How many of those filing for foreclosure know the proper procedures and are familiar with preventative practices? Not many. Most find themselves facing foreclosure after missing many monthly payments, often as the result of a lost job or high medical bills in the present. 2011 is expected to be the highest year for foreclosures in the United States, and to provide better guidance, the Short Sale Association of America (SSAA) developed a website that provides foreclosure education and assistance.

With a motto of “Uniting to save homeowners from foreclosure,” SSAA created this tool for two purposes. One, the site is a tool to better educate those facing foreclosure and to provide information about counteractive practices against filing. Two, agents in areas with greater foreclosures, such as Las Vegas, need a tool for dealing with distressed properties and for assisting clients.

SSAA provides the following services:

• Information about the effect of default and ways to avoid foreclosure.
• An evaluation tool for learning about foreclosure alternatives.
• Specific recommendations for courses of action.
• An educational tool for the agent to provide to buyers and sellers.

Each state has its own policies for foreclosure. Connecticut foreclosures can go one of two ways. As a judicial foreclosure state, Connecticut either grants a “foreclosure by sale” or “strict foreclosure.” The latter requires no action from the court and allows residents to redeem their properties. The former allows a court to establish a time for selling a foreclosed property.

Unless an individual is provided with these two options (or whichever ones are available in your state), he or she may not be aware of practices of preventing or filing for foreclosure. SSAA, then, offers an educational tool to assist buyers and sellers and to prevent “robo-signing” practices.

The abundance of foreclosures, which are expected to increase nationally in 2011, cannot be blamed on a single source. From adjustable rate mortgages and dishonest lenders to homeowners losing jobs or purchasing too-great of an investment to banks doing robo-signing, all parties share some of the blame.

Some of the filings that turned into foreclosed properties were the result of banks being too quick to sign paperwork – called “robo-signing” – and now, according to Reuters, U.S. bank regulators plan to punish banks that did not fully follow the foreclosure process. This included going against state and local foreclosure laws and wrongly evicting homeowners. Such banks, which include Bank of America, Citibank, and JP Morgan, may face fines or be required to forgive some loan balances.

Although punishment and greater regulation of banks may help those nationally in the foreclosure filing process, residents in New York state going through this process may soon be able to have free legal representation. Starting in two counties, this jurisdiction is expected to spread across the state by the end of the year. New York will be the first state to offer counsel to those facing foreclosure and could serve as a template for other states’ jurisdictions. Total Mortgage Services explains in the link above, this move is a direct result of banks going too quickly through or not following laws for foreclosure.

Another option, one more discussed than the two above, is loan modification, but much like predatory lending practices from four years ago, loan modification is full of scams that may push you closer to foreclosure. In a Boston real estate blog, Attorney Avi Liss discusses factors homeowners need to consider for loan modification. The interview going into more detail, but the general points are:
• Loan modification is not a quick fix. The process can take several months.
• Several factors contribute to acceptance for loan modification: financial hardship, state and federal tax filings, income, family size, equity, and organization of information.
• The loan modification amount can vary.
• If you are considering loan modification, work with an attorney or find a certified non-profit modification company, such as the National Assistance Corporation of America or another approved by the Home Affordable Mortgage Program.
• Don’t depend on loan modification, and as you wait for acceptance, continue to make mortgage payments in order to avoid foreclosure.

Since early 2009, we have seen – and been told on several occasions – that the average price per home and sales are going up. And each time, some prices went up and some home sales increased, but then a wave of foreclosures and more job losses thwarted any potential recovery. Sometimes, the number that increased slightly dipped downs, and on others, it stayed the same. As we saw last week, the projection of 1.2 million foreclosures for 2011 – juxtaposed with an unemployment rate between nine and 10 percent – indicates that recovery is only in a nascent stage, if it can be called “recovery” at all.

Susan Lawrence, a real estate consultant and President of Real Estate Strategies, Inc., presented an argument in an editorial last week about unfounded optimism in real estate. Rather than figures truly showing an increase in home sales over a greater period of time, only slight increases between drops and plateaus are evident. Can this truly be considered recovery?

