Out of this national figure, six States account for nearly 60 per cent of the total foreclosure filings. They are – California, Florida, Arizona, Illinois, Michigan and Texas. The top ten 10 Metro cities reporting highest foreclosure activity are – Las Vegas (Nevada); Phoenix (Arizona); Modesto; Stockton; Riverside-San Bernardino-Ontario; Merced; Vallejo-Fairfield; Bakersfield (all in California); Cape Coral-Fort Myers and Orlando-Kissimmee (in Florida).

So you can see the foreclosure situation is not bright. If you are caught up in any of above locations, chances are that you are sailing in the same boat with other distressed home owners. Foreclosure is a long drawn process, where the lender and the barrower are put to hardships – loss of time, money and prestige.

The inventory of unsold homes – foreclosed and waiting for public auctions as also repossessed by banks and lenders after foreclosure public auction – are huge. In this melee if your property is caught up, it will be months for you to get back your mental piece.

On the other hand there is an alternative option available in front of you – the Short Sale option. This is a compromise with the mortgage lender that instead of going in for foreclosure – you can sell off your housing property to a prospective buyer, with the consent and approval of the lender. You will be “fully released” from the mortgage debt, by paying off the mortgage on completion of the Short Sale and realization of the proceeds.

Remember – the Government has come forward with tax credit incentives for home buyers – $8000 for first time home buyers; $6500 for home buyers who have lived in their principal residence for 5 years and now wish to relocate to a newly bought house; and increased income limits for individuals and couples.

So the timing is ripe for you to cash in on these favorable circumstances, by exercising the best option of Short Sale of your distressed property.

WILDA RODRIGUEZ

Nations Realty

As per latest statistics of January 2010 the top ten foreclosure-crisis-stricken States are: Nevada; Arizona; California; Florida; Utah; Idaho; Michigan; Illinois; Oregon; and Georgia.

Nevada’s foreclosure filings in January continue to be the highest in the country (for the 37^th consecutive month). Although a decrease by 18 per cent is recorded in the year-over-year figure of foreclosure filings, the rate of foreclosure is four times more than the national average in January. Virtually one in every 95 Nevada housing units received a foreclosure filing – demand notice, actual foreclosure or repossession after foreclosure public auction.

The second highest foreclosure filings are recorded in Arizona. There is 4 per cent increase in the figures in January, compared to the previous month. It is noted that one in every 129 housing units in Arizona received a foreclosure filing.

In both the above locations –  particularly Las Vegas in Nevada – Short Sales are becoming more popular as the best alternative for foreclosure avoidance. This is evident from the figures that 21.1 per cent of all existing home sales in Las Vegas are Short Sales.

Judging from the way Short Sales are becoming more popular among distressed home owners, the Government seems to be keen on encouraging this trend. In December 2009, the U.S. Treasury Department has introduced new guidelines for Short Sale completion.

The law makers in Phoenix Arizona are contemplating a bill, towards making realtors learn the new strategies of Short Sale. It is reported that the State’s Short Sale Task Force has recommended for successful navigation of the Short Sale process and the legislature make it a mandate for realtors to take up 15 hours of Short Sale classes.

In yet another development, the local institution of Las Vegas – Five Star Institute (FSI) has given importance to Short Sale processing. A Short Sale Summit has been slated to be held on March 12, as part of their West Coast 2010 Spring Training. They are planning to conduct exams for a course in Short Sales, where real estate agents and practitioners will participate, to master the skills of Short Sale process. Successful attendees will be awarded with Five Star Short Sale Certificates.

So there is no question –  Short Sale has attracted most of the crisis-ridden home sellers as the best option for avoiding foreclosure.

In comparison with distressed property activity during the month – 13.4 per cent of damaged Real Estate Owned (repossessed by mortgage lenders and banks after foreclosure public auction) property sales; and move-in-ready REO properties accounting for 13.8 per cent – the figure of Short Sales are well above.

What does it mean? Well –  once looked down upon as a slow and problematic process, the Short Sales are getting popularity among home owners, to dispose of their distressed properties as the best method, to avoid foreclosure.

In the home purchase market, as recently as November 2009, the above survey tells that the figures of Short Sales stood at 12.4 percent; while ready to move in REO properties accounted 12.6 per cent and that of damaged REO properties stood at 12.3 per cent of the total real estate activities nationwide.

If you analyze the reasons for the momentum gained by Short Sales activity, you will find that first-time home buyers are mainly attracted by the lucrative sale prices. They get good housing properties – well maintained by the home owner until the time of short sales, in contrast to the deserted foreclosed homes.

According to the survey results, the Short Sales properties are available typically for 91 per cent of the list price, whereas on an average, the ready-to-move-in REO properties are sold at 99% of the list price, quoted by the lenders repossessing them.

Yet another reason why Short Sales are becoming popular is very obvious. By resorting to Short Sales, the lender incurs lower losses in recovery of the mortgage loan. This can neither be guaranteed in a foreclosure sale public auction nor on the sale after repossession. At times, the lender incurs more losses by the upkeep and maintenance of the damaged REO properties. Here also the lender derives advantage by the Short Sales, since the property is being maintained as saleable one, by the distressed barrower.

