Bank owned home foreclosures in Springfield, Massachusetts soared by 76.7 percent in January this year, based on data from Boston-based research firm Warren Group.

Springfield became the focus of the mortgage industry nationwide last year when Massachusetts Judge Keith Long ruled that two foreclosures in Springfield were invalid because of the defective documents submitted by the big banks that foreclosed on the properties.

In January, a total of 76 foreclosures were completed in Springfield, up by almost 77 percent from the 42 foreclosures completed in January 2009. The city followed the foreclosure trend of its county, Hampden, which posted 109 completed foreclosures, a 49.3-percent increase from 73 foreclosures in 2009.

In Hampshire County, actual foreclosures soared by 150 percent in January from 8 deeds to 20 deeds. In Franklin County, foreclosure deeds increased in number to 18, up by a whopping 350 percent from only four deeds in January last year.

Statewide, completed foreclosures also rose, although not as sharply as in the Springfield area. The total of 1,061, however, was the highest number of actual foreclosures among all January postings in Massachusetts since 2006. In January last year, the total number of bank owned home foreclosures statewide was 978.

According to Peter Gagliardi, head of HAP Housing in Springfield, more completed foreclosures are expected because mortgage lenders have been holding back over the past few months. HAP Housing, which manages the Western Massachusetts Foreclosure Prevention Center, has helped more than 2,000 distressed families since 2008.

Based on data gathered from distressed homeowners served by HAP, Gagliardi said that unemployment, and no longer subprime mortgage loans, has been pushing more homeowners to default.

The unemployment rate in December in Springfield hit 13.2 percent, the ninth highest jobless rate for any city in Massachusetts. The rate was a sharp rise from the November rate of 11.8 percent and from the December 2008 rate of 9.5 percent. The only other month that hit the 13-percent level was January 1993.

Nevertheless, according to the nonprofit Associated Industries of Massachusetts, there are some positive developments in the jobs sector in the coming months. Its monthly survey found that 25 percent of employers plan to hire workers in the next 6 months.

If the 14 percent of employers who reported they are going to cut jobs in the next 6 months pursue these layoff plans, the number of bank owned home foreclosures will certainly increase.

Bank foreclosures are expected to continue rising in part because of the increasing number of homeowners prioritizing the payment of their credit cards over their home loans, according to a recent study released by Chicago-based research firm TransUnion.

The trend of prioritizing credit cards was already evident in the last quarter of 2007, but it only began to be noticed widely in the first three months of 2008 when 4.3 percent of homeowners were not paying their home loans but were current on their cards. The trend got more defined when the percentage climbed up in the third quarter of the same year to 4.9 percent.

Last year, in the second quarter, the percentage shot up to 6.3 percent and then further rose in the following quarter of July to September to 6.6 percent.

On the other hand, the percentage of homeowners who were current on their mortgage payments but not on their credit card payments in the July-September quarter last year dropped to 3.6 percent, compared to the 4.1-percent level in the first months of 2008.

According to Sean Reardon, consultant in the analytics unit of TransUnion and author of the report, said that the decision of risking homes to bank foreclosures is unconventional. American consumers have always paid their secured loans first before their unsecured debts, especially when it concerned their homes.

But the hard times have screwed priorities, according to Reardon, and people who have lost their jobs cannot be blamed. Their families have to eat, so they have to guard the credit cards that could buy them some time.

Reardon studied credit-card holding homeowners with a mortgage loan and examined their mortgage and credit card delinquency data between April 2008 and September 2009.

In the July-September quarter of 2009, the default rate for homeowners with low credit scores who are current on their cards but delinquent on their home loans was 29 percent, far above the 19.1-percent posted in the last quarter of 2007.

In contrast, the percentage of low-credit consumers who have defaulted on their cards but up-to-date on their home loans dropped in the third quarter last year to 14.5 percent, compared to 18.1-percent level in the first months of 2008.

According to Ezra Becker, a top financial services executive at TransUnion, the mortgage industry meltdown that caused record bank foreclosures has redefined how homeowners are handling their finances and debt payments.

According to Darel Ross, president of Lighthouse, his organization has been purchasing foreclosed homes from mortgage lenders, repairing them and then leasing them back to the former owners until they get employed again or they can buy back the homes.

Ross said that community organizations or coalitions like the Foreclosure Response need to act quickly after foreclosure to prevent the deterioration of foreclosed properties that pulls down the values of properties in the neighborhoods.

Since January 2004, the pace of foreclosures has been rising in Grand Rapids and in other parts of Kent County, pushing the number of foreclosure homes in the county by more than 12 percent to June this year. Although the rate of foreclosure filings slowed down slightly over the past few months, the level of filings is still high.

