For several years the market for single family homes has taken a beating from the foreclosure crisis. The problem has spread uncontrollably across the country that almost all sectors of the housing market, including luxury homes, were affected.

Foreclosure is now threatening homeowners of pre-fabricated homes in Brevard County, Florida. Historically, manufactured homes were more likely to be listed as for sale by their owners and were less likely to be foreclosed. However, times have changed and the manufactured home communities are seeing a growing number of foreclosures and short sales in their midst.

Manufactured homes are built by parts in a factory and then assembled at land sites. They cost less than traditional single family homes. In 2008, the average market price for a manufactured house was $64,900 compared with the $292,600 average price for a typically single-family home.

Manufactured homes are intended as entry-level purchase and ideal for people who do not have the money for large down payments. And because pre-fabricated houses were untouched by the housing bubble, only few units went into bank foreclosure sale.

Generally, manufactured homes are owned by older people who did not take out subprime loans to finance the purchase. And they are less likely to allow their properties to be foreclosed.

But the increasing insurance rates and maintenance costs are changing all that and the number of foreclosed manufactured homes is starting to creep up.

At the start of this year, about 98 manufactured houses were sold in a 5,500-home community in Brevard County. Industry experts said that mitigating circumstances rather than bad loans or overextended credit are the most likely reason for manufactured home foreclosure.

Some owners of foreclosed manufactured homes have just lost their jobs or spouses. And those who have fixed incomes have difficulty keeping up with increasing taxes and insurance.

In July, the number of foreclosed houses in Brevard County rose by 11 percent to 862. So far, manufactured houses accounted for only a fraction of the total foreclosure number.

Industry experts said that because manufactured homes are cheap, they sell quickly, thus preventing short sales or foreclosures. But with the flood of cheap single-family homes on the market, owners of manufactured homes are finding it difficult to sell their properties, leaving some of them to bank foreclosure sale.

The report said that a family with an annual median income of about $64,000 could afford to purchase 72.3 percent of all houses sold in the country in the second quarter of 2009. In the first quarter of this year, the same family could afford to purchase 72.5 percent of all houses sold in the country. In the second quarter of last year, home affordability was 55 percent.

Industry analysts said that the demand for houses is increasing stimulated by the rise in affordability and the federal tax credit of $8,000 given to first-time homebuyers. Analysts explained that a home can be called affordable if a family who earns a median income could allot equal or not more than 28 percent of their earnings toward the housing costs.

The report noted that the dramatic improvement in home affordability this year was due to the declining prices and low interest rates. According to market data, the average home price in the country today declined by over 32 percent compared with the peak market price in 2006.

And for three months, interest rates for 30-year fixed-rate loans were below 5 percent, which was a historic low.

The improved home affordability may benefit buyers but it becomes a bane to sellers. Data showed that over 30 percent of all houses sold in the second quarter went below the price originally paid for by sellers.

In a typical real estate market, the value of the property increases over the years. But homeowners who purchased their properties and sold them within the last five years lost more money on the deals.

Compounding the problem of most home sellers is the foreclosure crisis. Many home sellers were forced to sell their properties at a lost because they know that they could not keep up with their mortgage payments and selling their houses was one of their options to avoid foreclosure.

But the abundance of foreclosure homes on the market pushed down prices of properties, leaving sellers no choice but to lower further their sale price in order to compete with bargain-priced distressed properties.

In Park City, industry analysts are expecting sales volume that are less than 50 percent of figures posted three years ago. A panel discussion on the state of the real estate market in Vail Valley showed that there are areas that are stirring from a sales slump but the overall market is still reeling from the impact of the financial collapse and the economic crisis.

In Telluride, industry analysts said that there are many stalled transactions. Many sellers are willing to trim off as much as 20 percent from their sale price but buyers want properties that are 40 percent less from their original sale price.

The resort areas have been experiencing a jump in the number of foreclosure properties for several years now. However, only a few properties that received foreclosure filings were auctioned off. In Eagle County, there were 236 foreclosures in the first half of this year, while Park City posted 191 for the same period.

According to industry analysts, Telluride’s area listings have eight short sales, properties sold at reduced prices to satisfy lenders. Meanwhile, there were more short sales in Park City this year compared with previous years. Experts said that there is always a daily increase in mountain resort areas, adding that so far, there are about 3,500 listings and about 10 percent of these are short sales.

From January to June, Colorado posted foreclosure filings on 26,565 properties, earning it the 10th position in states across the country with highest foreclosure rates. This means that one in 34 housing units or 1.25 received at least one foreclosure filing.

On the other hand, Wyoming ranked 44th in states with the highest foreclosure rates for the first half of this year. For the period, foreclosure filings were made on 413 properties, representing one out of 587 housing units or 0.17 receiving filings of foreclosures.

State industry experts said that preventing the increase in the number of foreclosed houses is a critical component towards the goal of stabilizing the real estate market.

