Foreclosure filings in the state dropped to 9,269 in 2009, down by over 25 percent from 2008, when 12,430 foreclosures were filed.

The number of mortgage defaults, however, rose by more than 28 percent to almost 28,000, compared to 2008.

Additionally, the increase in foreclosures in affluent neighborhoods like Concord, Weston and Winchester, is raising concerns because it shows how severe the recession has been. Even the island of Nantucket, where wealthy families enjoy their privacy, has not been spared. Indeed, the island experienced the highest increase in foreclosure filings in Massachusetts last year, posting a 733-percent jump from only 3 filings in 2008 to 25 filings in 2009.

In December, foreclosures also declined on a year-over-year basis, but defaults grew. The number of delinquency notices rose by almost 27 percent to 2,060 while the number of homes repossessed by lenders declined by 8.4 percent from December 2008 to 857 last December.

According to analysts, the number of homes from foreclosures in Massachusetts declined largely last year because of a landmark decision issued by the Massachusetts Land Court that forced lenders to clean up their foreclosure documents before filing them. Others said that lenders have been allowing distressed homeowners to work out loan modifications even if their efforts were expected to just postpone actual foreclosures.

According to Paul Willen, economist of the Federal Reserve Bank of Boston, the housing market is showing signs of stabilization, but the problems of high jobless rates and underwater mortgages are blocking the way to recovery.

Some realtors, however, see opportunities in the decline of home prices in affluent neighborhoods because of the housing crisis. Framingham broker Annette Norton said foreclosures in the $1 million range are giving opportunities to buyers who have been previously considering more expensive homes.

In the meantime, a number of Boston foreclosed homes for sale will be acquired by the city this year using the more than $13 million it received from the federal government under the Neighborhood Stabilization Program. The funding is part of the $47.9 million received by the state to revitalize its struggling neighborhoods.

According to Boston Mayor Thomas Menino, the money will be spent to rehabilitate homes from foreclosures in the neighborhoods of Roxbury and Dorchester, where there are many deteriorating vacant properties.

In December, a total of 2,013 households in the five New York boroughs were given default or foreclosure notices, an increase of 3.3 percent from the previous month. A big percentage of the filings were default notices, indicating that more foreclosures will occur in the first months of 2010.

A higher number of Brooklyn foreclosed homes for sale is also expected in the coming months, as most of New York City foreclosure postings in December occurred in Brooklyn. A total of 757 households were put into the foreclosure process, marking a jump of 151 percent from filings in December 2008. Next to Brooklyn was Queens, which posted 629 foreclosures, up by 21 percent from filings in December 2008.

The foreclosure rate for the city was one out of every 1,652 units, which was much better than the nationwide average rate of one out of every 366 units.

For the entire year of 2009, a total of 20,228 households in New York City got hit with foreclosure property filings, equivalent to one out of every 164 households. The number marked an increase of 4.2 percent from filings in 2008.

Statewide, more than 50,000 households got hit with foreclosure postings in 2009, representing 0.63 percent of all households in New York State and marking an increase of 0.67 percent from 2008 and a jump of 30.2 percent from 2007. Compared to other states, the pace of foreclosure in New York was very low, with 37 other states struggling with worse foreclosure situations.

According to Jonathan Miller, chief executive of real estate firm Miller Samuel, the economic engine of New York has been sustaining the city and the state despite the housing crisis. However, according to him, if unemployment remains high, more defaults and foreclosures are expected.

Another foreclosure issue hounding New York is the rising number of homes repossessed by banks, indicating the sharp decline in properties getting sold at foreclosure auctions.

According to the Furman Center for Real Estate and Urban Policy, the number of real estate owned homes rose to 1,750 units in September 2009 from only 290 units in December 2006. Of about 12,000 homes that went into foreclosure in 2007, 12 percent were subsequently moved to foreclosure property auctions but were not sold off, ultimately ending up as bank repossessed homes.

Canadian investors are taking advantage of bargain-priced properties with the help of real estate management companies. According to Rusty Shields of Pinnacle, nearly 27 percent of all foreclosed properties in the U.S. are being purchased by Canadians. He also said that Canadians are making the right decision in buying now, as prices are in record low levels.

Normand Haas, one of the clients of Pinnacle, said that he has accumulated a portfolio of real estate properties. Over the past five years, he has already earned a profit of 300 percent on three of his properties. Over the same number of years, his relative realized a profit of 280 percent.

Since Canadian clients do not live in the states where they buy foreclosure properties, they use the services of real estate management firms that specialize in foreclosures. Among these is Pinnacle, which uses a proprietary system to search for foreclosures and acquire them at low prices, administer them on behalf of their buyers or resell them at a profit.

