Arizona Lender Warns Rising Foreclosures Signal End of 13-Year Safety Net

Written by:

Steve Marcinuk

Date:

26 Dec 2025

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From 2010 to 2023, property values in Arizona and much of the U.S. rose steadily, creating a hidden safety net for both lenders and borrowers. Geoff Ball, a hard money lender with two decades of experience in Arizona, says that era allowed questionable lending and borrowing decisions to go largely unpunished. Now, as price growth stalls, Ball warns that the consequences of those decisions are becoming clear.

“During the expansion markets, from 2010 to 2023, after COVID, everything just continued to go up. When property values go up, it masks a lot of mistakes that people make, whether they do bad loans, take on bad debt, or even lenders doing bad deals that didn’t make sense,” Ball says.

Ball, president of HD Lending, LLC, explains that when home values reliably climbed, borrowers who overextended or made poor choices could often refinance or sell before trouble hit. Lenders who approved marginal deals could count on appreciation to create enough equity to avoid losses.

Foreclosures Begin to Rise

After years of historically low foreclosure rates, Ball reports that Arizona is now seeing an increase in distressed properties. “Now, as markets are getting tighter, you’re seeing people get into trouble. Foreclosures have not risen to any level that’s concerning at the moment, but they are increasing,” he says.

While the uptick is not yet severe, Ball emphasizes that it marks a clear break from the past decade’s pattern of declining distress. “There’s more foreclosures happening today than there were four or five months ago. We can’t sweep that under the rug. We have to pay attention to it,” he says.

Ball attributes the increase to several factors that have accumulated over the past three years. “Consumer prices have gone up tremendously, and that includes utilities, insurance, real estate taxes, and everyday expenses,” he says. “A lot of people have been living on debt, but you hit a wall where you can’t borrow more, or the debt payments become too much to handle.”

Underwriting Faces New Scrutiny

As values stagnate or decline, lenders are being forced to re-examine how they assess risk. Ball says that in the current climate, deals that would have closed easily six or twelve months ago are now failing. “Six months ago or 12 months ago, the value was definitely there, but now, as borrowers face other problems and need higher loans, shrinking values mean those deals don’t get done,” he explains.

This shift represents a return to traditional underwriting standards, where borrower quality and deal fundamentals matter more than the assumption of automatic appreciation. When values aren’t rising, lenders can no longer rely on the market to bail out risky loans.

Regional Disparities in Arizona

Arizona’s real estate market is now highly segmented by location and price point. Ball reports that metropolitan Phoenix remains the strongest area, with Paradise Valley, Scottsdale, Chandler, and the northwest corridor near the Taiwan Semiconductor plant still showing resilience.

“As long as the stock market stays strong, we’re going to see that market thrive,” Ball says of these high-end submarkets. “If we see a big pullback in the stock market, that market’s going to get hurt.”

Most other Arizona markets, Ball says, have shifted to favor buyers. The slowdown is especially pronounced in outlying areas that saw the most significant gains during the expansion. Properties in these regions are now seeing longer listing times and more price reductions.

Modification Rules Dampen Foreclosure Wave

Ball notes that the current rise in foreclosures would likely be more dramatic if not for regulatory changes implemented after the 2008 crisis. These rules require lenders to work with distressed borrowers to modify loans and, where possible, avoid foreclosure.

“Mortgage lenders are mandated to work with people, to create modifications, to help them through tough times,” Ball says. “I don’t believe we’re going to see a real issue where everything hits the fan, because lenders are working out with people.”

However, Ball cautions that these modifications often delay rather than resolve the underlying issue. If borrowers lack sufficient income to support their loans, even restructured terms may not prevent eventual default. With unemployment numbers rising, Ball expects pressure on struggling borrowers to continue.

A Return to Conservative Lending

Looking ahead, Ball does not expect a rapid rebound or a dramatic crash in Arizona real estate over the next year. He predicts a period of stagnation and slow adjustment. “I am not a believer at this moment that our market is just going to shoot up next year. I think we’re going to continue to have a challenging market,” he says.

The end of the long expansion has forced both lenders and borrowers to confront the risks that rising values once concealed. Ball assesses that the industry must now return to more careful underwriting and borrowing practices. Whether this transition can occur without significant losses remains uncertain, but early signs in Arizona suggest the correction is underway.

As foreclosures rise and lenders tighten standards, the market is shifting away from the easy assumptions of the past decade. The lessons of this adjustment period, Ball argues, will shape lending and borrowing behavior for years to come.