Though the number of REO properties in Connecticut appears to be dwindling slightly, the foreclosure crisis in the state is still far from over.

RealtyTrac’s May 2009 U.S. Foreclosure Market Report showed that notices of foreclosure filings declined by about 50 percent compared with April figures and 20 percent below last year’s May level. The state ranked 33rd in terms of foreclosure filings in May, with one out of 398 houses under REO properties.

Topping Connecticut’s foreclosure activity in May were the counties of New London and Norwich, with 12 each. They were followed by Waterford and Ledyard with 6 each, 4 foreclosures in East Lyme while 2 each for Old Lyme, Colchester, Groton and North Stonington.

Among states in New England, Connecticut fared well than Rhode Island, Massachusetts and New Hampshire. Vermont and Maine have the lowest foreclosure rates among New England states.

Nationwide, foreclosure filings were received by 321,480 homeowners in May, a 6 percent decline from the April level but about 18 percent increase from the May 2008 total. This makes one out of 398 properties on the brink of becoming REO properties.

Leading the foreclosure rampage is the state of Nevada with one out of 64 houses receiving a notice of foreclosure, over six times the average national foreclosure rate.

Nevada is followed by California in terms of foreclosure rate with one out of 144 houses receiving foreclosure filings. The state has the second highest repossession rate in the country despite a 4 percent drop in foreclosure activity from the April figures.

The ranking for the third highest state in terms of foreclosure rate went to Florida with one out of 148 houses under threat of foreclosure. Arizona grabbed the fourth place with foreclosure filings made on one household out of 158 units, while Utah settled in the fifth place with one out of 316 houses under threat of foreclosure.

On the other hand, California’s total foreclosure filings of 92,249 was the highest among states, an increase of about 23 percent from last year May’s total. On a positive note, bank foreclosures in California declined 1 percent compared with April’s figures.

The foreclosure crisis, which resulted to a subsequent sale of discounted REO properties, has pulled down average home prices across the country.

Home affordability has reached record levels nationwide as new home prices and repossession property prices continue to go down. According to a study by IHS Global Insight on U.S. homes prices, the average house has lost value by 12.2 percent.

Out of the 330 housing markets tracked by IHS, there are 248 markets where houses are undervalued. Four years ago, there were only 108 markets where houses were under-priced.

In markets such as Phoenix and Las Vegas, where home prices shot up during the boom, prices have declined so steeply that large numbers of investors have snapped up repossession property units. Oftentimes they rent the properties back to the previous owners.

IHS economist Jeannine Cataldi said the advantages of high affordability levels are improved consumer confidence and home sales. She said the downsides are increased job losses, higher inventories of unsold homes and repossession property units and consumers’ feelings of uncertainty.

The IHS report said that the most undervalued metropolitan area is Vero Beach, Florida, where the median price has dropped to $125,400, a drop of 29.7 percent compared to the first months of 2005. Next is Houma, Louisiana, where the median price of $113,500 represented a drop of 41.4 percent. Third most undervalued is foreclosure-battered Las Vegas, where the median price has fallen by over 46 percent since 2005 and is now under-priced by nearly 41 percent.

IHS analyzed the valuations of houses in metro areas using the three major home affordability factors, namely family income, historical prices and housing densities. Normal home values are compared to actual home prices to determine whether an area is undervalued or over-valued.

The most over-valued metro area is Atlantic City, where the median price of $243,600 is an overvaluation of more than 44 percent. Next is another New Jersey metro area, Ocean City, where the $302,100 median price is an overvaluation of 33.8 percent. The third most overvalued is Wenatchee, Washington, where the median price of $247,100 is more than 29 percent above the normal price.

In the largest metro areas, such as New York, Los Angeles and Chicago, home prices are slightly undervalued. The median price in New York City is $469,400, which is 3.3 percent below the normal level. Los Angeles, with a median price of $357,100, is undervalued by 6.6 percent. In Chicago, the median price of $220,800 is a 13.2 percent drop from normal values.

In California, among the most foreclosure-battered states, sales of bargain-priced repossession property units have been soaring, based on data from the California Association of Realtors. Inventories of repossession property units and non-foreclosures priced below $500,000 have declined to only three months’ worth of supply.

According to data released by real estate brokerage company ZipRealty Inc., last month’s supply of repossessed homes for sale went down by 3.6 percent compared with March figures. ZipRealty monitors all types of properties for sale on multiple-listing services, including condominiums, single-family houses and town homes.

Some analysts noted that the continuous drop in the real estate foreclosure properties for sale was an indication that foreclosure has hit bottom. However, others are still uncertain whether foreclosed homes will continue its declining trend or pick up again.

To boost the expectations of some analyst that the number of foreclosure homes for sale will hit bottom, research firm Zelman and Associates explained that property inventories usually increase in April due to the spring house-shopping season in the country. The average rise in April from the previous month has always been 4.8 percent since 1982.