The overall path of real estate, argues Lawrence, is downward. For every increase in home prices, foreclosure rates go up. She states the rates from 2009 to ’10 went up 14 percent, and as we saw last week, more than 1 million foreclosures are predicted for 2011. Additional factors, such as a lack of substantial job creation, fewer financing options, and difficulty obtaining credit, contribute to a greater picture of decline punctuated by small upswings.

Lawrence does not believe that 2011 will be a significant “turnaround” year for the real estate market, with prices and sales increasing. She, however, also does not mention that the year could be a tumble down another hole, either. Could 2011 be another plateau? According to Lawrence, only when more jobs are created will the real estate market show substantial signs of improvement.

When the amount of foreclosures is expected to increase, you know that the housing crisis is far from over. While we’ve been told for the past year or more that the market is improving because of a greater price per home and more sales, an article published recently in Yahoo News states otherwise. Instead of the early optimism seen since 2009, 2011 is expected to have the largest amount of foreclosures since the crash of the real estate market in 2007. 2010 saw 1 million foreclosed homes, and many more – one in 45 homes – filed for foreclosure. 1.2 million homes are expected to be claimed by lenders in 2011.

Although mortgage rates are decreasing and homeowners are now able to refinance, outside factors are preventing homeowners from making mortgage payments on time, job losses in particular. Although the unemployment rate has decreased slightly, it continues to remain between nine and 10 percent. Homeowners, even those without adjustable rate mortgages, are unable to make payments. As a result, a lack of employment opportunities leads to more foreclosure filings.

Buyers, on the other hand, aren’t grabbing the properties up for sale with the same fervor as in 2007 – or even before the latest first time homebuyers’ tax credit expired. Lower mortgage rates are only modestly encouraging, and the threat of job losses looming overhead makes one wary of making such a large investment.

Is this just a case of chick-or-the-egg syndrome, or is the job market keeping real estate down? The latter could be the case, as a job loss can lead to late or missed mortgage payments – and eventual foreclosure filing – and more foreclosures on the market lower the average home price. A lack of jobs, additionally, prevents more from purchasing a new home. While both affect each other, the creation of more jobs may create a buying public more likely to purchase a home.

It’s a cliché to think of success as one step forward and two steps backward, but this overly-used saying simply describes the current state of the real estate market. Although homes are for sale in all metropolitan areas, the average home price has decreased, according to a piece in The Wall Street Journal. While minor declines have been seen over the past year, the 1.3-percent decrease from October to September is cause for concern and contradicts with the recovery of retail and manufacturing industries.

Earlier this year, the housing market appeared to be in a state of recovery: the average home price had increased slightly – but not too much – while sales were up. But the WSJ isn’t the harbinger of bad news; such a drop was predicted over the summer. And, while this news applies mainly to homeowners, what about commercial real estate’s notable recovery?

The points contributing to this decline, as expressed in the WSJ piece, include:

• The job market correlates with housing. When job growth is slow (unemployment is currently 9.8 percent), housing is too risky of an investment.
• The tax credit for first-time homebuyers expired and, as of April, the amount of sales dropped, taking this figure back to early 2010 numbers.
• 20 metropolitan areas saw declines, with prices in Las Vegas and Cleveland dipping so low they’re back to 2000 levels. Las Vegas real estate, as we discussed months earlier, has a high percentage of foreclosures, which influence the average price.
• As seen in Las Vegas, foreclosures still make up a significant amount of home sales – about 30 percent – and, as foreclosures and short sales go for less than average, they bring the price down.
• Mortgage rates are rising, and current homeowners are stuck with underwater mortgages. This leads homeowners to wonder, “Why sell my property for less than when I purchased it?”

