Connecticut, a state that is ideally situated in the New England region of north-eastern USA is today a victim of foreclosures. There has been a tremendous rate of house foreclosures in the cities of Connecticut and the worst sufferer is the Windham County. Even after this, the foreclosures and distress sales of this state are pressing the value of houses throughout the state of Connecticut. This has been especially done in the towns with low income and other bigger cities of the state. If this situation continues, then it will further aggravate the problem of foreclosures which might lead to loss of employment in the long run. This is likely to hit the real estate industry of the state. It has already been noticed that due to the increase in the price of food, gas, and oil, the household budget in Connecticut is already at stake.

The Windham County is suffering from about 23 home foreclosures related matters per 1,000 households. The situation is getting worse day by day in Connecticut. One of the reasons that can be pointed out behind this tough situation is the increase in the price of goods that has hit hard the low income group especially. The greatest problem associated with the foreclosures is that it brings down the value of the nearby properties by about $5,000- quite a big deal in fact. It is indeed a big blow to the real estate sector. The increase in foreclosures has brought down the prices by approximately 18 percent. Some investors are taking the advantage of this situation and are buying the properties at a much cheaper rate.

Ann Davis, a resident of Green Hollow Road of Killingly, is undergoing the problem of house foreclosures. She bought everything to furnish her house on credit cards and now has to repay a huge amount. A divorcee and mother of two sons, she is at complete loss today. The state has taken initiatives in order to help the people to come out of this unmanageable situation. One among the various measures taken is directly assisting for refinancing the loans. This will definitely help in reducing the house foreclosures to some extent and help in the development of the real estate industry of the state. It will bring a ray of hope for the people like Ann Davis. We hope that the state of Connecticut will see a better tomorrow very soon.

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Located in the affluent Highland Terrace in Bridgehampton, the Hamptons Designer Showhouse is built on more than 4 acres of land. The 8 bedroom home has a mortgage of $ 4.4 million and is currently in the initial stages of foreclosure. So are four other properties on the ocean facing Dune Road. Surprising?

Not any more, feel real estate analysts. The Hamptons, peppered as it is with home valued at $ 30 million and $40 million, was regarded as being above the foreclosures which are happening everywhere else in the country. Foreclosures were something which happened to other people as far as the residents of this region were concerned.

Recently however this situation is seeing a slow change. Lis pendens, the first legal notices for foreclosure are raising their heads in some places and a few homes have already been taken back by banks this year.

Alan Stein, bankruptcy and real estate attorney in Southampton, says that he has more work than ever now as the number of clients coming to see him has doubled in the past 6 to 8 months. He underlines that several of his clients are being unable to make mortgage payments even though they live in homes worth several million dollars.

Real estate agents however are not unduly worried by this turn of events. They feel that a few foreclosures were inevitable with the national economy being affected by widespread foreclosures. Rick Hoffman, regional senior vice president for Corcoran, opines “I would say we’re almost foreclosure-proof out here to some extent.”

Experts warn however that every foreclosure affects the neighbourhood. Home sales can slow down and the economy may take a downturn, if there are a significant number of repossessions. According to the founder and chief executive of Town and Country Real Estate, Judi Desiderio, “If there’s less capital in the economy to spend, then it’s going to affect all of us.”

The Hamptons may be protected somewhat by the profile of its residents. As owners of multi-million dollar properties, they are likely to have resources that could help them find various ways out of the predicament. Alternatively, the properties may be rented out in summer, generating an extra income to tide over the situation.

As real estate attorney Alan Stein is quick to point out, “Nowhere else on the Island are you able to rent for three quarters of the years’ expenses … for three months of time. That saves people.”

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Rising foreclosures are affecting state economies and the after effects are being felt in every quarter.

Real estate analysts predict that the situation will start improving post 2009, although foreclosures will continue to take place throughout the decade. In the meantime however every kind of credit quality is experiencing delinquency in payments where earlier subprime mortgages had the most defaulters.