The April inventory of foreclosed home for sale in all 29 metropolitan areas in the country dropped to 21 percent compared to the same month last year.

Meanwhile, data from the National Association of Realtors showed that March inventory of foreclosure homes for sale was estimated at 3.7 million nationwide, a drop of 10 percent from the same period last year. And the figures do not include all bank owned properties foreclosures that are scheduled for sale.

Foreclosed homes owned by government-sponsored enterprises, Federal Home Loan Mortgage Corp. and Federal National Mortgage Corp. accounted for about 35 percent to 50 percent of the foreclosure properties for sale at any given time.

Housing economist Tom Lawler said that the drop in the inventory of repossessed homes for sale indicated that home prices is about to hit the market bottom. He also noted the drop in the housing construction. However, as with some analysts, he is also uncertain how many foreclosure homes will be put on the market for sale in the coming months.

According to Barclays Capital, loan investors and banks are estimated to own 765,500 foreclosed properties as of April, an increase from 629,100 the previous year. Barclays predicted that the inventory of foreclose homes for sale will rise at about 1.3 million halfway through 2010.

The 44-percent increase in foreclosure properties is seen by housing analysts as largely driven by foreclosures filed after mortgage lenders, including Freddie Mac and Fannie Mae, ended their foreclosure moratoriums. Other factors are the continued increase in job layoffs and difficulties of homeowners in refinancing their loans.

In the first month of 2009, ForeclosureS.com saw a significant decrease in numbers of foreclosure properties, leading the foreclosure tracking service to say the housing market might be starting to recover.

Alexis McGee, president of ForeclosureS.com, said she hopes the 44-percent increase represents largely foreclosure properties hidden by foreclosure moratoriums launched in the last months of 2008 and first months of 2009.

Pre-foreclosure filings increased by nearly 6 percent to 225,131 units from February levels. For the first three months, there were 604,590 filings, representing a 15-percent increase from the last quarter of 2008 and a 17-percent increase from the first quarter of 2008.

California foreclosures rose by 59 percent, although the total number of foreclosure properties in the state is now much lower than the state’s peak in September 2008, which spurred state legislators to immediately enact a law to stop foreclosures.

Florida foreclosures increased by 33 percent while Arizona foreclosures soared by 45 percent. In charts of foreclosure properties and foreclosure rates compiled by ForeclosureS.com and RealtyTrac, California, Florida and Arizona are among the states on top. With their large inventories of foreclosure properties, home prices in these states also had the steepest declines.

In February, sales of existing homes nationwide increased by 5.1 percent, according to the National Association of Realtors. This increase, found to have been the highest increase in five years, was driven by sales of foreclosure properties priced much below their mortgage loan balances.

The increase in sales of foreclosure properties also spurred new home construction, which stayed quiet for more than eight months due to the glut of foreclosure properties available at bargain prices.

According to the National Association of Home Builders, its sales index for new single-family houses rose from 9 points in March to 14 points in April, the highest level in a six-month period. NAHB economist David Crowe hopes the increase is a sign of the start of the housing sector’s recovery from the problem of foreclosure properties.

RealtyTrac said that foreclosure houses for sale jumped to 290,000 or 30 percent from the previous year. The agency has been compiling and collecting foreclosure data from over 2,200 counties since 2005.

RealtyTrac reported that one per 440 homeowners received foreclosure homes filings last month. The total foreclosure homes filings was about 6 percent higher from the January 2009 data.

February foreclosure homes filings were the third highest following data of August and December last year. Last month’s increase was in sharp contrast with the reported dropped in foreclosure and pre foreclosure filings in January.

Nationwide data showed that the total number of foreclosure properties in January dropped 25.7 percent to 72,694 from the previous month’s 97,841.

Pre-foreclosure filings also dropped almost 12 percent from December to January from 190,467 to 166,860.

The February increase is blamed on delays in the foreclosure process which prolonged the housing crisis

It has been noted that foreclosure homes filings increased after the 45-day voluntary foreclosure moratorium ended last week of January in Florida.

RealtyTrac reported that a 90-day foreclosure homes moratorium delayed proceedings in New York in January, resulted to a whopping 23 percent increase when foreclosure activity resumed in February.

According to RealtyTrac senior vice president Rick Sharga, there is not progress in the fight to end the housing crisis despite widespread efforts to help owners of distressed properties.

As more foreclosure moratoriums are scheduled to end, including that of J.P. Chase and Co., the number of repossessed homes is expected to increase throughout 2009.

Meanwhile, Bank of America Corp. said that it will extend its foreclosure moratorium program on a weekly basis as it continues to assess borrowers’ potential eligibility under the Obama Administration’s program aimed at stabilizing the housing market.

