South Florida is one of the regions in the country that was badly hit by the foreclosure crisis. The crisis brought devastation to the region in the form of record low home prices and values, unemployment and growing number of cheap foreclosed homes on sale.

The foreclosure crisis has brought life-wreaking impact on millions of homeowners. But some entrepreneurs and professionals found ways to turn a bad and hopeless situation into an income generating endeavor.

Some entrepreneurs purchased notes at very low prices and then reducing the monthly mortgages of borrowers to help them avoid foreclosures. Others buy large volume of bargain-priced foreclosure properties.

According to industry experts, the opportunities that came out of the current housing market in South Florida are expected to go on for another two years as the number of foreclosure filings continued to swamp the state’s court system and the number of homeowners losing their jobs is getting high.

Experts pointed out that people who had the inkling of what is going to happen and had bolt out of the market had found opportunities to profit from the foreclosure crisis.

Peter Zalewski, a former journalist, established his foreclosure consulting and specialty real estate firm to help homeowners avoid foreclosures. Three years after he started operation, he already has 36 staff to address cash investors’ growing demand for bargain-priced foreclosure houses.

His story and business operation caught the interest of movie director Michael Moore while he was on the process of making his documentary, entitled “Capitalism: A Love Story.”

Meanwhile, Giving Tree Development’s Jeff Waters buys notes at discounted prices and then reduced the monthly mortgage payments of distressed borrowers to help avoid foreclosures.

He started his initiative last year and soon discovered that it is possible to purchase distressed loans one after the other, rather than buying them in bulk of 200 homes or more. The process involves investors or companies buying a note, then homeowners will be approached and informed that they have a new loan service and will be offered with loan modification.

These are just some innovative ways to help stave off the number of cheap foreclosed homes on sale. The efforts do not result to a dramatic decline in foreclosure rates but combining all the housing recovery initiatives may help make a dent on the continuing problem, experts said.

The prognosis belies expectations in the past several months that home prices are starting to bottom out. This time, the verdict is out about national home prices falling much lower. Industry experts predicted that home values will fall in 342 housing markets, out of the total 381 nationwide, before the year ends.

Similarly, the median home price nationwide is predicted to fall by nearly 11.3 percent by June 30 next year. Furthermore, it is expected that prices will start to stabilize by rising 3.6 percent sometime next year.

Economists said that more home price drops are expected because the housing market is still inundated with cheap foreclosed houses for sale, with no letting up seen in the very near future. They said that areas with high foreclosure rates will experience the biggest price drops.

For example, in Miami, Florida, prices are predicted to drop by as much as 29.9 percent by June 2010. This home price drop is expected to occur after the city already experienced a 48 percent decline since 2007. By June 2011, Miami’s median home price will plunge to $142,000.

Meanwhile, in Orlando, Florida, a 27 percent home price drop is expected by June of next year to be followed by a moderate decline the following year. Similarly, in Hanford, California, home prices are expected to decline 26.9 percent and to continue to fall by 9.5 percent in 2011.

Home prices are expected to dive by as much as 26.8 percent in Naples, Florida before it will start to flatten out.

On a lighter note, some cities across the country are expected to buck the trend. About 33 housing markets are expected to post price gains while six will remain flat. The gainers will be led by Kennewick, Washington with 8.9 percent increase since 2007 and projected 3.4 percent gain by June 2010.

Other cities that are expected to overcome the impact of cheap foreclosed homes for sale by posting home price gains are Fairbanks and Anchorage both in Alaska and Elmira, New York.

• Miami Foreclosure Properties
• Orlando Foreclosure Properties
• Hanford Foreclosure Properties
• Naples foreclosure properties
• Kennewick foreclosure properties
• Elmira foreclosure properties

In 13 states in the West, particularly Arizona, California and Nevada, the median home price in August has dropped to $220,500, over 12 percent below the median home price in August 2008. Total house sales in the West climbed up by almost 1 percent compared to July sales.

Total house sales in August also marked a nearly 5-percent rise from sales in August last year. According to analysts, sales were driven by efforts of first-time home buyers to beat the federal tax credit deadline.

Celia Chen, a top executive at Moody’s Economy.com, said that foreclosures are still a big part of house sales in the West. She added that the big drop of home prices in the West compared to 2008 prices has been pushing up the number of people buying foreclosure homes for sale for their own use or for investment purposes.

Based on the monthly housing report of The Associated Press and Re/Max, several metro areas in the West showed home sales increases in August. These were San Diego, Los Angeles, Phoenix, Boise and Las Vegas.

