of a special fund designed to help prevent foreclosures to instead balance the state budget.
About half of all Arizona mortgages are under water, meaning owners owe more than the property is worth. This proposal was aimed at helping those who continue to make payments rather than simply walk away. It is a bit complex, involving the state using its power of eminent domain to acquire the property, paying the bank the current market value with money from investors who buy state bonds, and giving the lender a no-interest promissory note for the balance. That buys the homeowner some time for the market to recover.