The Mortgage Bankers Association’s most recent quarterly survey shows that foreclosures are continuing to rise. California and Florida alone account for 93 % of the increase. With 109,000 and 77,000 foreclosures respectively in the first quarter of the year, the two states are followed by Texas, Michigan and Ohio which all had around 20,000 foreclosures.

State governments and mortgage lenders in many states have taken steps to curb the rising numbers. Where some states like Indiana, Michigan and Ohio have seen the numbers start to fall, in others the impact of the programs has not been as great.

This could be because state officials are unable to affect the terms of loans of many lenders who have a national character. Further loans are being repackaged and sold as securities to investors both in the USA and internationally.

Gov. Tim Pawlenty highlights another hurdle. He says, “One group of investors may own years one through five of the loan; another five through 10; and another, 10 through 15.” Changing the terms of the underlying mortgage then becomes very difficult.

States are hopeful that Congress will take some steps to stem the tide of foreclosures. Economist Michael Levy of the Bank of America believes that Congress can help by passing laws to clarify legal issues. States would then get an opportunity to negotiate with mortgage lenders and modify the loans accordingly.

In the meantime home prices continue to fall, adding another dimension to the situation. With an average decline of 10% nationally, several homes are now worth less on the market than what they owners owe on the mortgage. This is forcing more and more homeowners to choose foreclosure in order to cut their losses.

States also have to deal with properties that are lying vacant after being repossessed. Some states prefer to buy up these homes and put them to better use. However the process of demolition and rebuilding is prohibitive and acts is a deterrent, especially as revenue is limited due to a weakened economy. Federal funding however could help achieve this.

States are trying to cope in the best way they can but perhaps federal funding and regulation will provide the boost the system is waiting for.

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Rising foreclosures are seeing the emergence of a new kind of transaction: the short sale. Unheard of even until a few years ago, these sales involve homeowners selling their homes for less than the amount of their mortgage. The sale is carried out in agreement with the bank, to avoid a foreclosure.

In the Hamptons, foreclosures were not a major concern until quite recently. The area watched other parts of the country experience a spate of repossessions but seemed to remain untouched by it.

The story however is now slowly changing. The last year has seen a steady rise in “lis pendens” or the first legal foreclosure notices in the East End area. Foreclosure auctions too have started taking place.

The Hamptons has always been an upscale area where the truly affluent have their homes. Foreclosures of $ 1 million or $3 million homes are hardly a concern for those whose homes are valued at $20 million and $ 30 million. Author Steven Gaines, who is considered an authority on the Hamptons, sums it up thus, “This has always been a place for people who could afford to live here. If one can’t, that’s fine……And if that means that you don’t have to wait three days to get a plumber, that’s good, too.”

But experts anticipate that it is the plumbers and other service providers who are likely to face the foreclosures. And too many defaulters could easily affect the economy of the Hamptons as a whole. Real estate agents too feel that no neighbourhood is safe from foreclosures.

Ashley Clark of Brooklyn’s PropertyShark , publisher of real estate research and data, points out that legal default notices and announcements of foreclosure auctions in the Hamptons would rarely be seen in newspapers even two years ago. Today however such notices appear weekly, even though their numbers are limited to one or two. Clark says, “It’s small in actual numbers and in comparison to the rest of the country, but it’s a big change for that particular area.”

ProertyShark data reveals that 415 lis pendens were filed in the five towns on the East End from October 2007 to March 2008. This reflects a 30 percent increase from the previous six months. The data also shows that 42 foreclosure auctions were scheduled for this period, an increase of 40 percent.

Real estate agents put down the foreclosures to the effect of the national foreclosure crisis and say it is no unusual that a few foreclosures will take place in the Hamptons as well. They do not anticipate a crisis and expect long term residents to remain unaffected by the situation.

