The first event will take place on Saturday, March 27 at Morgan Park High School, 1744 West Pryor Ave. (111th & Vincennes Ave.), from 9:30 a.m. to 2 p.m. The fourth quarter of 2009 had the highest level of foreclosure filing activity in the six-county Chicago region for any quarter since the foreclosure problem began in 2006, according to the Woodstock Institute.

In 2009, approximately one in 25 mortgageable properties in the City of Chicago were in the process of foreclosure.

In the City of Chicago, new foreclosure filing activity increased more than 10 percent from 2008 to 2009, with 22,685 new foreclosure filings.

The Chicago neighborhoods of Lincoln Park, Uptown and East Side had among the highest increases in foreclosures in 2009 compared to 2008 – 103.2, 78.4 and 74.4 percent, respectively.

Condominiums have also been particularly hit hard: New foreclosure filings on condominium units in Chicago increased 36.8 percent between 2008 and 2009, compared to an 8.6 increase for single-family properties during the same period. (All statistics stated in this release are from the Woodstock Institute.)

“No individual or family at risk of foreclosure should ever be embarrassed about their situation,” explained Ellen Sahli, first deputy commissioner, Department of Community Development. “Instead, step forward and get the free and valuable help being offered at these important events. Thousands of other Chicago homeowners have successfully modified their loans and kept their homes. We’re here to help!”

Chicago homeowner Michael Brothers was close to losing his home to foreclosure last year. He worked with Neighborhood Housing Services to apply for, and received, a permanent loan modification in July 2009. His monthly principal and interest payment dropped from $871 to $504, with a fixed rate of 5.25 percent.

“Keeping your home isn’t going to happen by just sitting there,” explained Mr. Brothers. “At the time I was going through this foreclosure, I thought it was hopeless. But there was a light at the end of the tunnel. NHS and this loan modification was that hope and light.”

“ATG and our volunteer real estate attorneys know this continued alliance with the City and Neighborhood Housing Services of Chicago will help thousands of homeowners in 2010,” stated Peter Birnbaum, president and CEO of ATG.

“Housing is the foundation of Chicago’s communities and this unprecedented effort is greatly needed,” stated Michael van Zalingen, director of home ownership services at NHS. “Two things that will increase qualified homeowners’ likelihood of getting loan modifications this year are, one, the lenders are much better staffed to process the loan modification applications, and two, we are using an online system for completing and submitting the applications at these events. This means no lost paperwork and a complete and instant transmission of necessary documents to the lenders.”

This follows an announcement by the Obama Administration that CalHFA is one of five state housing finance agencies slated to receive a total of $1.5 billion from the federal government’s Emergency Economic Stabilization Act of 2008. In addition to California, the funds will support efforts in Arizona, Florida, Michigan and Nevada. All five states have seen average home prices decline by 20 percent or more. Under the Obama administration’s plan, the funding can be used for innovative programs to assist unemployed homeowners, homeowners who owe significantly more than their homes are now worth and for those facing challenges associated with second mortgages. The programs will be available to homeowners, regardless of whether their mortgage was initially financed by CalHFA.

The InterContinental Montelucia Resort & Spa which has 293 rooms has been announced that it is heading towards foreclosure and scheduled for disposition on April 28 after its opening last fall. There is also the W Scottsdale which hit foreclosure a few weeks ago.

According to releases from press and media is that the owners of the Montelucia is having a troubles with a $185 million mortgage held by Eurohypo AG of Germany.

Senate Democrats are advancing legislation that would allow judges to reduce the principal or “cram down” the amount owed for the primary residences of borrowers who have sought Chapter 13 bankruptcy protection. Chapter 13 is a bankruptcy status that allows debtors to retain assets and pay back their debts over three to five years.

Judges can currently modify the terms of credit-card and other debt, including vacation homes, but haven’t been able to modify primary residences since 1979, when the U.S. bankruptcy code was enacted.

