These vacant units attract criminals and vagabonds, bring down the property prices of the adjacent houses and reduce tax collection. Sometimes the exited house owners whose names have not been removed are asked to foot the bills, the taxes and see to maintenance or face penalties for code violations.

A report by GAO (Government Accountability Office) has highlighted this problem. It noted that most of the vacant units were in the poor neighbourhoods. The metropolitan area of Cleveland that includes the counties of Cuyahoga, Geauga, Lake, Lorain and Medina noted 497 foreclosed abandoned units. In Ohio there were 1,544 such units.

The report also noted that the servicers generally abandoned foreclosed units when they calculate that the costs behind it are more than what can be made from selling the property.

The agency interviewed some servicers and found that many servicers were not always updated on property values prior to starting on foreclosures. If they had done so they might have stopped proceeding with this right from the beginning; they would have decided that the foreclosure was not worth it.

The GOA has suggested that Office of the Comptroller of the Currency as well as the Federal Reserve stipulate that the servicers of mortgage give proper notice to the borrower regarding charging off loans and not foreclosing; the borrowers should also be informed by the servicer about their rights to continue residing in their houses and discharging their responsibilities relating to the property.

Also the servicers must notify the local administration when they abandon a unit and obtain current property value rates in advance prior to starting foreclosure in places where there is a high concentration of such units.

The GOA felt that the involvement of the Congress would perhaps be necessary to see to that the federal regulators have the proper authority to enforce the mandates.

Senator Sherrod Brown said, “In this difficult time, we should be doing all that we can to help American families stay in their homes, and this is yet another area of the mortgage servicing industry where a few common sense reforms could potentially help thousands do just that”.

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In Lake County foreclosed houses are soon turning into homes – thanks to a housing programme. Laquita Green is a single mother – one of the beneficiaries of the programme. Standing inside the backyard of her new address on Russell Avenue in Eustis, Green says that she can’t believe this is happening to her and her three children. There are three bed rooms with two bathrooms. The house had been sitting vacant for over a year.
Green and her family had spent the last ten years residing in apartments. Their good luck is due to the ministrations of Habitat for Humanity. They had to work hands on in making the house habitable. The programme was backed by federal funds amounting to $3.1 million awarded to Lake County for renovating and reselling foreclosed units.

This house, worth $100,000 has been the second one bought with the funds from the programme. The mortgage payments of Green would go back to the programme for reusing in the taking over and improving other such empty houses lying around in areas that have been worst hit by the foreclosure crisis. Bill Bearing, the community enhancement coordinator for Lake County has distributed the funds to three other agencies that are partnering the programme.
Of these three, Habitat for Humanity has so far been able to put families into the houses to be converted into their homes. Kelly Pisciotta speaking on behalf of Habitat said, “We are actively looking for additional properties to purchase.” She has actively assisted two families to shift into houses that had previously been foreclosed upon. Plans have been finalized to settle four more families in these types of houses.

Another agency involved in this programme is Homes in Partnership. It has taken over 10 foreclosed houses. Nine families have been contracted for taking these over and waiting the final nod from the lenders confirmed Richard Wentzell the director overseeing operations. The non-profit body is active in the counties of Lake, Orange and Sumter. It endeavours to better the environment of neighbourhoods troubled by too many foreclosures by providing habitable accommodation to those coming from the poorer section of society.

The entity got $1.2 million from Lake County to purchase the foreclosed houses in areas where the numbers are high. The money would be utilized to pay for the renovation and closing expenses of the foreclosed houses.

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Houses are purchased for different purposes – for own occupation, letting it out for deriving continued income and “flipping” transaction by investors for resale. For whatever reason, buying houses from foreclosures and that too from tax foreclosed houses is the order of the day in U.S. Millions of houses are being foreclosed every year in the entire U.S. nation and tax foreclosed houses are a special variety of them. In fact tax foreclosed houses have already crossed the 6 million mark over the counties and metropolitan areas of U.S. country. Tax foreclosed houses are varied in their sizes and accommodation – single family house; multiple family apartment houses; town houses; condominiums and farm houses. The local and federal governments assess the value of these properties and based on the assessment levy the taxes. Apart from these yearly tax liabilities, the governments are also entitled for collection of taxes on mortgage loans borrowed by the property owners. In case these taxes are not paid promptly, then the taxing entities are compelled to take legal action as stipulated in the laws governing the State for collection of these government dues. The Internal Revenue Service (IRS) is empowered to issue Government Tax Lien Certificates on these house owners who have defaulted. Such Government Tax Liens get top priority in the Courts and by issue of the default notice to the respective house owner, the process for tax foreclosed houses is deemed to have commenced.

