“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 auction was held by Helaba, the German bank that holds the first mortgage on the property. Helaba itself ended up buying the site with a bid of $42.5 million.The only other bidder was the real estate investment firm The Bulfinch Companies of Needham, which offered $26 million.

The 119-acre property, which fronts Route 128, was owned by Watch City Development LLC, a joint venture between Polaroid and The Related Companies of New York, which intends to build a 1.7 million-square-foot office and retail complex at the site. Polaroid declared bankruptcy last year, and now that Helaba has bought the site, it’s unclear whether Watch City will be able to work out a deal to proceed with the development.

Officials from Polaroid did not respond to requests for comment. A spokesman for Related declined to comment, as did Barry Braunstein, a lawyer representing Heleba.

Waltham Mayor Jeannette McCarthy expressed relief that the property wasn’t scooped up by another developer. ‘‘I was pleased that the bank is the one that got it,’’ she said. ‘‘It’s not somebody completely new.’’

McCarthy said the site is ‘‘absolutely’’ important to Waltham, simply by virtue of its size. ‘‘It will have a major impact on the city no matter what goes in there,’’ she said.

Whoever develops the land, McCarthy said, should honor four commitments Watch City agreed to as part of the proposal: to make $45 million in traffic improvements, to preserve 20 acres of forest on the property, to convert a rail bed into a recreation trail, and to set aside part of the site for a potential direct connection to Route 128. She thinks the site can still be developed as planned at some point, despite the current weak real estate market, McCarthy said.

David Begelfer, CEO of the commercial real estate trade association NAIOP Massachusetts, agreed that the land could support a major development. ‘‘Someone may choose to scale it down and just get something started, but I think it does have the potential to be as large as originally planned,’’ Begelfer said. ‘‘The market will be coming back. When it does, properties like this will be the first to be developed.’’

Begelfer said Heleba may just let the property sit vacant for a couple of years until it can fetch a higher price. ‘‘There was a hope that someone could steal this property’’ with a low auction bid, Begelfer said. ‘‘Clearly, the bank was not going to allow the property to be stolen.’’

Inge Uhlir, who lives about a mile from the site, said neighbors are happy with the current plan and would fight any major changes. ‘‘If that’s ditched, there’s going to be a storm of opposition,’’ Uhlir said.

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?

North Shore Music Theatre closed in June due to mounting financial problems. David Fellows, chairman of the NSMT Board of Trustees said the board of trustees has turned the property and assets over to Citizens Bank, which is in the process of foreclosing on the theater’s two mortgages, which total about $5.2 million.  The theater also owes another $5 million to subscribers and vendors, but that is unsecured debt that won’t be repaid unless the auction sale nets enough money, Fellows said.  Boston Culinary Group, which ran the theater’s food service, also has a $250,000 attachment on the property for unpaid bills.

Daniel P. McLaughlin and Co. Auctioneers says the auction is scheduled for Oct. 1 at 1 p.m. at the Dunham Road theater. Nobody at McLaughlin could be reached for comment.

The property and assets of the North Shore Music Theatre will be auctioned off to the highest bidder at an upcoming foreclosure auction, according to the theater’s former chairman.

The assets include three buildings — a theater-in-the-round, a restaurant and an education building — on 24 acres on Dunham Road alongside Route 128. There are also costumes, lighting, sound equipment and five vehicles, Fellows said.

The property is assessed at about $12 million, according to the city’s online records. Fellows said the theater’s total debts are in the $11 million to $12 million range.

• Find a specialist. Check newspaper and online ads to see which agents handle REOs. Typically, banks have just a handful of brokers handling all of their local foreclosure sales.
• Get loan pre-approval.  The really good deals on REOs go quickly, and the buyer doesn’t necessarily have time to try to work out the financing afterward.  So, experts recommend getting pre-approved for a mortgage before even looking at foreclosed properties.
• Study “comps.” How do you decide how much money to offer for a foreclosure?  Simple: The same way you determine how much to offer in traditional transactions – by checking “comps.”  “Comps” are the prices that comparable listings in the same neighborhood recently sold for.
• Also look at how quickly nearby foreclosures have been selling.  The best advice on a bank-owned property is to come in at your highest and best, unless the property has been sitting on the market forever with no activity.

Remember that REOs are sold “as is.” Don’t expect the bank to cut its price to compensate for any repairs that a foreclosed home requires.

After all, banks base list prices on how much nearby foreclosures recently sold for – and those properties probably needed work, too.

Further details are listed below.