Giving judges the ability to restructure mortgages would help borrowers who have been unable to get their loans modified because the loans have been packaged into securities and sold to multiple investors, who won’t agree on a solution.

One sign that this may be inevitable: Giant lender Citigroup recently supported this bill, much to the dismay of rival lenders.

Rod Dubitsky, Credit Suisse managing director and lead housing analyst, also would like to see money from the government’s Troubled Asset Relief Program being used to buy up loan portfolios and modify them as part of a national government program.

“We have outsourced the housing recovery to loan servicers who are inadequately staffed and don’t have the freedom to do what is needed to minimize housing costs,” Dubitsky says.

Ron Faris, president of Ocwen Financial, a publicly traded servicer of subprime loans, says there is no financial incentive for most servicers to help strapped borrowers stay in their homes.

“Mostly it’s 50 basis points to the servicer whether (the borrower) is paying or not paying,” Faris says.

Writedowns and rewards for helpful servicers
That’s part of the reason why we’ve seen such a dismal success rate with loan modifications to-date, Faris says. The other reason is that many servicers lack the know-how or staff to carefully study a borrower’s total financial picture and tailor a solution.

Most of the loan modifications done to date, analysts say, do not involve reductions in principal, rate or term, but rather forestall the inevitable by rolling delinquent payments into a new and still unaffordable loan.

According to the comptroller of the currency, 52% of the loans modified in the first quarter of last year fell delinquent again in six months.

“Something is wrong if you are getting that kind of default rate,” Faris says.

With these kinds of inefficient solutions, and with prices continuing their downward slide, more borrowers are simply choosing to walk away from their homes, says Mark Zandi, chief economist of Moody’s Economy.com.

“Millions of homeowners are underwater, deeply underwater on their house and with any increase in expenses they are stepping away from their home,” Zandi says. “I think the only way to mitigate the surge in foreclosures is to have a government plan to have mortgage write-downs.

“It’s costly, but at the end of the day, not doing that and allowing these millions of dollars to go into foreclosure will cost more people their jobs.”

Faris, whose firm has received some attention for its successful foreclosure mitigation efforts for subprime loans, would like to see government get more involved in monitoring the performance of servicers and allocating work to those companies that are returning calls and helping borrowers keep their homes.

Here is the fun part you can gain from previous homeowner’s lost. Did you know? Because these houses where owned and repossessed they are being sold for basically what was owed on the mortgage. So whenever you hear of a Foreclose Auction go out and see you may just end up with a house for less than you think.

They will use $50 billion of the recent $700 billion bailout package, This will provide approximately $500 billion to $600 billion in government guarantees on at-risk mortgages. With this in effect it will require banks,savings and loans to offer loans with lower interest rates for a five-year period.

[Source]

1) Search bank websites.

Banks often list their foreclosed properties for sale online. At Bank of America, for example, about 800 residential listings are posted, including 156 in California. Prices, photos, and home descriptions are listed along with agents’ contact information. Willie Williams, a real estate agent in Inkster, Mich., says that it’s a useful resource but warns that listings are often limited. He recommends also checking the online listings of Fannie Mae and Freddie Mac, which purchase mortgages from banks.

2) Look up government-owned listings.

The Department of Housing and Urban Development lists the foreclosed homes that it owns on its website as well as through local real estate agents. Once you find a home you’re interested in, you can make an offer through the agent representing the property. The department warns that the homes are sold “as is” and that after the sale is made, it is not responsible for any repairs or problems.

3) Visit your county’s offices.

Foreclosure information is filed with county offices, some of which post it online. In Boulder County, Colo., for example, current foreclosure listings, as well as weekly sales, are published on the county website, where users can search by ZIP code or street address. Sheryl Del Rosario, a deputy public trustee in the office, says interested buyers can search from home or come into the office to use the public computers. They can then bid on available properties every Wednesday morning.

4) Pay for a foreclosure listing service.