Meanwhile, Sharga said that option-arm and Alt-A loans estimated to be worth between $60 to $70 billion will start to reset in the coming quarter. He pointed out that the scheduled reset, coupled with the continuing rise of unemployment rate, will brought further misery to about 3 million distressed homeowners who are expected to receive foreclosure homes notice this year.

On the other hand, Mortgage Master Inc. Chief Executive Officer Leif Thomsen explained that some foreclosures are necessary as many homeowners bought properties that they could not afford to pay in the first place. He advised these troubled homeowners to accept their loss and try to move on.

According to the MBA report, the percentage of homeowners who are behind on their loan payments for at least a month increased by 8 percent during the last quarter of 2008. The figures are the highest recorded by MBA since it started monitoring foreclosure homes rate in 1972. The last quarter data represented a 13 percent rise from the third quarter.

MBA chief economist Jay Brinkmann explained that subprime adjustable-rate mortgage loans and prime adjustable-rate mortgage loans still accounted for majority of loans on default and the increasing foreclosure homes rate.

He added that across the country, 48 percent of subprime adjustable-rate mortgages were one payment behind, while in Florida, 60 percent of subprime loans were on default for a month.

Meanwhile, the number of foreclosure homes filings increased to 3.3 percent, representing about 1.5 million houses at risk of falling into foreclosures.

The 3.3 percent increase in the number of foreclosure homes filings during the last quarter of the previous year represented a 0.33 percent increase from the previous quarter and 1.26 rise from 2007.

On the other hand, Brinkmann noted that the number of troubled loans languishing on the foreclosure market has remained significantly high because of the moratorium on foreclosure sales in several states, the suspension on foreclosure sales by Federal Home Loan Mortgage Corp. and Federal National Mortgage Association and reluctance of mortgage services to evict owners of foreclosure homes.

He pointed out that because of the foreclosure moratorium, the number of mortgage loans due 90 days and more increased to 3 percent in the last quarter from 2.2 percent the preceding quarter.

If there was no moratorium, these troubled mortgages would have been dealt with immediately by lenders by completing the process of foreclosure.

Harvard University’s director of Joint Center for Housing Studies Nicholas Retsinas said that the MBA report reinforced what industry experts have been asking for a long time now, a foreclosure relief plan that will successfully streamline the number of foreclosure homes and stabilize the housing market.

Industry experts viewed Obama’s foreclosure prevention plan as another attempt to decelerate the foreclosure rate but doubted if it will ever solve the housing crisis.

The number of Florida foreclosures has made the state among the best places for individuals looking for bargain real estate investments. Before the housing meltdown, Florida, California and Nevada were among the hottest housing markets. These times of the meltdown, they can still be the hottest markets depending on your skills.

According to California-based foreclosure tracking firm RealtyTrac, the 2007 foreclosure rates soared to higher levels in 2008, leaving hundreds of thousands properties foreclosed and made available for sale. Among these are Florida foreclosures ripe for the picking.

Angie Hicks, owner of consumer service research site Angieslist.com, said an informal survey of its list members in 2008 found that of the 29 percent who bought homes within the six-month period of the survey time frame, 95 percent said they made profits from their home purchases.

The first key to investment success during this downturn is to make your own research, according to Hicks. Research the neighborhood, know the prices, compare prices and research development projects in the area. Among Florida foreclosures, look for units in neighborhoods that have community development projects.

Emma Allen, chief executive officer of Emma Allen Enterprises, says it is better to concentrate on an area that you know very well. She says she looks for bargains in communities where she herself would like to reside. Areas currently being rehabilitated with urban renewal projects are great opportunities. Allen’s advice fits investors looking for bargains in Florida foreclosures.

The second piece of advice is to check your available capital. Factor in renovation costs and carrying costs while you are looking for buyers. Remember also that you must pay the monthly amortizations while the mortgage is in your name. Make projections in case you can not sell the house within two or three months. If you are flipping Florida foreclosures, you may find great bargains, but factor in the average number of months a house is sold in the area.

Another advice is from veteran California flipper Nicole Sassaman. She says you need to have a cash reserve in the bank equal to 25 percent of the home price and about 18 months of house payments.

Home flipper Scott Patterson says you try to make low offers on targeted properties. He cites one example where he bought a $100,000-priced home for $80,000 and then sold it for $160,000 after some renovations. For Florida-based flippers, lots of low-priced homes can be found among Florida foreclosures.

Related Information:

• Foreclosure News
• Tax Foreclosure Properties
• Tax Foreclosures
• Cheap Houses for Sale
• Foreclosure Listings
• Foreclosure Homes

According to RealtyTrac Inc., more than 274,000 homes all over the nation have gotten at least one notice of foreclosure in the previous month. Even though that was down by 10 percent in December, it is still 18 percent higher compared to a year ago, says the California-based foreclosure listing service.