The taxing entities obtain a Court order for disposal of these tax foreclosed houses after duly notifying the commencement of the foreclosure process and not getting any response for clearance of the tax dues. The tax foreclosed houses are announced for sale through public auction as “deed sale” or sale of “Tax Deed Certificates”. In the case of deed sale, the auction is made for selling the deed of ownership of the property entangled as tax foreclosed houses to the highest bidder. Normally the tax foreclosed houses carry a price only to the extent of the tax dues together with interest and administration charges for the legal action taken thereon. This commencing bid in respect of these tax foreclosed houses will be virtually a fraction of the real value. The home buyers from these tax foreclosed houses at this stage are in for a great saving, as they get the ownership for a throw away price, not available to them in any other method. In respect of public auction of the Tax Deed certificates issued on these tax-foreclosed houses, basically the bidder takes up the responsibility of clearing the accumulated tax dues on the auction date and also assures the future payment of taxes. This way the government gets the tax dues cleared and also is assured of the payment of further taxes continuously. The bidder is entitled to collect whatever taxes are being paid with interest running from 6 to 18% thereon from the original house owner of the tax foreclosed house. This arrangement is valid for only up to a certain time period and if the house owner does not redeem the tax foreclosed houses in time, the bidder will be awarded the title of ownership of the property. In either way the investment is lucrative and is worth making. All these tax foreclosed houses are classified and listed neatly in the website ForeclosureListings.com for the searchers online.

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A potential purchaser of foreclosed houses – those that have been repossessed by the banks, can take their pick from a surfeit of such units in various cities of Arizona. The state is dotted with nature parks, forests, Indian reservations and of course the Grand Canyon is there with all its awesome majesty. For those who love adventure the wide spaces of Arizona calls out to them with open arms. The climate is congenial – mild winters and hot summers; the northern part of the state being cooler ringed in by mountains and green pine forests.

Phoenix is its largest city having for sale a good number of foreclosed properties. The buyer can have a wide range to choose from. The houses are being sold with heavy discounts so that the inventory of distressed houses can be reduced.

There are other cities with foreclosed houses begging to be sold – Mesa, Scottsdale, Tucson, Chandler, Glendale as well as Yuma. 70% of the entire sale in the last year was from the distressed sector comprising of short sales and foreclosure auctions.

Those who are interested in investing in foreclosed units will find a huge choice awaiting them; while going about this job as an added bonus they can take in the majestic sights. The updated foreclosure listings are available online inclusive of photographs and maps for those who do not have the time to make the trip to the state.

Arizona ranked in foreclosure rates in the previous year according to RealtyTrac. More than 163,000 owners of residential units defaulted on their loans. They were served with foreclosure notices – the proportion being 6.12% of all the homes in the state. The national rate was 2.2%.

In 2010 February foreclosure activity in Arizona had somewhat slowed down but it is still behind Nevada. The latter has a foreclosure rate of 1:163. In February 6,053 houses were auctioned and taken over by the lenders. Another set of 10,657 houses have been notified for trustee sale. Nearly 17,000 homeowners in distress in Arizona are in trouble; many have already been evicted.

Last January more than 21,000 residential houses in Arizona were in some stage of foreclosure or taken over by the lenders. Of these some 9,000 houses have already been repossessed by the banks and listed for sale to third parties. The situation can be rewarding to investors and house hunters.

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The economy continues to be weakly trying to stand up. An increasing number in Michigan are walking away from foreclosed houses that have gone underwater. The value of the property has become less than the loan amount due. From 2005 to 2008 the numbers of such people have tripled from 5,100 to 17,250 as per the findings of Experian-Oliver Wyman.