Meanwhile, other Western cities such as Denver, Seattle, San Francisco, Honolulu, Anchorage, Billings and Albuquerque posted declines in home sales compared to August 2008.

Nationwide, based on a report from the National Association of Realtors, foreclosures accounted for around 31 percent of overall house sales in August. But in some states in the West, foreclosure sales comprised the majority of home sales.

In Arizona and California, foreclosure sales and short sales comprised over 50 percent of total house sales in August. In the state of Nevada, a staggering 80 percent accounted for distressed sales.

Because of the big increase in number of home buyers in the West, inventories of bank-owned houses have been dropping. In Phoenix, only about 18 percent are bank-owned now out of all types of homes available on the market.

As home sales increased in August, the average number of days properties stayed on the market dropped in July and August in many metro areas in the West, such as Los Angeles, San Francisco, Phoenix and Denver.

A big real estate broker in Arizona said that about 25 percent of its home buyers in August were first time home buyers. The rest were people buying foreclosure homes for sale, people moving to Arizona and residents moving up.

The land bank would target lands foreclosed by banks and lands acquired by local governments due to tax foreclosures.
The Bay County Board of Commissioners has sent its land bank application to Michigan’s land bank authority and will meet with state officials for the approval of an intergovernmental agreement related to the land bank.

County officials will also set up a seven-member board to lead Bay County’s land bank, which will comprise county commissioners, Bay City officials, town officials and residents.

Officials said they have not made plans yet about what they will do with the foreclosed lands to be acquired. They said that once they have set up the land bank, they will have enough time to make plans.

Bay County official Richard Brzezinski said that in the past, only large counties were forming land banks but because of the rising number of bank and tax foreclosure properties, even smaller counties can benefit from forming land banks.

Funding from the federal government also encouraged the county to form the land bank, according to Brzezinski. Among the goals of the federal stimulus money given to various communities was to maximize the use of foreclosed properties and eliminate blight from communities.

Thomas Hickner, top executive of Bay County, said he hopes his county’s land bank can get a share from the funds to be distributed in the coming months by the Michigan State Housing Development Authority. In 2008, counties with land banks got between $10 million to $20 million from the federal Neighborhood Stabilization Program.

Genesee County and other Michigan counties which have been operating land banks for years said land banks have been helping their counties fight blight in communities clobbered by a lot of foreclosure properties and abandoned structures.
According to Hickner, Bay County has around 800 to 1,000 bank foreclosure properties.

In Saginaw County, one of the programs of the land bank authority leases abandoned properties for one dollar a year to the neighbors of the abandoned lands. These neighbors agree to use the lands and maintain them.

With the launching of the Bay County land bank, community advocates hope that abandoned tax and bank foreclosure properties will now be acquired and fixed or sold to local investors with redevelopment plans that help the community.

Industry analysts are concerned that the raid on Taylor Bean’s Florida offices could have disastrous fallout on its operations in Colorado. The mortgage lending company is a major issuer of Federal Housing Administration(FHA)-guaranteed loans in danger of foreclosure in Colorado.

Analysts said that Colorado is in the fifth position nationwide in terms of the highest number of foreclosed homes. Of the total number of delinquent loans, 576 that are seriously in danger of foreclosures, valued at almost $107 million, were issued by Taylor Bean and Whitaker under the FHA program.

Forensic investigators in Florida plan to examine the books of Taylor Bean for possible fraud following the mortgage lender’ submission of incomplete financial records to the government.

For some time now, industry analysts are concerned about the growing number of foreclosure properties in Colorado. And the raid on Taylor Bear had them fear the possible repercussions on state homeowners and the impact on the credit market.

Independent Banks of Colorado executive director Barbara Walker said that the turn of events and loans’ oversight took her by surprise, adding that there are concerns about possible options for community-bank participants.

According to industry experts, Taylor Bean originated and acquired over $30 million mortgage loans in 2008. The company holds 5 percent share in the FHA loan market in Colorado, issuing mortgage loans through bankers or community banks.

Experts said that small banking institutions with low cash flows typically depend on a national third-party wholesaler to create or negotiate mortgage deals. They added that Taylor Bean is the 12th biggest home loan company in the country.

Meanwhile, the 576 FHA-backed loans in Colorado that are seriously at risk were 3 months or more overdue. Industry experts do not know what will happen to these troubled loans now that Taylor Beans’ operations have been shut down. FHA officials said that some loans will continue to be serviced by the mortgage lender and some would be transferred to the Bank of America.