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The increased foreclosure activity in the country is giving rise to a unique situation where mortgage defaulters are vacating their homes but lenders are delaying foreclosing on it.

One of the fall outs of numerous foreclosures has been the decline in real estate prices. As a result sometimes homeowners find that their properties are worth less than the mortgage on them. In such a situation it is increasingly becoming common for the homeowner to abandon the property without completing all the mortgage payments on it.

The onus of maintaining the property then falls on the lender. But a trend is emerging where lenders are delaying foreclosure for some reason. With no one taking the responsibility of maintaining them the homes then fall into disrepair. This not only affects the resale value of the property but also the home values in the whole neighborhood. Becoming an eyesore, breeding disease and attracting crime are just some of the other consequences of this negligence.

The trend was first noticed in January this year and is a source of worry for observers as lenders are usually expected to dispose of distressed properties as soon as possible.

Various explanations are being given for this trend. On the one hand, city officials attribute it to lenders avoiding taxes and maintenance. On the other hand, legal aid lawyers feel that this maybe a ploy on the part of the lenders to hide heavy losses. Declaring such losses could attract regulators, they believe.

The real estate industry has its own explanation for this phenomenon. Industry officials put it down to the high number of foreclosures that lenders have to deal with. There is so much to handle that delays are inevitable, they believe. Says attorney Berry Laws III, who looks after the interests of lenders during foreclosure, “There’s just a glut. Lenders are overwhelmed with properties.”

In spite of all the explanations, real estate experts continue to be worried as the trend is gradually spreading all over the country. The situation suggests that the actual number of foreclosures may, in fact, be higher than declared by official statistics.

Founder Joe Schilling of National Vacant Properties Campaign believes that with foreclosure being delayed in this way, more and more properties are not being accounted for in foreclosure figures. He says, “What it means is that the crisis is a lot more complex than anybody knows. And the conclusion is that this is going to get much worse before it gets better.”

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A few years ago, Merced, California experienced the property boom in all its dimensions. Real estate brokers made hay selling property to investors from outside and home prices were on an upswing. In a single year, home prices were increasing by 30 percent or more.

Today the picture is quite different. Now the main clients for the brokers are banks who have repossessed properties and want to sell them off to repay the debts of their owners. It is not surprising then that with the housing market hard hit by foreclosures this is one of the places where prices have crashed.

In the first quarter of this year, Data Quick Information Systems puts the number of foreclosures in the most affected areas of Merced at 112. At the same time last year this figure stood at 93.

Mike Conway, spokesman for the city, says that foreclosures and their effect on the economy is a major cause for concern.

The real estate industry is not the only one affected by foreclosures. With construction and remodelling at low ebb, businesses like plant nurseries and paint stores as well as those dealing with interiors and furnishings have also been hard hit. Not only are sales falling but the businesses are also being forced to lay off employees due to lack of work.

Foreclosures have led to the abandonment of several homes. Lack of maintenance is now turning these properties into eyesores. Low demand for housing coupled with potential buyers cancelling contacts is also making property developers stop building.

As a result, new homeowners who moved to recently developed areas with dreams of living in a beautiful neighbourhood are now finding themselves surrounded by vacant lots and ill maintained properties. Their only hope of regaining their dream is to wait for home values to rebound again.

During the boom years, the University of California decided to locate its newest campus in Merced. This gave an additional boost to the already burgeoning market. But the expected benefits from the university may now take years to bear fruit.

Some residents of Merced, however, are happy that the boom years are over. According to real estate broker, Loren Gonella, homes were affordable to only 11 percent of the local population at that time. The percentage of residents who can now invest in homes in Merced is as high as 60 to 65 percent, Gonella says. With low prices anticipated to last through 2009, first time buyers will get the opportunity to gradually buy up the vacant properties, he stressed.

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The decline in home prices has been a much discussed topic in recent times. In metropolitan areas the effect of this fall is being felt acutely in neighbourhoods dominated by low income families or minorities. Areas in the outer suburbs have also been hard hit.

