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Maricopa County: Inflated Home Values

Maricopa County
Maricopa County, Arizona has been particularly hard hit by the mortgage crisis and KB has played a leading role in its problems. In all its 2006 first lien mortgages in Maricopa County, Arizona, Countrywide KB sold only 41.18% with fixed rates. 40.03% of their mortgages were five-year ARMs, 10.74% were two-year, three-year and option ARMs, and 8.06% were seven- and ten-year ARMs.

  • In Maricopa County in 2005, Countrywide KB sold 29.9% of its home purchase mortgages at subprime/high cost rates. In 2006, the rate was 31.1%. In just one year, the rate increased 4.2%.
  • Countrywide KB made 249 prime and 230 subprime loans in 2005. In 2006, they made 744 prime and 336 subprime loans—upping their prime rate by 198.8% and their subprime rate by 217%.
  • In 2006, Countrywide KB issued 55.5% of its Maricopa County mortgages with piggybacks.
  • In Maricopa County, 71% of Countrywide KB’s second lien purchase mortgages were subprime in 2006.

Maricopa County prices have slipped seriously in the past two years. The average KB home was estimated at $227,826 for 2008 taxes, and just $172,204--$55,622 less—for 2009 taxes. That’s a loss of 24.4% in just twelve months.

Carl Reniker closed on his KB home in Buckeye in January 2006, purchasing it for $195,900. Countrywide KB Home Loans gave him a first mortgage for $156,720 and a second mortgage for $39,180. The first mortgage is an interest only ARM that starts at 6.875% and can go as high as 11.875%. The second mortgage has an interest rate of 9.625%. He says there was no discussion about his mortgage options or whether he wanted a fixed or adjustable rate.

Maricopa County lowered the assessed value of the property from $177,500 to $124,200 just since last year. He owes a total of $196,000 between the two mortgages and is not able to refinance because his home has gone down so much in value.

Joni Lynn moved from Texas to Arizona. Her realtor found her a KB Home in the Santarra subdivision in Buckeye, Arizona. Lynn said she told the realtor that she just wanted a plain old conventional mortgage with a fixed rate, that she didn’t want any “bells and whistles” with it.

Lynn closed on her home in November 2006. Countrywide KB gave her two mortgages.
Although she is retired and her income is just from social security and a pension, the first mortgage is an interest-only ARM which starts at 6.5% and can go as high as 11.5%. Lynn now owes about $204,000 between the first and second mortgages. The Maricopa County tax assessor has lowered the value of Lynn’s house from $210,000 to $148,800 just since last year.