Taylor Bean issued 2,612 bad loans in Georgia, 2,139 in Florida, 1,016 in Ohio and 640 in North Carolina.

The bills are part of several consumer protection bills passed by the state legislature during the 2009 session.

The governor said the state government recognizes the fact that many Oregonians are facing a lot of hardships and are struggling with consumer debts and unemployment and that many are losing their homes to foreclosed house for sale inventories.

The consumer protection bills cover a lot of areas affecting consumers. Among these are protections for families struggling to pay home loans, other personal loans and bills; protections for households with properties subject to seizure; and protections for tenants living in foreclosed house for sale units.

The bills also have provisions that would enhance ]mortgage lending policies] and practices to ensure that borrowers receive fair treatment and have low risks of seeing their homes added to foreclosed house for sale lists.

Based on a recent nationwide foreclosure report, the pace of foreclosure in Oregon in the first 6 months of 2009 continues to rank high compared to other states. Oregon is 11th in a ranking of state foreclosure rates, with one housing unit out of every 84 units in the state getting a default or foreclosure notice.

More than 19,000 housing units across the state were in various stages of the foreclosure process in the first 6 months of the year.

Analysts said that unemployment is driving foreclosures in Oregon, being second in unemployment rate across only to Michigan.

In a chart showing the top 203 metro areas in foreclosures in the first 6 months of 2009, Portland, the largest city in Oregon, was in 60th place. It had 11,647 default and foreclosure postings and had one housing unit out of every 65 units in the foreclosure process.

Salem was 64th in the ranking, with 1,724 foreclosure postings and one housing unit out of every 69 units hit with a foreclosure action. The metro area covered by Springfield and Eugene ranked 90th, with 1,188 foreclosure actions and one housing unit out of every 125 units in a stage of foreclosure.

In June, Oregon had more than 3,000 housing units in the foreclosure process, with 952 units already in the foreclosed house for sale lists of lenders.

Market data showed that prices of properties in the counties of Hampshire, Hampden and Franklin fell by 10.1 percent from April to June. The number of properties sold for the period also declined slightly compared with figures for the same quarter a year ago.

The median single-family home price in the three counties in Pioneer Valley for the second quarter was $187,000, lower than the $208,000 recorded in the same period the previous year.

Additionally, the volume of home sales declined by 2.3 percent to 1,083 from 1,109. According to industry experts, the price decline in the second quarter was brought about by the growing foreclosed home listings which offered low-priced properties and short sales. They explained that short sales involve distressed properties for sale that both homeowners and lenders agreed to sell at less than the amount of the total mortgage owed.

Experts said that majority of properties on foreclosed home listings were purchased by buyers who intend to improve them, and as result, improving the neighborhoods too. Meanwhile, investors who buy repossessed homes tend to resell them at higher prices.

The decline in quarterly numbers do not alarm industry experts as they take in some signs that home sales volumes are picking up. Last month, home sales in Pioneer Valley rose by 10.2 percent to 465, compared with 422 the previous year. Home sales volume in June was the third straight month of increases, prompting experts to say that the market is starting to gain back its normal seasonal
rhythm.

Meanwhile, the number of properties under contract in Massachusetts last month rose by 5 percent to 5,153 from 4,885 the same month last year. Experts noted a high demand for smaller properties in Hampshire County. They said that small homes are popular among first-time homebuyers and sales of this type of property may help boost the median price.

Home sales volume in Hampden County dropped by 4.6 percent to 752 from 788 while the median price declined by 9.2 percent to $172,500 from $190,000.

Statewide, home sales volume dropped 9.3 percent to 9.544 from 10,519 while median price declined by 9.9 percent to $292,700 from $325,000 due to the abundance of cheap properties on foreclosed home listings.

They explained that with foreclosures, the time timeframe is about one month to one-and-a-half month while short sales timeframe is estimated to be three months to four months, making them difficult to buy.

They said that foreclose houses are bank owned and the banking institutions’ selling process for foreclosures is more defined. They added that foreclosures are quick and easy to dispose over short sale properties.

Data showed that 60 percent of home sales in Cape Coral are foreclose houses. Short sales take up only a small portion of the total home sales in the area. This is because banks do not have procedures on short sales, they do not own the properties and they are not as motivated, experts said.

Meanwhile, experts said that when buying foreclosed homes, potential buyers should have more knowledge about the properties they are planning to buy, especially when it comes to the condition. Most foreclosure properties are sold on as-is basis so it would be wise for potential buyers to hire a home inspector.

Most foreclosure properties on the market are priced below the replacement cost. Experts noted that home prices during the housing boom of 2004 and 2005 were irrationally high. Today, home values were irrationally low encouraging investors and second-home buyers.