Some companies, such as RealtyTrac, offer comprehensive foreclosure listings for a fee. At RealtyTrac, $49.95 a month gets users access to around a million listings that cover about 75 percent of the nation’s counties. They include homes already in foreclosure as well as those approaching it. (Website visitors can search a simplified version of the database free of charge.) Users can make offers online for many of the properties, which aren’t binding but get the process started, says spokesman Daren Blomquist. Users usually work with either the agent or owner listed in order to complete the purchase. The database also provides estimates of the property value based on comparable sales in the area, which Blomquist says helps buyers determine whether they are getting a good deal.

5) Work with a real estate agent.

Real estate agents often know about local properties that are nearing foreclosure because they network with other agents and are familiar with the local market, frequently working directly with banks and other lenders. Donna Dickson, an agent with Burgdorff Realtors in Maplewood, N.J., says that while online listings often include properties that are already under contract with new owners, real estate agents can help buyers find deals before it’s too late. She suggests developing a relationship with an agent who will quickly let you know about new foreclosed properties.

Via [Yahoo Real Estate] & [US News]

4) Buying houses in preforeclosure enables you to create unusually large equity spreads. Recent economic uncertainty has caused a lot of foreclosures, and rising rates will cause more in coming years. If banks had to take back all of the properties that went into foreclosure the FDIC would shut them down. They know this, so they try not to take properties back they don’t have to. By requesting the Lender discount what is owed on their payoff, large spreads of equity can be created on houses that are totally “maxed out” with loans. This can’t be done on loans not in default.

5) Because Lenders are under pressure to liquidate bad loans rather than take the property back, large discounts can be negotiated. After becoming familiar with the issues that cause Lenders to discount, larger and larger discounts can be achieved as you hone your negotiating skills.

6) If your plan is to buy and hold the property, having good enough credit and financials to get bank financing excludes a great many people from getting into real estate. On top of that, if you do get a bank loan, your financial exposure is at it’s maximum when everything is in your own name and personally guaranteed. Buying houses in preforeclosure allows you to simply take over the existing financing already in place. No qualifying needed. You can take title to the property in a Land Trust, begin making payments on the existing mortgage(s), and still get all the tax advantages, appreciation, depreciation without any of the risk of being personally liable for the mortgage and the property.

7) If you have ever bid at auction for property at the courthouse steps, you are only too aware of the competition breathing down your neck. Lots of mind games. The 40 thieves are talking trash to you trying to get you not to bid. If you are Larry Bird, no problem. Make sure you have $500K on your credit line though. However if you are not the ‘Bird’ and you don’t pack half a mil’ of credit, you can sneak in and avoid this NBA showdown by buying the house during the preforeclosure period… before the auction.

Once you arrive at the property you’re only able to in most cases, view the outside of the home. You really need to see the inside if you are to properly make a decision and this is always extremely difficult because it’s not like an open house. There are several options here and it really depends on your judgment and comfort to be able to have a peek inside. Your options are to walk up the steps and knock on the door and see if anybody is home, if the house looks vacant or abandoned maybe take a quick walk around the property and peek through any windows without disturbing the neighbors, or just walk away and look for a different property. Now I’m not suggesting you trespass nor illegally enter a property and that’s why I said use your judgment. If it’s nighttime and you’ve got a flashlight it’s probably not a good idea to wander around the property unless you want the local authorities coming by to meet you.

Let’s say you were able to see the property and got a nice glimpse of the inside. You felt it’s a good prospect to bid on. Your next step is determining what it will of praise for. I’d recommend you hire an appraiser, realtor, or another investor who has more experience to help you pin down an approximate price on what it will appraise for. There’s a good chance depending on if you were able to get a glimpse of the inside in the previous step, that the appraiser will not be able to look at the inside and only give you a rough appraisal based on what he or she can see on the outside. Of course, there are exceptions, and you might not be too disappointed if you trust just the condition of the outside.