The situation is being attributed to the high number of loans given when the housing market peaked in these areas. Many of these loans were given without sound financial basis. As a result defaulters are aplenty and foreclosures have become the order of the day.

According to Rick Sharga, Vice President, Irvine California Realty Track, first time buyers investing in overvalued real estate on the basis of risky loans have contributed significantly to the situation.

Real estate specialist and researcher Stan Humpheries of Zillow.com opines that the housing boom was largely dependant on land on the fringes of urban areas and hence it is these areas that are now feeling the ill effects of foreclosure intensively. According to him, many people prefer living close to the core of an urban area as this implies shorter commuting time and greater access to amenities. Thus housing in the suburbs holds value better, ensuring that builders concentrate much of their efforts on the perimeters of urban areas when trying to increase housing supply.

A study conducted by Impresa of Portland, Oregon points out that the distance of a neighbourhood from a city’s downtown area and the decline in home prices is interlinked. Called “Driven to the Brink” and conducted for the CEOs of the Cities Group, the study has found that as the price of gas crossed the $2 per gallon mark, home price gains began slowing down. According to Joe Cortright, an economist with Impresa, the study found that the further away from downtown a locality was situated the greater was the decline. This was true of metro areas across the country , with cities as different as Portland, Chicago, Tampa, Florida and Pittsburg, Pennsylvania all showing a consistent pattern.

The study further underlines that some economically weaker areas have high foreclosure rates because mortgage brokers have shown a tendency to give greater loans in neighbourhoods that were previously ignored. This is a reflection of the current global trend of investment based on the income from mortgages.

Congress is planning to remedy the situation, says the study, by encouraging state and city governments to buy foreclosed real estate in economically backward areas. It hopes that this will bring down the number of vacant properties and more units will become available at affordable prices.

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The Warren Group, a Boston real estate tracker, has recently come up with figures that point to an alarming situation in some Bay state cities. Figures cited by the group show that foreclosure sales are now posing a challenge to home sales in these areas. The housing crisis is particularly acute in hard hit areas where the number of foreclosures is almost the same as the number of home sales.

According to the Warren Group the number of homes that were foreclosed in Lawrence in the first four months of the year was 156. This is in contrast to the 184 homes that were sold on the market. These figures suggest that bank seizures account for 46 percent of all real estate sales in the city. Not only is the state wise average almost half of this but the situation was vastly different even a few years ago.

Dorchester experienced 244 foreclosures and 340 home sales in the same period while figures for Brockton reflected 233 foreclosures and 307 home sales. In terms of percentages, foreclosures thus accounted for 41 percent of real estate sales in Dorchester and 43 percent in Brockton.

A break down of the figures shows that in certain cases foreclosures actually outnumber home sales in Brockton. This was reflected in the data for single family homes as well as two and three family homes in certain localities.

The result of this rising number of foreclosures is that real estate prices are dropping further in these areas which are already experiencing a depressed market. According to the Warren Group, there has been a decline of 17 percent in the median price in Dorchester. Lawrence has experienced a drop of 31 percent in the same period while Brockton has shown a drop of 19.7 percent. Trade analysts and experts are finding this trend alarming.

Thomas Callahan of the Massachusetts Affordable Housing Alliance is of the opinion that the current situation is disturbing because it is depressing the real estate market. Joseph Kriesberg, who heads the Massachusetts Association of Community Development Corps warns that the real estate market has not hit rock bottom yet and the numbers are likely to get worse.

Some experts attribute the present situation to the increase in high interest loans by subprime lenders during the recent real estate boom. Over the last two years many of these loans have defaulted and contributed to the turmoil in the global financial markets. This trend has been seen not only in Massachusetts but all over the country as well.