In the July-September quarter, the pace of foreclosures in the Grand Rapids metro area rose by almost 9 percent from the second quarter and increased by more than 25 percent from the same quarter in 2008. A total of 2,415 homes were notified of default or foreclosure, many of which were already repossessed and added to listings of bank owned properties.

With one out of every 132 residential units in the area receiving a foreclosure posting, the Grand Rapids area ranked 54th in a chart of 203 of the country’s largest metro areas based on foreclosure rates.

Lighthouse head Ross said that subprime lending, which was the major reason for foreclosures at the start of the housing crisis, was easier to solve. The major reasons for foreclosures over the past few months – record-high unemployment rates and sharp home value declines – are more difficult to solve.

Grand Rapids hit the unemployment rate of 11.4 percent in October. Statewide, the jobless rate dropped slightly to 15.1 percent in October from 15.3 percent in September, but the rate level was still high compared to other states. According to the Bureau of Labor Statistics, October marked the 44th straight month that Michigan occupied the top of state unemployment rate charts.

To help homeowners cope with the effects of unemployment, Lighthouse head Ross said that his organization will use the $12 million it received from the federal stimulus program to help rehabilitate bank owned properties, revitalize neighborhoods and spur job creation.

According to Vikram Pandit, CEO of Citi, distressed homeowners in Missouri who have applied for loan modifications were able to obtain their desired modifications at a ratio of almost nine to one, a significant improvement from the ratio of 3.4 to one in the July to September quarter of 2008.

Pandit cited the loan achievements of Citigroup when he spoke at the Olin Business School of Washington University in Saint Louis about responsible refinancing. Pandit also met with local officials and nonprofit groups about foreclosure prevention programs that Citigroup can join or support. The CitiMortgage division of Citigroup in O’Fallon, Missouri manages $751 billion of home loans that it owns or services.

CitiMortgage, the servicing division of Citigroup, also reported that it has modified 33 percent of all its qualified home loans in Missouri as of September this year.

Nationwide, Citigroup officials claim they have helped over 715,000 distressed borrowers keep their homes from bank owned foreclosure lists since the start of the housing crisis in the early months of 2007. They said they carried out loan modifications on $79 billion worth of mortgage loans.

In addition to carrying out the federal modification program launched by the Obama administration, Citigroup said that it developed its own modification programs including its Homeowners Assistance Program and its Unemployment Assist Program. It also said that it continues to provide extensions, reinstatements and forbearances and it claims to have the highest proportion for loan modification among all mortgage servicers in the country, with 33 percent of qualified borrowers helped.

According to Citigroup officers, the bank also releases a detailed report of its foreclosure prevention efforts every quarter, describing its loan modification activities in 22 states. Citigroup officials have been proud to say that Citigroup is the only mortgage lender releasing a detailed quarterly report on its mortgage lending and servicing and its foreclosure prevention activities every quarter.

In Missouri, Citigroup has 5,800 employees and has been helping local nonprofits, providing over $1.2 million in grants in 2008.

In the July to September quarter, foreclosure filings continued to rise in Missouri compared to the previous quarter, with almost 8,000 foreclosure filings, including more than 3,000 units already in bank owned foreclosure listings.

The nine banking subsidiaries of FBOP that failed are Bank USA in Phoenix, San Diego National Bank, California National Bank in Los Angeles, Pacific National Bank in San Francisco, Community Bank in Lemont, Park National Bank in Chicago, North Houston Bank, Citizens National Bank in Teague, Texas and Madisonville Bank in Texas.

All these nine banks, which held $19.4 billion in total assets and $15.4 billion in total deposits, had been taken over by Minneapolis-based U.S. Bancorp. Their offices, which total 153, will open as branches of U.S. Bank.

The deposits of customers will be covered by the Federal Deposit Insurance Corporation up to $250,000. Bank customers can still access their money using checks, debit cards or ATMs and should continue making their home loan payments and other loans as usual.

According to FBOP, it suffered huge losses in two areas: preferred stocks in Fannie Mae and Freddie Mac and bank foreclosed properties in the commercial sector.

FBOP said that when the U.S. Treasury Department took over Freddie and Fannie, it wiped out the preferred stocks of these two companies, also wiping out the investments of banks and insurers.

FBOP also incurred huge losses because of its long-time involvement in commercial area estate lending. FBOP posted $708 million in loan losses last year, and by the middle of this year, FBOP fell below 98 percent of similar holding companies in ranking based on bank capital.