The troubled home owners escape from the impacts of foreclosure, by going in for Short Sales. Thus the Short Sales route provides a win-win situation for both the lender and the barrower. No wonder it is gaining more popularity, as certified by the Campbell Survey.

Compared to December 2009, the total foreclosure listings reported nationwide put together has been 315,716 homes. This is nearly 10 per cent less than what it was in December 2009, although it is 15 per cent more than the level of January 2009. This figure includes – default notices, scheduled foreclosure actions and repossessions by banks and other mortgage lenders.

Category wise break up also shows decline in the trend reported. From the previous month, Repossessions are down by 5%; default notices down by 12% and foreclosure auctions scheduled to take place are down by 11%. These figures when compared to January 2009 are up by 31%, 4% and 15% respectively. This is understandable from the view point that on a year-to-year basis, the foreclosure activity has gone up.

Distressed home owners burst out a sigh of relief by taking note of the situation obtaining as above, in the real estate markets nationwide. This is because, when there is reduction in the foreclosure activity statistics, the chances are more in disposing off their equities – through Multiple Listings, For Sale By Owner and Short Sales. The pressure brought by foreclosure properties at throw away prices in seeking prospective buyers is somewhat reduced.

Talking of Short Sales, unquestionably there is a spurt from different parts of the country – more specifically from California and Florida – in making use of the escape route of Short Sales. This is getting momentum by the awareness among troubled home owners, as the best alternative in foreclosure avoidance.

By resorting to Short Sales those facing foreclosure processes of their homes or in the verge of foreclosure public auction can get away from the crisis. They can clear the debt from the sale proceeds by getting “forgiveness” for the balance mortgage loan through Short Sale approval of the lenders.

Instead of undergoing the ordeal of foreclosure and ruining the credit history, which can cripple their financial activities for at least seven years to come, Short Sale option can give them the relief much desired. It is in this context the recent foreclosure activity statistics announced for the month of January 2010 are most welcome.

The bill (Senate Bill 1130) is prohibiting “foreclosure consultants” from taking any charges until they have fulfilled their promises – these being sketched out on paper in an inked contract. Thousands of residents of Phoenix have been swindled by these firms with amounts starting from $1,000 and going up to $4,000.

The Attorney General of Arizona Terry Goddard who is giving his support to this legislation said, “Too many homeowners are just happy to have someone offer them help, so they give scam artists all their money and then receive no help and fall farther behind on their mortgage payment.”

Recently a legal suit was filed by the office of Goddard against Asset Creation – a firm based in Phoenix. Its owner Marvin Williamson indulged in fraudulent activities by offering to help in matters of loan modification. The court documents show that Asset Creation took from its customers, fees stretching from $1,680 to $3,430 for promised help. It assured its clients that it would be able to reduce mortgage payments by half.

Warnings were given out by housing advocates to the homeowners to be wary of many such firms who assure reduction. These promises are baseless as none, not even bonafide housing counselors can promise modification of mortgage loan.

The new law would permit the prosecutors of the state to bring charges against those consultants “who engage in conduct that constitutes fraud or deceit against a homeowner” for Class I misdemeanor. It could mean a fine of a maximum of $2,500 plus a prison term of nearly six months.

The harangued homeowners of Arizona have been asked to avail of hotline (877-448-1211) to avail of help that is free from housing counselors (non-profit agencies). They are not included in this legislation.

Recently in the last week of January housing advocates met in Phoenix church to alert the residents about these growing foreclosure scams. The forum was the included in a new initiative started to reach out to religious leaders so that they spread the message about the scams and where the beleaguered borrowers can get help.

One of them is Carol Eaton, a resident of Milford and owner of Corp Décor that deals with furniture. She is having a rough time paying taxes and said, “It’s the worst year I’ve ever had for business. I haven’t been buying needless things and I’ve budgeted myself in areas I wouldn’t normally do so.”

Another sufferer is Charlotte Wells of Ansonia who is struggling with medical problems and cannot find the dollars to pay taxes timely. She is listed as one of the 25 top whose taxes are due. Her husband recently had a stroke and although he is recovering he still cannot comprehend all that is going around. Wells said that this has complicated matters as she is concentrating on his health. Till now he used to see to tax matters. Right now he needs continuous supervision and as a result all other issues have taken a back seat.

When taxpayers become delinquent the towns as well as the cities are the first hand sufferers. Last December Bridgeport town had failed to collect over $137 million as taxes. Generally its collection is 97% but so far it has brought in only 48.3% in December 2009.

Anne Kelley-Lenz, the tax collector of Bridgeport said that although in comparison to its own past record its collection is low but in other cities and towns the collection rate is far less. This is because Bridgeport sells its liens on certain types of properties. She said, “We have the ability to sell an asset to a third party and get paid for it. For Bridgeport, it’s a necessity because the city gets paid for any outstanding taxes for the year it’s due.”

Kelley-Lenz that if the city sells the property it is for the best for all concerned. She said, “These liens give the taxpayer an option to set up a payment plan with the new owners of the property. There’s a contract that puts a hold on the foreclosure of the property so the taxpayer can pay the amount owed that the city can’t afford to pay.”

Number three on the tax due list is Wheelabrator that deals with the business of converting waste to energy. This company is contending that its tax dues have been wrongly assessed.