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A private financial conference held in London last week saw bankers from the USA airing their views on the present housing and mortgage situation. Some of the top executives of American banks presented their forecasts and offered the audience a perspective into the inside world of real estate forecasts. On the whole the bankers were optimistic about the situation.

The hardest hit state so far has been California, which has seen a spew of foreclosures and dropping prices of real estate. According to Kerry Killinger, CEO, Washington Mutual the last month has seen a slight improvement in the state. His company is closely monitoring the situation as this may be an indication that the downslide in real estate is finally evening out.

Chief financial officer, Wells Fargo, Howard Atkins believes that lower rates of mortgage coupled with affordable housing and capital infused banks can together help the market recover within the year. Quoted in the American Banker newspaper, Atkins’ views promise a brighter future for the hard hit real estate market.

The latest federal pricing data however does not reflect this upbeat mood. The Office of Federal Housing Enterprise Oversight is the agency responsible for tracking home values on behalf of the federal government. Issued last week, its quarterly report cites a 4.4 percent decline between January and March 2008 in California. This makes the predictions of improved conditions by the bankers all the more significant in the second quarter.

California’s declining real estate prices are not reflected throughout the country, however. Of the 292 metropolitan areas surveyed by the report, 56 percent have actually shown an appreciation in real estate values in the last year. Topping the list is Houma-Bayou, Louisiana with a 11.2 percent gain, closely followed by Grand Junction, Colorado at 9.1 percent. Wenatchee, Washington (up by 8.1 percent), Austin, Texas (up by 7.7 percent) and Billings, Montana (up by 7.1 percent) also find places at the top of the list. State wise, real estate in Wyoming appreciated by 6.3 percent, in Utah by 5.6 percent, in Montana by 4.9 percent and in Texas by 4.7 percent.

These figures once again highlight the fact that real estate is a highly localized asset. Fluctuations in value in different states do not necessarily affect prices everywhere. Thus on the one hand there are states like California and Florida which experienced highs of 25 percent increases at one time and have hit rock bottom more recently. On the other hand, there are those states that have plodded along on a steady keel, experiencing neither extreme.

“Slow and steady” seems to be the mantra of the future.

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When it comes to foreclosure auctioning, often, as no third party bidders offered to buy the foreclosed properties the estates got auctioned off with the mortgage lenders repossessing their claims through the reclamation of these properties. Sean O’Toole of ForeclosureRadar.com has said that despite the situations of lenders often offering bigger discounts at courthouses and to auctioneers, 98% of the state’s foreclosed properties in April failed to draw much attention to seek buyers. The result was that the lenders took the bulk possession of these properties en masse. These properties come to be known as REOs due to their real estate ownership possessed by banks and other such financial institutions. The banks also try to sell off their homes through the real estate agents on the list of local listing services, in terms of property related issues.

The Santa Clara County averaged a discount of 15% off of the value being tracked as mortgage foreclosures. This means that the previous homeowner had held a mortgage rate balance of $400,000 while the lender had started the initial auction of bidding at $340,000. O’Toole has also suggested that the notifications of defaults are on the rise still with the foreclosure crisis still at a stage where it needs immense help and resurgence to get the overall economy coming back to stabilized normalization. The situation is deepening instead of balancing off on a level. In April, 44,101 notices of foreclosure had risen on a state-wide level. There has been a hike of 14% in April, as compared to January 2008. He has even commented that lenders failing to start approving their short sale periods rather quickly, would have to take the homeowners through the foreclosure process as soon as they can sense an end approaching.

A short sale occurs when a lender lets a homeowner sell part of the property for less than the balance acquired through mortgage so that long-term foreclosure gets avoided. But the approval process getting to be slow eats up a lot of time. Realtors tend to complain daily that to pay market for a particular house there has to be nodding and willing lenders who are simply not there at the most needed times. O’Toole has even said that the lenders’ best interests may be preserved in making a rapid short sale process and as the home prices keep dwindling down there comes the greater necessity to do so soon.

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