Shields said that the business of helping Canadians buy foreclosure properties for sale is not solely focused on profits. He explained that his firm is also helping cut down the number of vacant untended properties that are devastating neighborhoods.

By acquiring repossessed homes for sale, fixing them and renting them out to families that need affordable housing, the firm is helping in the rehabilitation of neighborhoods and development of affordable housing and at the same time earning profits for its clients.

In the U.S., Pinnacle runs its charitable projects through the public foundation called Shield Foundation.

Among the most popular states for Canadian real estate investors is Florida, where record numbers of foreclosures have occurred since 2008. One proof of the popularity of Florida is the proliferation of ebooks and web articles advising Canadians on how to invest in REO homes in Florida.

Canadians are being advised to take advantage of the strength of the Canadian dollar over the American dollar and to borrow investment money in their home country by refinancing their homes if they have enough equity. They are also advised to look for a good real estate agent or reputable real estate management who can advise them about taxes, insurance, closing costs, home ownership and laws on purchasing foreclosure properties for sale in the U.S.

The first thing you should do before looking for homes is to get a loan pre-approval document from a financially stable mortgage lender. The pre-approval letter states the amount you can borrow and the time frame within which you can use the document.

If you are holding a pre-approval document, you have better chances of getting your purchase offer considered by the seller. Knowing your pre-approved loan amount will also help you limit your search to houses within your price range.

You can get pre-approvals online, but make sure you are dealing with a reputable mortgage company. There are now a lot of online entities just fishing for personal information.

When looking for foreclosures, you can start with online foreclosure listings. As you surf, you can also read tips and warnings about how to buy foreclosures and how to buy in places with high foreclosure rates. You can also read about the advantages of using foreclosure listings accessed by paying reasonable subscription fees.

You can also visit the websites of banks to look for their REO listings. Check also if they have exclusive brokers. Oftentimes banks do not have departments that market or sell their repossessed homes and instead hire brokers to sell these homes on their behalf. Contact these brokers as they may have listings that were not yet published on the websites.

Remember also that some banks selling their REOs may prefer that you also take out your home loan from them; others do not have this preference and may also instruct you to get your loan from another bank.

Before making a purchase offer, research the prices of comparable homes that were recently sold near the property you are planning to buy. Do a research on the house – its history and condition, either through public records or through actual property inspection. Check also if the bank is selling the property as is, which is typically the case.

If homes comparable to your target property are selling quickly, submit your best offer, but remember to incorporate repair expenses into your purchase offer.

If you are buying the house for investment, check the absorption pace for your type of property. It might take you a long time to resell your property and you might have to relearn how to buy foreclosures.

Investors can take advantage of lower prices before market recovery pushes prices up. According to Southern California economist John Husing, the housing market in the counties of San Bernardino and Riverside is recovering and that the median home sales price in the region has bottomed out. He added that there could be price fluctuations as lenders pursue their delayed pre foreclosures, but any price decline would not be as steep as in 2008 and 2009.

The median sales price in Riverside in December last year was $196,000, down by 6 percent from December 2008 while the price median in San Bernardino was $154,000, a 14.4-percent drop over a 12-month period. The sharpest price decreases in the two counties occurred in February last year when prices plunged in San Bernardino by 47 percent and by 42 percent in Riverside.

Esmael Adibi, an economist at Chapman University, said that counties in the Inland region of Southern California will experience a slower pace of housing market improvement because they suffered more severe foreclosure rates. But he added that as investors continue to find foreclosure homes and reduce Inland inventory, price levels would improve in the coming months.

In the four other counties in Southern California, the median sales price increased not because of increase in home values, but because of the rise in sales in upscale communities, according to a real estate research company. More homes were sold in December in the high-end neighborhoods of Santa Monica, Newport Beach and Beverly Hills, where the number of homes sold was insignificant in 2008.

Economist Adibi, however, contended that home prices will fall further in higher-cost neighborhoods in Southern California in 2010 as prices in lower income communities – which have already experienced volumes of sheriff sales and sharp price declines in 2008 – continue to level off. The percentage of houses priced more than $500,000 increased to 20 percent of all home sales in December, marking a jump from 16 percent in December 2008 and the highest percentage since August 2008, when 24 percent of total sales accounted for upscale homes.

Because of the still large number of bank-repossessed homes in the listings of real estate brokers in December, buyers can certainly find foreclosure homes at attractive prices in Inland Southern California.

