The American dream of homeownership took a back seat when the mortgage industry suffered a meltdown in 2005. In response to the millions of delinquent loans, regulators reviewed lending practices and worked with lenders to tighten the guideline to prevent another collapse. The consequence of such tightening is a huge decline in homeownership rate.

With the federal government still working double time to put an end to the foreclosure crisis and create an environment conducive to market recovery, it is difficult to say how everything will turn out in the coming months. But one thing is for sure, individuals and families looking to own a home will be able afford one, thanks to the many cheap homes for sale in the market.

Housing Made Affordable

Foreclosed properties, despite their neglected state, will prove to be the most practical choice for anyone who wants to be a homeowner but is worried about being able to afford it. Sold at prices way below their current market values, buyers will obviously save much money and at the same time, gain instant equity the moment they claim ownership.

But, of course, you need to be realistic if you are keen on becoming a homeowner and looking at foreclosed homes as the answer to your prayers. Some of the facts you need to know about these homes include the following:

• Distressed properties are sold “as is”, which means they will most likely require repair and rehabilitation. Make sure you keep this in mind and find out just how much it will cost you to fix it up. You do not want to go over your budget just because you failed to prepare for the repair expenses.
• There is currently a large inventory of foreclosed homes for sale and grabbing the best deals can be tricky with the many other buyers also on the lookout for these deals. It would help you save time if you choose to subscribe to online foreclosure listings, which are efficient and convenient.
• Do your homework so you can make a reasonable offer. You have to consider the condition of the property as well as the local housing market situation. Check how much similar homes in the neighborhood have been sold for to give you an idea of what a reasonable offer is.

Keep in mind homeownership comes with responsibilities, most important of which, is paying your mortgage. Be sure to crunch the numbers and imagine the worst possible financial scenario you can get into so you can be prepared for any event.

Foreclosure property listings have been boosting the business operations of Fort Myers, Florida-based property preservation company Florida’s Finest Industries. The firm cleans, secures, protects and repairs foreclosed properties in Lee County and other parts of the state.

Oftentimes, it also accompanies law enforcement officers during evictions and does all other tasks needed to ensure that vacant properties do not cause blight in neighborhoods.

With the increase in foreclosure properties, the firm earned about $1.1 million in gross revenues in 2008 and about $1.5 million in 2009. It expects to earn $3 million in 2010, according to firm owners Analisa Xioutas and husband Jack Xioutas.

The Xioutas couple, who previously owned and operated several Wiltshire Cleaners units in Lee County, purchased Florida’s Finest in 2008 because they saw its potential for growth. At the time they bought it from former owner Mark Wilson, it did not have full-time workers and Wilson was operating from home.

Today, the firm has grown rapidly to several offices in Fort Myers and employs five full-time workers to run the business in the area. It also operates a network of subcontractors and about 50 workers throughout Florida.

Florida’s Finest gets its preservation jobs from real estate brokers, agents, lenders and national preservation companies that have projects in Florida.

According to Analisa Xioutas, the overwhelming increase in foreclosed properties in Lee County and in other parts of Florida spurred great demand for real estate preservation firms. In 2009, almost 517,000 houses in Florida entered foreclosure property listings, nearly 22,000 of which were located in Lee County. In 2008, more than 26,000 homes in the county were hit with foreclosure filings.

Realtors in Florida said they prefer hiring Florida’s Finest because its employees can do anything from cleaning to demolition and it also consistently surpasses expectations. They said there are other preservation companies, but Florida’s Finest has been proven in its communication systems and timeliness.

Naples real estate firm Prosults Realty has been hiring Florida’s Finest because of its reliability, price competitiveness and customer relations management. Analisa Xioutas said that her teams always make sure that every property they touch turn out into something they can be very proud of.

Because foreclosure property listings are expected to grow further in 2010, Florida’s Finest and other preservation firms expect to increase further their gross revenues. However, based on customer feedback, Florida’s Finest is set to earn much more than the others.

The large number of low-priced foreclosed properties in Santa Clara, California has cut down the growth of property values in the county as of January 1, 2009, based on a report released by the county this week.

Total assessed property values in Santa Clara grew by only 0.18 percent compared to last year, the smallest growth rate since 1978.

The total assessment was $303.9 billion, marking an increase of only $542 million compared to last year.

County officials said the low prices and high volumes of foreclosed properties contributed to the drop in the total assessed value. They pointed out that when foreclosed properties are sold, the selling prices are often much lower than the previously assessed values.

Countywide, foreclosed properties soared four times to 6,200 units in 2009, compared to the total in 2008.

David Ginsborg, county deputy assessor, said that about 90,000 houses out of the total 400,000 houses in the county lost value this year largely because of the large volumes of foreclosed properties. He said the average value loss for each house was about $170,000, pushing the total net value loss to $17.4 billion.

Larry Stone, the county assessor of Santa Clara, explained that assessed values in the county incorporate market conditions.

Additionally, Ginsborg said that the county is responding appropriately to the declining market values of real estate properties. He said that the county also suffered a drop in assessed value growth in 2007. That year, total assessed value fell by 8.25 percent, a drop from the 9-percent growth rate in 2006. Last year, value growth was 7 percent.

Ginsborg expects assessed value growth to further decline next year because of the continued increase in foreclosures. The expected drop in commercial real estate values will also cut down assessed values further.

When a consumer buys a home in Santa Clara, the buying price is the assessed value, according to Ginsborg. Every year after the purchase, the county assessor adds only 2 percent or less to the home’s assessed value.

