“With the end of the year coming, the banks are going to dump a lot of stuff,” says Richard Zwick, a real estate agent from DeLand, Fla. “The prices will keep coming down and down as the banks are forced to take less and less.” In the area of central Florida Zwick covers, price tags on many foreclosed homes are as much as 50% lower than they would have been six months ago.

Before you start focusing your energy on finding a foreclosed home, here are a few ideas to keep in mind.

First off, try to get a sense of how many foreclosures there are in your area. Places like Phoenix, Las Vegas and central Florida are hot spots with massive inventories.

In contrast, foreclosure rates in many rural areas have barely gone up since the recession hit. And even if there are a number of foreclosures in the neighborhood you’ve got your eye on, factors such as high-quality schools could lead to hefty competition for each one.

Next, become familiar with the different categories of foreclosure sales. “Short sales” usually occur when homeowners are behind on their mortgages and their home is worth less than what is owed to the bank. The homeowner requests that the bank agree to a short sale in order to escape the overly burdensome payments without getting the blot on their credit record that a foreclosure would leave. Banks usually go along with these deals because they figure they will face smaller write-downs and fewer administrative costs than with a foreclosure. The catch with this type of sale is that the current homeowner’s mortgage lender, who gets to approve the new buyer, might take as long as two months to sign off on an offer.

“That gets very frustrating for those involved,” says Timothy Warren, head of a Boston firm that publishes information on foreclosure sales in the New England states.

Once a home is foreclosed on, it’s auctioned off at a public event. Most of the time it’s the lender of the original mortgage that buys the property. (That was the case 95% of the time in Massachusetts last year, according to Warren.) Why do individual buyers tend to stay away? At this point in the foreclosure process, the financially beleaguered original homeowner is often still living in the foreclosed property, which makes it extremely difficult to arrange a thorough property inspection. And when amateurs do try their luck at an auction, they tend to make rookie mistakes.

“Most people get so excited, they overbid,” Zwick says.

After the original mortgage lender purchases a foreclosed property, it typically puts it up for sale as-is. These sales are known as REOs, for “real-estate owned.” The thing to watch out for here is that banks are quick to yank a prospective buyer’s deposit for failing to strictly abide by deadlines.

“I’ve heard of people about to buy an REO losing their deposits because they don’t follow the inspection deadlines or the mortgage deadlines,” Zwick warns.

Another possibility, albeit a relatively remote one: key paperwork concerning your new REO’s previous mortgage was mislaid as investors traded it like a baseball card during the mortgage securitization boom. More and more state court judges have been ruling that such slip-ups create a reason to invalidate a foreclosure. That would jeopardize your claim to the foreclosed property you just purchased.

It’s tempting to believe you can navigate the foreclosure sale process on your own. Much of the information you need is public. The downside is that it can be difficult to track down, let alone do so fast enough to ensure you’re getting the jump on the competition. The petitions for foreclosure that precede a short sale often have to be dug out of courthouse record rooms.

Foreclosure auction information comes from hard-to-read-type in the back of major newspapers, or from subscription services like the one Warren operates. As for REOs, lenders tend to have favored networks of brokers they tip off about the best deals. The result? A DIY approach to buying a foreclosed home “is really not for the faint of heart, and requires a lot of patience,” Warren says. There are plenty of real estate agents who specialize in setting up buyers with foreclosed homes. Consider hiring one if you’re interested in the foreclosures market.

The address of this Cambridge Massachusetts Foreclosure is 10 Museum Way Unit: 526 Cambridge, MA 02141.

Cambridge Massachusetts Foreclosure

• Condo/Townhome/Row Home/Co-
• Community Name: Regatta
• Year Built: 1998
• 2 total bedroom(s)
• 2 total bath(s)

• 2 total full bath(s)
• 3 total rooms
• Approximately 1040 sq. ft.
• Type: Condo, Fifth floor location
• Style: High-rise

• 1 open parking space(s)
• Heating features: Central
• Central air conditioning
• Call agent for details on association fee info.

In late March of this year in the case of U.S. Bank v. Ibanez, Massachusetts Land Court Judge Keith C. Long issued one of the most controversial rulings in recent years which has called into question hundreds if not thousands of foreclosure titles across Massachusetts.

