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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January showed an all time increase in the rate of home foreclosures recorded for this year till date. The Oakland county officials stated that this month saw the highest among all other months’ records.

January ’08 posted the highest number of foreclosures. At 949 foreclosure cases, it was 200 cases more than those posted in January ’07 and twice that of postings in December.

The county’s Equalization Division, which is the county’s tax-assessing wing, takes those foreclosures into consideration where properties have been claimed back by the lenders.

Dave Hieber, manager for Equalization stated that it is too early for him to comment whether the trend will continue but he also says that if it does then the total will rise to 11,000 as compared to 7643 cases in 2007. This may put even more pressure on an already struggling economy in the country.

This high rate of foreclosures is a burden on the housing market as prices will crash and tax revenue collections by the government will be deeply affected.

RealtyTrac Inc, a mortgage analysis company stated that Detroit area posted the highest rate of foreclosures in 2007 at 4.9 percent. Stockton in California stood second with 4.8 percent and Las Vegas metro area was third with 4.2 percent rate.

All these cases reported would be in different stages of the foreclosure process. RealtyTrac includes all those properties, which have entered into some stage of the foreclosing process. It determines the ranks by comparing the ratio of the number of foreclosures in the area versus the total number of houses in that metro area. These include owners having received defaulter notices, auction sale notices and repossessions by the bank.

Detroit metro area, which includes areas of Livonia and Dearborn, reported a 68 percent jump with 72,616 filed cases against 41,273 properties.

RealtyTrac also combined areas of Troy and Farmington in the Oakland County with Warren in the Macomb County, creating another metro area, which is ranked, 17^th in its report where 2.1 percent of homeowners are facing foreclosures.

Hieber also insists that RealtyTrac numbers are higher than actual as they include all properties in some stage of foreclosures as compared to the Equalization wing that includes only those, which have been claimed back by the lenders. Hieber also added that Equalization wing of the county is parcel specific and loan specific.

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