Last August, FBOP was given a chance by the FDIC to increase its capital, improve its risk management and cut down its focus on commercial property lending, but it ultimately failed. FDIC later signed a $14.4-billion loss-share agreement with FBOP acquirer U.S. Bank.

The biggest of the nine failed FBOP banking units was California National, considered the 101st largest bank in the U.S. It had $7.1 billion in total assets and had 66 branches in the Los Angeles metro area.

According to FDIC, the closure of the 9 banks will reduce FDIC funds by $2.5 billion. The 115 banks which failed largely due to bank foreclosed properties since January have pushed down the FDIC insurance fund to less than $10 billion from its $45 billion one year ago.

Banks in Michigan have started to realize that they could never dispose the properties on Bank Forclosure Listings immediately if they do not do some cleaning. And the need to clean and maintain foreclosure properties has created a business opportunity for some landscapers in the state.

One such landscape company is Complete Lawn Care based in Grandville. The company was established in 2007 and started losing contracts when the economy declined. It saw an opportunity in servicing homes on Bank Foreclosure Listings and subcontracted work with another landscape company.

Most banks hire landscape companies to maintain foreclosed houses on their Bank Foreclosure Listings. And most landscape companies do jobs that normally do not fall into their line of work, such as picking up garbage and trimming the grass.

Some even change locks for repossessed homes and make sure that the properties are safe and clean, including repairing plumbing and eliminating chemicals. These jobs may be out of line of the usual job responsibilities of landscape companies. But most of these firms are willing to do anything to survive the economic crisis.

And with foreclosure rates in Michigan going higher, landscape companies are assured of profits that will tie them up until such time that the economy recovers and landscaping business thrives again.

Meanwhile, Michigan reported that about 33,184 properties received foreclosure filings in the first three months of the year, representing a 12 percent jump from the same quarter a year ago but 2 percent less from the December 2008 level.

The U.S. Foreclosure Market Report of RealtyTrac showed that one out of 136 homeowners in Michigan received foreclosure filings during the first quarter of this year. This figures put Michigan in the sixth place among states with high Bank Foreclosure Listings.

In March, Michigan reported 12,417 houses with foreclosure filings, a 1 percent drop from February and 31 percent rise from the total March 2008 figures.

The state accounted for nearly 4 percent of the total 803, 489 foreclosed properties on Bank Foreclosure Listings across the county for the first three months of this year.

It used to be that city code enforcement officers received complaints from residents about abandoned, vacant and repossessed properties in their neighborhoods. Residents said that these foreclosed homes attract crime, vandals and became eyesores in their communities.

Code enforcement officers used to clean the foreclosed properties and secure them so as not to become magnets to criminals and squatters. And all the while, the city was the one shouldering the expenses of cleaning, securing and maintaining these foreclosure properties.

But because of the city’s limited budget, it decided to start charging banks for the maintenance of bank foreclosed homes. Currently, the city has 1,800 registered homes and already collected over $100,000 in registration fees from banks.

The extent of the foreclosure problem in the city is a cause of concern to both officials and residents. The Cape Coral-Fort Myers area has the second highest foreclosure rate in the country in April 2009, with one in every 57 houses receiving filings of foreclosure during the month. The area’s foreclosure activity jumped by 31 percent from March.

Statewide, first quarter 2009 foreclosure rate in Florida increased 36 percent compared with the same quarter the previous year. According to RealtyTrac’s U.S. Foreclosure Market Report, filings of foreclosure were made on 119,220 properties in the first three months of the year, representing a drop of 12 percent from the last quarter of 2008.

The report noted that one out of 73 houses in Florida received filings of foreclosure during the first quarter of 2009, making the state the fourth highest in the country in terms of foreclosure rate.

In March, the state registered 47,131 houses with foreclosure filings, a 2 percent jump from February and 56 percent increase from March the previous year.

According to James J. Saccacio, RealtyTrac Chief Executive Officer, Florida lost over 400,000 jobs in 2008 and its unemployment rate is above the country’s average rate. He added that an above average unemployment rate, decrease in home prices and an increasing number of unsold homes have contributed to the continuing rise in bank foreclosed homes.

According to Rick Sharga, top executive of foreclosure research firm RealtyTrac, there are about 600,000 foreclosed properties nationwide that mortgage banks have not disclosed and have not added to foreclosure listings. Sharga added about 80,000 of these undisclosed repossessed homes represent California foreclosures. If these properties are added to foreclosure listings in one move, there would be further price declines and chaos.