Mark Zandi of Moody’s Economy said that he apprehends the situation to worsen in 2010 and continue on to 2011. Speaking to the Detroit Free Press he said, “As people struggle to make ends meet, they will say, this just doesn’t make sense.”
Underwater mortgages are fueling this trend of people walking away from their properties. Michigan stands fourth in the country as regards underwater mortgages. 38.5% of the house owners counting to 532,774 owe more than the worthy of their houses.

For those who want to continue staying in their houses despite this, the situation does not pose a problem. But it is difficult for those who have to move out because of job constraints or who have lost their jobs and want to cut down expenses. Those walking away usually do so after having failed to negotiate a loan modification or a short sale.

Attorney John E. Jacobs of Southfield focuses on real estate. He said that the societal stigma attached to walking away from loan commitments is fast fading. He said, “When things are that bad, your moral compass, and the obligation to make payments that most people feel, has to give.”

One of those who walked away is Sondara Malone. She is in her mid thirties. In 2005 she purchased a house in Eastpointe with an ARM loan. But the monthly payment of $1,200 together with heating bills and payment for a costly SUV became too costly for her. Soon debts began to bury her. The final blow was when the real estate market collapsed and the value of her house fell. She soon went underwater with her loan on the house calculating to $116,000 on a house that was worth $99,000 in 2007. She tried to negotiate with her bank to either lower payments or to sell it but when nothing worked she took a condo on rent and just walked away. Social worker Malone said, “I didn’t know what else to do. I’m embarrassed.”

Meanwhile strategic defaults are increasing together with more foreclosures.

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The recent housing crisis has caused many landlords to surrender their properties to foreclosure causing many tenants to be evicted by the new owners who fail to give them proper notice and time to make new arrangements. To tackle this problem the Congress has recently passed a law – Protecting Tenants at Foreclosure Act (PTFA) that will reduce the pace of eviction following foreclosure.

Prior to the passing of PTFA when a foreclosure is completed the ownership is granted either to one who has bid the highest (generally it is the lender) at the public auction or to the redeemer of a second lien.

If the property has been rented out on lease at the time of the sale the new owner can keep the tenants by filing a notice with the personnel conducting the sale. If this is not done then the leases become invalid by the foreclosure process. The new owners can then start with the eviction of the occupants and regain the property from the tenants as thought fit.
PTFA slows down the power of the new owner following foreclosure to throw out the tenants. It stipulates that the new owner would have to grant at least 90 days grace period to the tenant from the time the new deed has come into effect. Even if the lease was contracted while the house was in foreclosure the tenant is entitled to this grace period of 90 days. If no written deed exists then the tenancy would be cancelled according the wishes of the new landlord.

If the lease had been contracted prior to the starting of the foreclosure then PTFA allows the tenant to continue to remain on the property till the completion of the terms of the lease. But if the property has been sold to a new owner for whom this unit is the primary residence then the tenant would have to vacate – but after expiry of 90 days.

PTFA does not refer to the problem of the respective positions of the new owner and the renter if the latter has been defaulting during the lease period.

Thus to avail of the benefits of PTFA the lease has to be in proper order – the tenant must not be the owner of the unit or a close relative like child, spouse or parent. The lease must not be between two persons who have close business deals. The rent taken by the landlord must not be less than the rent in the fair market unless it is subsidized as per federal, state or local law.

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Although St. Paul has initially failed to dispose of many foreclosure houses it had bought hoping to sell them to purchasers with certain conditions, it has learnt some lessons from the operation. The condition was that the buyer was to produce proof that he or she had the resources to carry off the repairs that would observe city building rules as well as rules regarding heritage buildings. Now the city is considering some improvements in the exteriors and interiors of the houses to attract buyers.

With extra investment it is expected the properties would fetch buyers paying a proper price enabling the city to make up its investment. The efforts of the city have been helped by certain trends in the local real estate market. There is noticeable activity among buyers hunting for affordable homes.
From 2008 December and 2009 November over 12,000 units with price tags of $120,000 and below have been sold in 13 country metro regions as per the findings of Minneapolis Area Association of Realtors. It marks 95% spike over the sales numbers within this price range during the previous 12 month stretch.