They said that many homebuyers are cash buyers and often, individual homeowners find themselves competing with buyers who have cash, who do not need to prequalify for a loan and can close a sale in just two weeks. This trend has made it hard for buyers looking for a primary home and they may find the buying process both challenging and frustrating.

Experts suggest that buyers prepare their financing before making an offer for a property. Some banks may require a full loan approval while others will prefer handling the prequalification.

They said that buyers will have a better chance of purchasing houses to live in if they return on the market. There is a possibility that previous deals did not work out and banks are looking again for buyers.

Experts said that for good deals, buyers should watch out for foreclose houses that re-entered the market or where prices have been reduced.

State officials launched a television campaign aimed at intensifying the state information drive about the availability of free foreclosure counseling services offered by the state. Through the television spots, several officials of the state Department of Housing and Community Development and housing counselors speak and encourage troubled homeowners to seek help from state services aimed at containing foreclosed homes.

In a recent report on foreclosure filings and foreclosed homes nationwide for the first 6 months of 2009, Maryland had about 18,112 foreclosure notices filed, an increase from the 17,625 filings in the first 6 months of 2008. One household out of every 128 housing units in Maryland was hit with a default and foreclosure action in the first half of 2009.

According to Maryland officials, despite the 2.8 percent increase in foreclosure filings in the first 6 months despite various state initiatives to contain foreclosed homes, they are still hopeful that the combination of state and federal programs will help more families keep their homes.

Based on data from the Home Ownership Preserving Equity program of Maryland, over 6,800 distressed homeowners have saved their homes from foreclosure through the help of the state HOPE program. Additionally, almost 23,000 consumers were given assistance in the resolution of their financial difficulties.

The state HOPE program was launched in November 2008 after Governor O’Malley and other state officials obtained commitments from six mortgage servicing firms to develop and implement a loss mitigation scheme that would help troubled Maryland homeowners keep their homes after missing months of payments.

Aside from providing free counseling programs and free legal assistance to distressed homeowners, the DHCD also runs other foreclosure prevention initiatives that provide loans to homeowners to help them keep their homes. Since the launching of these programs, the state of Maryland has provided a total of 152 assistance loans worth $27.7 million.

The other statewide foreclosure mitigation program of the state, which is funded under the Neighborhood Stabilization Program of the federal Department of Housing and Urban Development, has been launched with an initial funding of over $46 million.

Under this NSP-funded program, Maryland housing officials will acquire foreclosed homes in foreclosure-battered areas, rehabilitate them and then sell them to low income families at low interest rates. Aside from containing foreclosed homes, this program will also solve affordable housing problems across the state.

Encouraged by lower mortgage rates, federal tax incentives, lower prices of foreclosed houses and bigger inventories of homes for sale, people decided to pursue their home ownership and home purchase plans.

According to the data, total sales of existing homes jumped to an adjusted yearly pace of 4.89 million, marking an increase of 3.6 percent. Analysts said this yearly rate was the highest rate since October last year and was higher than what they predicted.

Stuart Hoffman, the top economist of PNC Financial Services Group, said that the housing market has finally bottomed out. He said his total sales projection for June was 4.9 million, which was right on the dot. He added that the unemployment rate is rising, but higher home affordability has been offsetting its effects.

The higher total sales of existing homes nationwide for the month of June also affirmed the statements of Federal Reserve Chairman Ben Bernanke about the national economy. He said that the housing sector appears to be starting its recovery from the harsh effects of foreclosed houses.

But Bernanke also warned that the recovery is being slowed down by a significant decline in household wealth and the rising unemployment rate. He also pointed out the effects of prices of foreclosed houses on declining property values.

Previously, in a survey by Bloomberg News, economists predicted that sales of existing homes for June would increase to an adjusted yearly rate of 4.84 million compared to the 4.77 adjusted yearly rate for May. This prediction is also close to the nationwide total sales figures just released.

On the other hand, based on national housing data, the number of homes for sale nationwide in June decreased to 3.82 million, a drop of 0.7 percent. At this inventory level, approximately 9.4 months are needed to sell all the homes for sale.

In May, the inventory of homes for sales was worth 9.8 months. According to real estate analysts, a home supply worth 7 months has been the supply level during normal times. They predicted that property values may stabilize by the end of the year or early next year.

Lastly, they also said that the median price for existing homes in June dropped to $181,800, compared to the $215,000 median in June 2008, as the prices of foreclosed houses pulled down median prices.