According to a survey done by the Right to the City Coalition, more than 600 condo buildings in South Bronx, Harlem, West Village, Bushwick and Lower East Side were largely vacant or incomplete because speculative investors thought that there are a lot of buyers who can afford to buy high-priced units in the properties they acquired at overinflated prices.

In most of the areas where $36,538 is the median family income and where a large number of households are below the poverty level, condo units were being sold for more than $500,000 to $1.5 million. For over a year now, these properties have remained vacant and have been deteriorating as fast as repo homes in these neighborhoods.

One sad example of property speculation gone bad in New York City was the forced acquisition and conversion of a former factory that was turned into a 42-unit subsidized housing. Despite seeing that the building was already occupied legally by artists, a private equity investor still targeted it, purchased it and filed a court action to evict the artists. Those that resisted were threatened with individual lawsuits.

The building was later resold to a developer who paid almost $20 million, with a $9.8-million loan from American International Group. In 2008, the apartment units were offered for sale at $1,100 per square foot, but there were no takers. Now, the building is abandoned and as dilapidated as the other Bronx foreclosures in the area.

According to William Apgar, adviser to HUD Secretary Shaun Donovan, about 100,000 occupied apartment units in New York City are headed toward foreclosure. Owners have not been able to pay their mortgages and do needed repairs because of low rents, high vacancy rates, expiration of rent subsidies and stricter property lending.

Apgar said that foreclosure rates in the multifamily sector could increase as foreclosures in the single-family sector slow down. Families living in distressed properties could experience worse property conditions and could be forced out of units as lenders pursue repossession proceedings.

Benjamin Dulchin, director of the Association for Neighborhood and Housing Development, also added that about 10 major speculative deals involving over 21,000 apartment units in the Bronx, Harlem, Washington Heights and other areas are in danger of foreclosure in 2010.

In the first nine months of 2009, foreclosure filings in the middle-class neighborhoods of Williamsburg and Greenpoint have risen by 141 percent compared to filings in 2008 while filings in Brooklyn Heights and Fort Greene increased by 71 percent.

Brooklyn appraiser Sam Heskel said that repossessed homes in Williamsburg have been rising substantially in number, including pre-foreclosure condo units.

David Maundrell, founder of Williamsburg brokerage aptsandlofts.com, said that his enterprise is now doing more short sales as homeowners who bought properties in 2005 to 2008 could no longer sustain the high prices they paid.

The median home price in Williamsburg and in Greenpoint has dropped by 14 percent from its highest level in 2007, with prices for new homes declining more sharply.

A rising number of Williamsburg condos that feature high-end features are also entering foreclosure and they are getting difficult to sell because their loan balances are still much higher than their current market values.

Realtors in the area also observed that many investors are shying away from auctions featuring Brooklyn foreclosed homes for sale located in areas that are rent-controlled. Over the past three years, only 19 percent of Brooklyn properties auctioned were purchased by investors and the rest were put back by banks into their listings of REO homes. To sell these homes, banks had to suffer loses averaging 35 percent of their mortgage loan amounts.

In addition to rent control, tenants and former property owners can also be difficult to evict, according to investors. They even said that squatters are easier to evict than tenants and owners as there are laws that protect current occupants from eviction.

Investors planning to purchase homes through foreclosure auctions in Brooklyn need to investigate further if the properties are being auctioned off at ridiculously low prices. Auctioneers oftentimes do not disclose some liens attached to these properties. Prospective auction participants need to make thorough research on the titles of the properties and make sure that repair costs do not substantially increase total acquisition costs.

Two rescue organizations in Arizona, the Lost Our Home Pet Foundation in Scottsdale and the Phoenix group called RESCUE, which stands for Reducing Euthanasia in Shelters Through Commitment and Underlying Education, have been taking in more and more animals from foreclosed homes which have become cheap houses for sale.

Jodi Polanski, president of Lost Our Home, said that the rescue organization is overwhelmed by the rising number of pets that they need to rescue and place for adoption. Last year, the organization rescued about 400 pet dogs and cats which were all abandoned by financially struggling pet owners.

According to rescue personnel, some pets left behind at abandoned homes and fixer upper homes are more fortunate than other pets because they are discovered on time by neighbors who had been willing to feed and care for them while waiting for rescue from animal rescue organizations. Others are found in wretched conditions after they have been left inside properties without water and food.

Polanski contended that families oftentimes abandon their pets instead of bringing them to shelters because they do not have money to pay for the fees.