The resolution to delay foreclosure sales in the winter holidays by government-controlled mortgage industries like Fannie Mae and Freddie Mac became a factor to the monthly drop. In addition, Governor Charlie Crist of Florida negotiated a deal that lenders in the Florida state permitted the 45-day stop to the new foreclosure petitions.

Moreover, a federal regulator last Wednesday advised over 800 thrift institutions to delay all foreclosures as the top economic officials of President Barack Obama shall utilize plans to let borrowers stay in their homes. The administration intends to spend $50 billion to fight the foreclosure crisis among owner-occupied and middle class homes. The housing plan of the administration is expected to be announced in the next few weeks.

It was also pointed out by John Taylor of the National Community Reinvestment Coalition that the Obama administration should approve the utilization of government money to buy up mortgages and eradicate the multifaceted mortgage-linked securities, and reorganizing them at more reasonable levels.

The administration is also assumed to support the Congress’ move to permit bankruptcy judges to modify the loan terms of primary homes. According to Obama, it does not make sense if judges are not permitted to do so. This is in opposition with the mortgage industry, who contends that this permits lenders to charge rates that are lower.

The report by RealtyTrac Inc. also adds that Nevada, California, Arizona and Florida had the top foreclosure rates of the nation. One in 76 homes in Nevada obtained a foreclosure, while in California, the number was one in every 173 homes. Included in the top 10 were Oregon, Illinois, Georgia, Michigan, Ohio and Idaho.

Moreover, pre-foreclosure filings which gauge the future of completed foreclosures dropped as well to 12 percent from 190,467 last December into 166,860 this January. These findings are according to the data collected by Foreclosures.com, a housing information company in Fair Oaks.

In California, foreclosures continue to drop as buyers step into the housing market. Completed foreclosures have dropped to more than 31 percent last month to 14,351, which is the lowest point since December last year, and less than half of the 31,851 foreclosed homes in the peak month of September 2008.

Completed foreclosures declined by nearly 22 percent in Florida as only 10,007 homes in January had completed foreclosures, compared to 12,786 homes of December last year. In addition, Nevada experienced a decline by 20 percent in completed foreclosures, which went from 4,039 last December 2008 to 3,207 this January 2009. Other states like Arizona, Georgia, Ohio and Texas have also experienced drops in completed foreclosures filings. Only Texas and Michigan underwent an increase in pre-foreclosure filings.

According to the president of Foreclosures.com, Alex McGee, the slowing down of the foreclosure crisis can be attributed to the efforts made by the government and federal industry last year to lay the foundation for housing recovery. Even though unemployment is still a big concern to the economy, there are still many buyers in the housing markets. Home sales are thriving because of the dramatic drop in mortgage interest rates and home prices, making homes more inexpensive and manageable than in the last 30 years.

Neophyte homebuyers and investors are coming off the sidelines and are now purchasing homes. Even though the spotlight is still on foreclosures in most headlines, the story is currently the revival of the real estate.

McGee anticipates the rise of foreclosures in 2009 will be much less compared to what the experts are predicting, thanks to the many foreclosure intervention programs by the state and federal government, and the now more accommodating lenders in their loan modifications to prevent foreclosure.

There are also other factors laying the foundation for the comeback of the housing industry, states the president of the real estate information company. An increase in population and all-time lows of new construction put the country on the course for a shortage in housing.

This is because of the recent increase in the number of foreclosed homes in the US, more specifically in areas such as Georgia. As a result of the economic recession, homeowners who have lost their jobs and a significant amount of money along with it have been forced to let go of their homes because of their inability to pay their mortgages. This then resulted to thousands of repossessed houses with prices even lower than their tax values.

Homes are taxed according to their fair market value or their retail prices. With this, at foreclosure, it is very likely that homeowners may even be paying more for the tax of their homes than the sale value of their foreclosure homes.

Senator Chip Pearson, Senate Bill 55’s sponsor, says that a property’s foreclosure value should be seen as a very important factor as it is affects the whole neighborhoos, and as a consequence, the whole area or state as a whole.

The bill is expected to have great effect on local governments and residents. Areas with high foreclosure rates can experience their tax values to decrease by large amounts. Although this has a good effect on individual residents facing foreclosures, it poses other problems especially on the governments.

Officials have already expressed apprehension regarding this matter, as low tax values can cost millions of dollars worth of tax revenues. Assessors have likewise said that the bill puts great risk on the sale of houses and other properties, in general.

Burt Manning, chief appraiser in Fulton, said that this drastic change in the system makes the market highly volatile. DeKalb County’s interim chief appraiser Terry Raider has the same sentiment, saying that considering foreclosures in setting 2009 tax values would cost them huge amounts of money.