Finding foreclosure listings in underwater markets can result in profitable investments for individuals who can afford to wait for several years before they can sell their acquired properties at high profit levels.

According to Karen Weaver, director of securitization research at Deutsche Bank Securities, investors can find a lot of severely underwater mortgages in several areas of California, Nevada and Florida. She said that in many parts of these three states, home values have gone down sharply for as many as 75 percent of all mortgage borrowers in these areas.

Nationwide, 26 percent of all mortgage borrowers are underwater. They owe much more than the value of their homes.

In San Diego, home values have gone down by approximately 40 percent since the first quarter of 2006, based on data from the Standard & Poor’s/Case-Shiller home price index for 20 major metro areas.

For the past three months, house prices rebounded and returned to the price level in October 2002, the period before the housing boom. In July this year, home prices returned to the home price level in September 2003.

Because of the sharp home price declines, the number of homeowners deliberately walking out of their mortgages and letting their properties go into foreclosure have been increasing, giving more opportunities for finding foreclosure listings in areas hit by substantial price declines.

According to credit tracking firm Experian PLC and consulting firm Oliver Wyman, the number of homeowners committing strategic defaults has risen to 588,000 in 2008, a staggering increase of 128 percent. The firms reported that about 67 percent of those who deliberately defaulted lost their primary residences to foreclosure.

Strategic defaulters are those who deliberately stop paying their home loans, although they still have money to make their monthly payments, as shown in their monthly income and in their continued payments of other debts such as credit card debts.

According to analysts, these people deliberately defaulting make up around four percent of all underwater borrowers. The percentage could soar if home prices go down further, the analysts added.

Mortgage analysts added that the number of strategic defaulters could increase in states where deficiency judgments are prohibited. These states prohibit lenders from going after homeowners for the difference between the loan amount and the home sales proceeds.

For investors finding foreclosure listings, nonrecourse states such as California, Arizona, Oregon, Minnesota and Hawaii may offer more profitable real estate investment opportunities.

The National Association of Home Builders has called on the U.S. Congress to extend the $8,000 federal tax credit offered to first-time home buyers or taxpayers who have not owned a home in the last three years to November 30, 2010 to give more time for potential home buyers to obtain financing and cut down inventories of new homes, existing homes and foreclosed houses. The tax credit is set to expire on December 1.

NAHB also is urging Congress to offer the federal tax credit to all buyers of main residences and not just first-time home buyers.

According to Joe Robson, chairman of NAHB, if the tax credit scheme is extended, it would result to 383,000 more home sales, creating around 350,000 jobs in the coming months and year. NAHB estimated that the extension would result to 80,000 housing starts.

Robson also explained that the tax credit extension and expansion would help solve the unemployment problem, as the house construction sector comprises over 15 percent of the country’s gross domestic product. Currently, the nationwide unemployment is nearing the 10-percent level.

Robson also explained that NAHB members will meet with their legislators in their respective states during the August recess to explain other factors clobbering the home building industry.

One of these is the appraisal process, which the NAHB says is unfair to home builders. NAHB members are complaining that new homes are being appraised at very low prices because the sales prices of foreclosed homes and distressed properties are being used as comparables. A recent survey held by NAHB found that 25 percent of new-house sales are not closed because new-home appraisals are far below the contract prices.

The homebuilders are asking Congress to require the Federal Housing Finance Agency, Freddie Mac, Fannie Mae and the Federal Housing Administration to create an appeals process for appraisals, like the one established by the Veterans Affairs Loan Guaranty Program.

NAHB are also asking lawmakers to support the net operating loss relief bill already being discussed in Congress. This proposal eliminates the $15 million limit on average yearly gross receipts and allows 2009 losses to get qualified for the expanded carry back scheme.

Additionally, home builders are also asking Congress to pressure banks to provide them with loans for the purchase and development of properties and to give construction borrowers time and flexibility to sell their new homes and developed lots.

With the increasing number of properties on repo home listing and proliferation of fraudulent foreclosure prevention schemes, distressed homeowners are finding that there are few options that can help them avoid foreclosures. Or so they think.

Foreclosure counseling services have proven to be a great help to distressed homeowners who want to save their properties from being placed on repo home listing. Housing experts are one in saying that foreclosure counseling can help distressed families remain in their properties.

And even if foreclosure counseling services failed to stop properties from being placed on repo home listing, they could at least help troubled homeowners get through the stressful process of foreclosure, housing experts said.

Housing experts in Minnesota pointed out that homeowners who have good credit standing are finding options are scarce for them who did everything right when choosing their mortgages. The foreclosure problem that rocked the housing market started with high interest subprime mortgages. The situation became a crisis when mortgage payments increased beyond the capacity of homeowners to pay.

Last year, the foreclosure problem affected about 26,265 families in Minnesota and in the first quarter of 2009, it wreaked havoc on 5,157 lives. And as the economy continues to languish and unemployment rate increases, even homeowners who have traditional mortgages were in danger of losing their properties to foreclosures.

The Minnesota Home Ownership Center has been a haven to homeowners who are on the brink of foreclosure. The center has helped troubled homeowners communicate with counselors from various nonprofit organizations that provide help, including the Lutheran Social Service.

Lutheran Social Service’s financial counseling program director Dan Williams said that if a homeowner can prove that he can continue to fulfill his monthly mortgage payment, then the organization can surely help him.

However, if a homeowner is financially strapped and the value of his property is worth less than his mortgage, the chances that the organization could help him save his home from repossession is doubtful, Williams said.

Lutheran Social Service has been providing foreclosure counseling in the city of Duluth. Williams claimed that the organization has benefitted from its relationship and close collaboration with the administration of Mayor Don Ness who last year, ordered the setting up of a task force to address the foreclosure problem in the city.

Data showed that 418 homeowners sought foreclosure counseling in St. Louis last year. Out of these numbers, 241 homeowners or 58 percent were able to save their homes from being placed on repo home listing.

A bill that would expand the existing $300 billion initiative of reducing foreclosed home inventories was passed by Congress on Tuesday.

First-time homebuyers are given another incentive to entice them to buy existing, new and foreclosure listing properties. The Federal Housing Authority (FHA) will provide a tax credit of $8,000 to first-time homebuyers of existing, new and foreclosed properties.

If you are a homeowner troubled by foreclosure listings and attracted to various stimulus grants on the Internet, beware. It is true there are several financial grants available under President Obama’s Home Affordable initiatives, and they are available to you automatically as soon as you submit the needed documents. Ignore scammers and swindlers who tell you otherwise.

On February 18, 2009, President Obama revealed his plan for dealing with the sinking US real estate market. The $75 billion plan targets the growing number of foreclosures in the country and will offer relief to homeowners who have been responsible with their sub prime loans but because of personal tragedy or rising interest rates are falling behind with mortgage payments. It is expected that the plan will help 9 million Americans who face foreclosure on their homes.

Because of the rise in foreclosure cases, frauds have seen a new opportunity to make money. While some foreclosure prevention companies may be legitimate, others are simple scheming. They promise to save distressed owners from foreclosure but they just collect money from homeowners and deliver no service at all. Spare yourself from being [...]

The Nassau/Suffolk Law Services Committee has set up its Volunteer Lawyers Project at the Nassau County District Courthouse located in Hempstead where Long Island foreclosure cases are decided every day.

Since foreclosure is still escalating all over the country, FDIC Chairperson Sheila Bair proposed to use $24.4 billion from the $700 billion Troubled Asset Relief Program (TARP). She is now appealing to the incoming Obama administration to see this fund through.