Jennifer Berry, head of RESCUE, however said that rescue personnel cannot really say the real reasons for all the pet abandonment cases. Most of the abandoned foreclosure pets rescued by RESCUE and other rescue organizations do not have past records. RESCUE also takes in animals from shelters that have euthanasia programs and rehabilitates them and then places them with adoptive families.

Howard and Tammy Teeter, owners of a dog training business in Ahwatukee called Wiggles and Wags, are among volunteers who are training pet foster families. They said that becoming foster parents for abandoned pets is not difficult even for persons who have several children and who already have pets.

According to Tammy Teeter, they train foster parents to treat abandoned pets as normal pets and not as animals that should be treated differently because they have come from miserable situations. Pets should not be too pampered, according to them. They should be trained to follow rules and schedules.

Additionally, abandoned foreclosure pets should also be taught on their first day to avoid raiding the garbage can, avoid barking excessively and avoid playing on the couch.

In Sarasota, a house listed at $235,000 was bought at a discount of $19,380 in October. The figure was far above $10,100 or 5.7 percent, which was the average discount in nearby Tampa. Nationwide, the average discount was $5,741 or 2.7 percent off the average asking price.

According to Bill Geller, head of the Sarasota Association of Realtors, real estate agents now are busier than at any other time over the past two-and-a-half years because of the soaring number of buyers and investors taking advantage of bargain prices.

The length of time properties stay on the market has also been falling from 14 months to 9 months.
Realtor Michael Granston said that he has been selling for the past two years a two-bedroom condo unit which is strategically located in downtown Sarasota, but no one has offered to buy. The $1.2-million original asking price has been reduced by $300,000. With the improvement of the market, Granston hopes he will finally find a buyer.

According to Geller, foreclosures are still pulling home prices down in Sarasota so prospective buyers can still buy bargain-priced repo homes in the area.

In November, foreclosure activity in the counties of Sarasota, Charlotte and Manatee climbed back up to its highest level in the area since July. A total of 3,132 foreclosures were posted, much higher than the 2,561 filings in the previous month and higher than the summer record of 3,029 filings. Total filings in Charlotte and in Manatee rose by more than 200 percent.

Statewide, foreclosure activity stepped up. Florida shot down the declining foreclosure trend nationwide and replaced California as the second highest in foreclosure rate in November.

Jack McCabe, a housing consultant in Deerfield Beach, said that Florida continues to struggle from foreclosures because the state had the highest level of speculative building, speculative buying, toxic-loan making and approval of unqualified borrowers.

In Sarasota, nearly 1,300 foreclosures were filed, an increase of 20 percent from the previous month and a jump of 16 percent from November last year. Across Florida, nearly 53,000 households received default or foreclosure filings. With these high numbers of foreclosures, investors and homebuyers can buy bargain-priced repo homes in Florida, particularly in Sarasota.

The LPS report showed that about 6.9 million families or around 12.4 percent of U.S. homeowners with mortgage loans were in default by at least one month or already in foreclosure in October. The percentage marked an increase from 12.3 percent in September and from 8.6 percent in October last year.

Additionally, homeowners with mortgage loans who are already delinquent by at least three months but have not yet received notices for foreclosure sales increased to about 3.4 percent of all U.S. homeowners or around 1.9 million households, marking an increase from 1.5 percent in October last year, based on the report from LPS.

Early in September, Amherst Securities Group estimated that seven million more homes will be foreclosed in the coming years. In his most recent speech, Federal Reserve Chairman Ben Bernanke also cited the continued growth of listings of repo homes, but he insisted that increased investments in the housing sector will contribute to economic growth in the coming years.

The slide in housing starts in October also dampened earlier hopes of recovery. Based on data from the U.S. Commerce Department, starts for new homes dropped by 10.6 percent from housing starts in September to its lowest level in 8 months. Starts for new single-family houses dropped by 6.8 percent.

However, the recent expansion and extension of the federal tax credit has renewed hopes that sales of newly-built homes will continue to improve, especially now that move-up buyers can also take advantage of tax credits.

Low mortgage levels are also expected to drive sales of all types of residential properties, according to realtors and housing analysts. Rates for fixed-rate 30-year home loans are still below 5 percent for borrowers with good credit scores.

Home affordability is also viewed as a major factor in housing market recovery. Although foreclosures pushed down home prices to low levels, they improved home affordability levels in many markets, enabling more families to realize their dreams of home ownership.

Average home prices almost doubled between the years 2000 and 2006, but since the start of the housing meltdown, home prices fell by around 30 percent. In many areas of the U.S., listings of repo homes are still pushing down house prices to levels lower than 2008 levels.