The cities which bucked the countywide declining trend are Mountain View, where assessed values rose by 6.2 percent; Los Altos, by 4.3 percent; Los Altos Hill, by 2.9 percent and Palo Alto, by 3.8 percent.

The deputy assessor explained that the four cities had more established communities and had lesser number of entry-level houses and foreclosed properties.

Among the reasons given for the continued rise in number of foreclosed properties are unemployment, subprime lending, adjustable-rate lending and difficult family circumstances such as divorce or hospitalization.

Another major reason is negative equity – home value is less than loan amount. Borrowers who have negative equity, sometimes known as underwater borrowers, often decide to walk out on their loans when their equity gap becomes too big and it becomes senseless for them to continue sacrificing to pay their loans.

According to mortgage data, about one in five homeowners have negative equity. In states where borrowers are not required to pay the shortfall when a house is sold for less than the loan, many borrowers often opt to walk away rather than bear the negative equity.

Even in states where borrowers are liable for shortfall payments, borrowers with big equity gaps allow their homes to become foreclosed properties, hoping that their lenders would not pursue them with the shortfall. Indeed, some lenders often think twice before pursuing unpaid debts because of the cost.

In a study of 1,000 mortgage borrowers who are in different stages of foreclosure, 25 percent said they would choose to intentionally default or allow their homes to become foreclosed properties if they have negative equity. Calling their decision as strategic default, they would do it even if they still have the money to make the monthly payments.

The variety of the responses depended on the extent of the negative equity, the availability and quality of other options and the borrowers’ moral considerations.

Few would decide to make strategic default if their equity gap is less than 10 percent of home value. But one out of six respondents would allow their homes to become foreclosed properties if their mortgages become underwater by 50 percent or more.

Additionally, four out of five think that strategic default is morally wrong. But when the negative equity reaches $100,000, the morality stand wavers. The study also found that more borrowers who are younger than 35 and older than 65 do not believe that strategic default is morally wrong.

The impact of neighborhoods on borrowers’ decision to walk away is also significant. The study found that homeowners in neighborhoods with a lot of foreclosed properties are 82 percent more likely to default intentionally.

In view of the findings, policy makers should address the issue of negative equity when crafting programs to stop the rise in number of foreclosed properties.

On September 19, a foreclosed house in the Healy Block Historic District in Minneapolis was burglarized. The house is situated in the neighborhood that features Queen Anne-style houses built by Thereon Potter Healy. Most of the houses feature decorative balustrades and curved and stained glass windows.

On the afternoon of September 19, thieves entered the vacant property and took the house’s woodwork, stained glass and some copper. Stealing copper pipes may cause fires or explosions.

Real estate agent Connie Nompelis explains that a house is vulnerable for theft and vandalism immediately after foreclosure.

Foreclosed properties pose problems for neighborhoods and cities where these houses are situated. Securing vacant houses is not that easy because it involves bureaucracy, which could sometimes be counterproductive and may jeopardize the neighborhood and the property’s safety.

Under  foreclosure laws, a six-month redemption period is provided for homeowners to buy back their properties after banks foreclosed them.

Boarding a home is not a full-proof way of securing it. Sometimes, a boarded house attracts thieves and squatters. Also, once a home has been boarded, its address is listed on Minneapolis’ website which make it easy for thieves to locate it.

Once a house is boarded, homeowners are given 60 days to take out the boards and protect the property by conventional means such as placing locks on windows or replacing broken glass. Failure on the part of the homeowner to secure his home means that the property is condemned after the 60-day period.

An annual registration fee of $6,000 is imposed by the city on foreclosed properties as long as it remains vacant. Prospective buyers may negotiate the annual registration fee for the property with the city.

New homeowners and the city may draw up an agreement which would contain plans and schedules to bring the property up to code.

What is there to like about foreclosed properties? There are, in fact, many things to like about foreclosed properties. But first, let’s talk about what foreclosed properties are. Foreclosed properties are houses and properties of all kinds that have been foreclosed on by the bank or lender than financed the mortgage loan. There are various reasons that people end up with their house in foreclosure. While it is a sad thing for the homeowner, it is an opportunity for a buyer or real estate investor to save some money on the purchase of these foreclosed properties.

There are several types of foreclosed properties to choose from. There are pre-foreclosures, auction sales, bank owned properties, and government foreclosures. This means that you have many kinds of foreclosed properties to make a selection from. In just about any state across the nation, there are hundreds of foreclosed properties waiting to be sold.

The main reason that people like to buy foreclosed properties is that they can usually get them at a bargain. Foreclosed properties are cheaper than other properties. Houses for sale in the regular real estate market tend to sell for more than foreclosed properties. Sometimes, foreclosed properties sell for as much as 50% below other properties, and other times, they sell for 10% less than other properties. In most cases, this is because the property needs to sell quickly.

While some foreclosed properties do need some work, others are simply ready to move into. Because of the economic changes that occur across the nation, there are often very expensive houses that end up in foreclosure. Foreclosed properties do not have to just be older, run down houses in bad neighborhoods anymore. Houses in many price ranges, different sizes from small to large and houses of every age are now included in the listings of foreclosed properties. If the foreclosed property you are interested in does need some work, you can either do it yourself if you know how or have it done by a professional.

One good place to find foreclosed properties to look at is Nationwide. Nationwide is a foreclosure listings service that will give you the latest listings of foreclosed properties, and you can search for foreclosed properties in any area of the country that you wish. The search process at Nationwide makes it easy to look for properties according to your own personal search criteria. You can search by state, county, city or ZIP code for foreclosed properties that will make a perfect home or investment option for you.