The Facts

In the Ibanez case, the Land Court invalidated two foreclosure sales because the foreclosing lenders failed to show proof they held ownership of the foreclosed mortgages through valid assignments. In modern securitized mortgage lending practices, the ownership of a mortgage loan may be divided and freely transferred numerous times on the lenders’ books. But the documentation (i.e., the assignments) actually on file at the Registry of Deeds often lags far behind. The Land Court ruled that foreclosures were invalid when the lender failed to bring the ownership documentation (the assignments) up-to-date until after the foreclosure sale had already taken place.

The Ibanez decision has called into serious question the validity of any pending or completed foreclosure where the lender did not physically hold the proper paperwork at the time it conducted its auction. The mortgage industry has criticized the decision as form over substance. The judge is presently reconsidering the ruling, but whatever the outcome, the case will likely end up before the Massachusetts Supreme Judicial Court given its far-ranging impact.

What can you if you are affected by the Ibanez ruling? If you are a homeowner facing foreclosure, you now have a powerful tool to delay or stop the foreclosure sale. Check the Registry of Deeds online to see if your lender has timely recorded the proper assignments, and send a written request for the loan documents. It may be confusing to piece together the chain of custody of your mortgage. If the foreclosure auction has already taken place and you are being evicted, you can request the loan documents in written “discovery requests” filed with the court. You could also file a lawsuit to enjoin the foreclosure.

If you are contemplating purchasing a property out of foreclosure or are selling a previously foreclosed property affected by an “Ibanez” issue, check if there’s an existing title insurance policy on the property, and ask the title company to insure over the issue. Some are willing to do this. Others are not, however. The other option (albeit expensive) is to hire an attorney to file a Land Court “quiet title” action to validate the proper assignment of the mortgage loan, assuming you can track the documents down and they were not backdated. You can also try to track down the foreclosed debtor and obtain a release deed from them, assuming you can track them down and they cooperate.

If you are facing foreclosure and need help getting through the legal paperwork maze, contact City Life/Vida Urbana. They are Boston based. Other efforts are starting up all over eastern Massachusetts, too.

If you are buying foreclosed property, get a lawyer, please! (I know you all hate it when lawyers tell you to get a lawyer, but this is a time when you really need one.)

Ibanez is going to make foreclosure slower and more complicated. But, it may also force lenders into doing things right.

Have you ever read your mortgage documents? If you haven’t, pull them out of that dusty old box and take a look. There is a process; lenders need to follow it. If they don’t, the next person buying the house may not have proper title. Remember that you never buy a house; you buy a title.

Are we headed for a paperwork mess of mammoth proportions? Will Ibanez keep it manageable?

Beacon Hill Foreclosure Living Room

According to the listing, the property is totally livable now – it boasts +-1,550 SQFT , 2 bedrooms, 2 full bathrooms, central A/C, 2 gas fireplaces, storage, courtyard with private +-300 SQFT patio. There is a spacious, open floor plan.  The entry level has chef’s kitchen with granite counters, oak cabinetry and granite counters, with large island. There is also a flexible informal living and/or formal dining area as well.   An additional living room, guest room, and full bathare located on the second level. The master level has large bedroom, walk in closet with laundry, and spacious master bath with whirlpool tub and separate shower. Top level is currently unfinished with storage and has endless possibilities.  

There is a PDF floorplan of this Beacon Hill Foreclosure, available here and a virtual tour here.

• # of Bedrooms    * 2
• # of Bathooms    * 2
• List Price              *  $899,000
• Square Feet         *  1550 sq feet
• FY 2009 Taxes  * ~$9468

There are 6 more pictures after the jump; click below to see the rest of the photos.

You can contact Charlesgate Realty to learn more about the Beacon Hill Foreclosure located at 28R Phillips Street, Boston MA.

More than $9 million  has been set aside to encourage low- and moderate-income buyers to purchase, improve, and move into as many as 250 properties in neighborhoods most hit by foreclosure.  The areas included in the plan include: Boston, Salem, Somerville, Yarmouth, Brockton, and Peabody

According to the details of the plan, buyers purchasing single-family homes could get up to $20,000 in funds and those buying multi-family homes like two- or three-families could receive as much as $40,000 to make improvements under the plan.

“We are trying to give folks another reason to take a look at foreclosed properties in neighborhoods that are hardest hit,” said Clark Ziegler, executive director of the Massachusetts Housing Partnership. “We think we are going to help people get into good situations.”

Further details are listed below.