Although the homeowners market has been somewhat stagnant over the past few months, the rate of foreclosures has actually decreased, according to an article in the U.S. Financial Post. Although the article claims that borrowers are still defaulting on mortgages, government programs and banks have instituted measures to prevent the rate of foreclosures from increasing:

• The Loan Modification Program, issued by the government, is one measure cited by the article for decreasing foreclosure rates. Essentially, families refinance their mortgages at lower interest rates. Nevertheless, those looking for a loan modification shouldn’t just pick any program. In general, the FDIC’s Loan Modification Program is the only legitimate program available, and those not associated with the FDIC may be scams or may not work with your bank in reducing your mortgage.
• Banks, according to the Financial Post article are putting caps on foreclosures, with Chase and GMAC Mortgage being two of the larger chains practicing this. In 2007, when the foreclosure crisis took hold and accelerated, many banks were too quick to go with the foreclosure process, according to the Financial Post article, and were charged with foreclosure fraud, as they seldom verified a homeowner’s information and often ignored requests from said homeowner.

Foreclosures, according to the Financial Post, article have experienced a two month drop. Although this amount, in the scheme of the foreclosure crisis thus far, is somewhat small and could rise a few months down the line, it’s a positive indication that the real estate crisis may be on the way out, at least in this aspect. Nevertheless, the real estate market has other issues to combat before actually being stable, mainly lowered home prices, underwater mortgages, and a lack of construction of new buildings and homes.

To follow up on the last post, the real estate market isn’t in as great of shape now as many of predicted. Yes, 2009 and the first quarter of 2010 have seen a few improvements, but periods of stagnancy have also characterized these past two years. Additionally, while home sales have also increased at points, where are these figures coming from? Are people actually buying new homes, or, instead, are foreclosures taking up a large portion of the market?

According to a recent article on Boston.com, the latter might be more accurate. Figures released recently by RealtyTrac indicate that 30 percent of home sales in the first quarter of 2010 were foreclosures. In Massachusetts, more specifically, the sale of “distressed” homes – any foreclosed or short sale properties – conuted as 42 percent all off homes sold during this time period.

So, with such a significant percentage of home sales associated with foreclosures, is the real estate market really in a state of recovery? The answer at this time might be one of uncertainty. While foreclosures came in large quantities back in 2007, they appeared to have lessened over the past three years. At the time, however, the sudden abundance of foreclosures was more of a shock than the properties being sold.

In the present, it appears that the amount of individuals filing for foreclosure or short sale has lessened (although this can’t be said for commercial real estate), but, perhaps, the foreclosed properties from a few years ago are still on the market. Buying foreclosures does have a significant advantage in the current market. Rather than worrying about tax credits expiring, buyers can purchase a home that is 27 percent less than the median home price. Assuming the property is in good shape (and this can vary with foreclosures), the buyer might actually be getting a good deal on a new home.

Have you ever wondered what goes into foreclosure? Or why certain people sell their homes as a short sale and what REO means? As many properties sold on the market are foreclosures, knowing the steps of foreclosure are important if you’re considering purchasing a foreclosed or short sale property.

One term is pre-foreclosure. Most homes sold as a short sale are pre-foreclosure homes, as the owner is willing to settle for selling the property at a lesser value than what the home is worth to avoid foreclosure. A pre-foreclosure, out of the three options, can forestall damage to an owner’s credit, which results with a foreclosure, and before a lender gets involved, consultation on the lesser price of the home can be done with attorneys, accountants, and real estate agents.

Foreclosure is more of a common term used and pertains to any steps leading to an auction on a property. For those interested in auctions for a foreclosed home, often county clerk offices have listings – some of which can be found on email lists and notifications – of when foreclosed homes are going up for auction and the dates for viewing them. Although the procedure varies with states, foreclosure comes in two types, judicial and non-judicial. Judicial foreclosures involve mortgages instead of deeds of trusts and the process for a home to go up for auction takes longer. A non-judicial foreclosure, however, involves a trustee, or third party, who handles the process of foreclosure two to four months after the owner has defaulted on the home’s payments. A home will reach the auction block much quicker with a non-judicial foreclosure.

The third type of foreclosed home is a post-foreclosure. A post-foreclosure can simply be the new owner assuming the property or, if not sold at the auction, can be a property still in control of the lender, or an REO. An REO, although the property is still held by the lender, indicates that the property is the result of a poor lending decision that lead to overhead and losses. However, once the property is an REO, the lender must continue to maintain it and not leave it “as is.”