Sharga based his statements on his firm’s recent study of forclosures houses repossessed by banks and foreclosure listings in California and in three other states. The study found that only about one-third of the repossessed properties were listed in foreclosure listings.

In the San Francisco Bay Area, Chronicle contended that more than 33 percent of foreclosure properties in the area are hidden in shadow inventories–the term used in the industry to refer to bank repossessed homes not listed by the banks in foreclosure listings. Chronicle based its conclusion on MDA DataQuick’s study which found that mortgage lenders repossessed 51,602 houses and condo units in the area from January 2007 to February 2009, but posted only 30,823 units in foreclosure listings.

Real estate brokers say mortgage banks typically post their repo homes in foreclosure listings within one or two months after repurchasing the foreclosed homes. These foreclosed homes are usually bought immediately and closed within a month, completing the process of repossessing to registering in the books as resold in only 3 months.

Tom Kelly, a spokesperson for banking corporation Chase, avoided responding to the issue of shadow inventory when interviewed. He said banks are not keen on holding a lot of foreclosed homes and want to sell them quickly in ways most profitable to the banks.

In California, there are about 100 homes in shadow inventory, according to Sean O’Toole, chief executive of MDA DataQuick. The MDA report showed 65.5 percent of repo homes in the 18-month period ended this January had been recorded by banks as resold in March.

Among the reasons listed by foreclosure analysts why mortgage banks are not adding all their repo homes to foreclosure listings are the inability of bank systems to accommodate large volumes of repo homes that they need to prepare for sale, the need for banks to control their balance sheet losses and banks’ recognition of the adverse price impact of sudden addition of thousands of foreclosure properties to foreclosure listings.

With the rising volume of foreclosures across the nation, 2007 brought newfound attention to the foreclosure marketplace. Tired of dealing with broker fees and eager to take advantage of the unique savings available on foreclosure property, many buyers began to shirk the traditional sales for foreclosure auctions, where foreclosure homes are often sold for anywhere from 10 to 50% below their real market value.

Sheriffs, trustees and banks began to see increased attendance at public foreclosure sales, especially in states with very high rates of foreclosure, like Texas, Florida, Michigan and Nevada. The Dallas Morning Star recently ran a report suggesting that weekend foreclosure auctions had become regular community outings, with investors and homebuyers alike turning out to see what would be available and whether or not they could get it for a good deal.

But with more and more properties coming on to the market and inventories climbing ever higher, many properties are not being sold off at auction at all. Instead, they are being awarded to the banks and lenders trying to collect on the delinquent loan owed them. And this is creating a host of new opportunities for investors and homebuyers.

As more and more bank foreclosure properties are being awarded back to the banks that issued the mortgages on them, it is making it increasingly difficult for them to get rid of their properties. Banks are not in the business of selling real estate, and as a result, the rising inventory of bank owned homes has made many of them more eager than ever to get rid of them, and this can lead to some very low prices.

Buying bank foreclosure properties is different from buying properties at foreclosure auction, but in many ways it can be less stressful. Rather than getting involved in the one-upping that occurs at live auction, buying homes through bank sales involves submitting a single, silent bid. It is then up to the bank to award you the property or not. Buying bank owned homes also gives you more of an opportunity to inspect a property before you have to bid on it. And with banks controlling lots of properties, there are virtually entire catalogues of properties to choose from.

So if foreclosure auctions are crowded and competitive in your area, be sure to consider the chance to buy bank foreclosure properties. Already in 2008 we’re seeing more rises in foreclosures, as the national rate jumped 8% from December. So be sure to watch out for all the buying opportunities, not just the commonly attended auction! In many cases, buying bank foreclosure properties and other types of repo homes may end up being more beneficial!

Buying bank foreclosure homes offer a more low key alternative to the schedule-driven auction format. Bank foreclosure homes are properties that either, did not fetch a price at auction high enough to satisfy the lending bank’s needs, or went straight into the bank’s possession after a foreclosure took place. The buying process for bank homes is much different than for a public auction, because the bidding process is silent. You can take as much time as you need to survey the property, gather information, and estimate the property’s value. This can be very advantageous, as it gives you more time to work out a good value to bid on the property. Entering a single bid on a foreclosure property through the silent bidding process also ensure you’ll pay only what you want to, and can be an easier way of restricting yourself to what you decide you want to pay.

Either way, since banks are not in the business of dealing real estate, dealing with foreclosure homes is something of a hassle for them. Often times, they’ll be looking to sell quickly and for low prices, just to get rid of them. Investing in bank foreclosure homes allows you a little more control over the buying process, and bank foreclosure properties can be just as cheap as auction homes.