In recent months there have been extra incentives to buy in and around Dayton’s Bluff. Last April the Pohland Family Foundation offered a grant of $1 million to buyers purchasing in 55106 zip code. Dayton’s Bluff is included in this area. The money is being managed by Bluff Neighborhood Housing Services of St. Paul – a non-profit group.

The demand for affordable houses has been matched now with a massive supply of units. It means purchasers looking for discounted houses have plenty of choice before them. Many buyers who have been hunting around in the price range stretching from $25,000 to $100,000 finally end up choosing prices in higher niches around $80,000 when they note that the higher price bracketed houses require less repairs.

Brad Griffith of Edina Reality suggested the officials of St. Paul City should think about working in tandem with the local realtors to sell the houses. The houses could then be listed with Regional MLS of Minnesota. Griffith explained, “The MLS is helpful from the exposure standpoint.”

Recently some of the buyers opting for housing below $120,000 are planning to rent out the units or resell them after repairs. But the city wants purchasers who will nest in these houses. But there are lesser numbers of buyers in this range.

Another problem is that the willing buyers are finding difficulty in getting loans to finance the costly repairs.

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The innumerable abandoned foreclosed houses are attracting criminal activities. The administration has had to clamp down curfew to keep gangs off the streets. It is part of the strategy adopted by the city to stop the houses from being burnt down during the three Halloween nights otherwise known as Angels Night.
The police are determined to keep off the streets the young aged below 18 after 10 p.m. But a more strict emergency measure will take off from 6 p.m. All the steps are targeted to see that the young stay within the safe confines of their residences. Halloween curfew takes off from 10 p.m.

The office of the Mayor Dave Bing sent out a release stating that if any minor was seen on “any public street, sidewalk, alley, park, playground, vacant lot or any other unsupervised outdoor public place, or in any arcade, billiard or pool hall, bowling alley, restaurant, theatre, or place of amusement or entertainment” would be detained and fined by the police.
In previous years the law breakers were kept back by the police until they were collected by the guardians. Gary Brown, former Deputy Police Chief commented “We spend too many resources baby-sitting kids, and if we can limit that, then the police officers can be out doing other things. I thought that was just a waste of valuable resource.”

Eighteen candidates for Detroit City Council including Brown conferred with Bing on Wednesday 28th October to step up anti-arson efforts. The meeting is an annual event. There are five sitting councilors and 13 challengers who are campaigning for 9 open-seats in the general elections to be held the following week.

Bing is being challenged by Tom Barrow. He asked the candidates to put aside all political wrangling and join the volunteers to patrol the neighbourhoods of Detroit on the nights of Thursday, Friday and Saturday. Bing was hopeful of gathering together volunteers numbering 50,000. He said, “We’re asking our angels to come out this weekend to help us prevent anything negative as it relates to fires in our city”

Traditionally 30th October is observed as Devil’s Night – it being marked by fun and pranks laced with mischief. But from the 80’s it has taken an ugly turn with the Halloween revelers using this pretext to set fire to empty houses and properties all through Detroit. In 1984 there were 800 fire outbreaks. Volunteer patrolling has been able to bring down the numbers.

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Florida and other places in America wrecked by foreclosures are facing the problem of treating abandoned pools left behind in vacant foreclosed houses. The pools have become stagnant choked with algae. It is resulting in breeding of mosquitoes and other disease spreading insects.

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The Board of Alderman of Melrose is mulling over plans to pass an ordinance that would financially penalize lenders by imposing an annual fine to the extent of $3,000 for neglecting foreclosed properties. The ordinance suggestion is being given a review by Appropriations Committee of the board. Its target is to clear the neighbourhood of foreclosure blight like unkempt gardens, boarded windows and stagnant pools.

Peter Mortimer, the Alderman of Ward 6 and chairperson of the Appropriations Committee said, “We want it crafted so that it will be effective. We don’t want it to be subject to a legal challenge.” He clarified that the ordinance would be applicable only to those units that were vacant and foreclosed and not to those foreclosed houses that were occupied by tenants even after auction. He said, “There are two prongs – it must be vacant and foreclosed.”

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ForeclosureListings.com has a comprehensive, searchable database of foreclosures in areas like Columbus, Bronx, Derry, Missoula and in the whole country. Try to search foreclosures by state today! Melrose Planning to Punish Lenders Neglecting Foreclosed Houses