JJ Manning Auctioneers has advertised the Bank Owned Foreclosures auction for the property which consists of five buildings located on a 2.61-acre parcel of land. The facilities include two apartments, an office building and two hotel/motel buildings.

According to JJ Manning Auctioneers, the planned auction is on schedule but sometimes, with auctions, cancellation is a big possibility and so potential bidders are advised to call the company for confirmation on the day of the sale.

The property has been used both as a motel and for housing seasonal workers. It contains a 20-room dormitory used by its former owner, Doctor J. Richard Fennell to shelter seasonal workers of the Snow Inn and Thompson’s Clam Bar.

In June 1999, Fennell sold the facilities to Stone Horse Motel Inc. for about $600,000, with Harry Miller as the identified purchaser of the complex. In January 2002, Caribbean Cleaners Inc. bought the complex for a dollar. The following month, the company sold the complex back to Stone Horse Motel, also for a dollar.

Meanwhile, Douglas Levings, who declared himself as the only owner of the complex now under Bank Owned Foreclosures, operated the facilities as housing for seasonal workers and rental motel units. Last year, Levings decided to use the dormitory portion of the property into long-term rentals. He was concerned about the availability of foreign workers who worked seasonally under the H2b visa program.

Levings proposed using the complex to house people who have drug problems. He said that his research showed that there was a lack of housing for individuals who are recovering from drug addiction. He said that his proposal is aimed at providing housing to people who have successfully completed drug addiction recovery programs.

When he put his plan into action, residents living near the property staged a protest. The building department also served Levings a cease and desist order due to his failure to secure permits for conversion work.

The Bank Owned Foreclosures auction requires that successful bidders must have at least $25,000 in certified bank check. They must also be prepared to complete the sale within a month.

In her speech at the association’s meeting, Appleton-Young linked the languishing condition of the housing market in Marin and the national and state problems that exacerbate the ongoing crisis in the country’s economy.

She said that the economic outlook is important in determining how the city and the whole of the country could quickly recover from the crisis, adding that there is still uncertainty over how long unemployment can push higher the number of Bank Owned Foreclosures.

She told agents to brace themselves for a second wave of foreclosed properties this year or next as loans will start to re-set and properties repossessed by banks will begin to flood the market.

She noted a decline of 20 percent in the state association’s membership in 2008 despite the increasing number of Bank Owned Foreclosures selling at lower prices. She explained that the current situation in the real estate market is not for agents with faint hearts.

Appleton-Young’s speech was a contrast from her statements before the state association in April 2007. She told agents then that recession is not a possibility, citing job creation, the boom in the commercial real estate market and the economic growth in California. She pointed out that a 30 percent decline in home prices in Marin will not happen in her lifetime.

Fast forward to April 2009, the median price of a single-detached family house in Marin declined to $734,500 from $935,000 the previous year. Last month, foreclosed houses in the Bay Area accounted for nearly 50 percent of the total number of properties sold.

Appleton-Young said that she never thought home prices in California would decline by almost 35 percent. She added that the current housing market situation has a lot of lessons to offer. She told agents that today is the right time to make some changes on the housing industry.

Statewide, foreclosure filings were received by 230,915 homeowners in the first quarter of this year, a jump of 35 percent from the previous quarter. One out of 58 houses in California is in danger of becoming Bank Owned Foreclosures.

He ordered government-controlled mortgage financiers, Federal National Mortgage Association and Federal Home Loan Mortgage Corp. and Lender Processing Services (LPS) to provide him with information on why only two law firms handle foreclosure proceedings in Connecticut.

Blumenthal is responding on complaints he received from consumers who claimed that they were not given proper notices of foreclosures from marshals. He said that troubled homeowners are being charged high fees on foreclosure proceedings and some marshals have received excessive fees linked to properties on bank foreclosure
listings.

According to Blumenthal, dominance of several law firms on foreclosure service has resulted to complaints of illegal or improper practices such as assigning work load to non-marshals, forgery, failure to serve papers and receiving bribes. He pointed out that these law firms in question are making a profit out of properties on bank foreclosure listings.

In his letters to Fannie Mae, Freddie Mac and LPS, Blumenthal asked them to disclose the criteria they are using to choose law firms that will handle foreclosure proceedings for them in the state.

He cited in his letter the law firms of Bendett and McHugh and Hunt Leibert Jacobson. Both law firms filed majority of foreclosure cases which are now clogging courts in Connecticut.

Furthermore, these law firms have allegedly passed the work of serving foreclosure notices to few select state marshals. According to complaints, state marshal John Fiorello and his group received over $1.1 million in 2008 for serving notices of foreclosures to homeowners whose properties are on bank foreclosure listings.

Blumenthal pointed out the anti-competitive practice of focusing the mortgage foreclosure processing service on few state marshals and law firms.

Records showed that Bendett and McHugh and Hunt Leibert filed nearly 1,200 lawsuits monthly in 2008, with foreclosure actions accounting for 99 percent of the cases. Additionally, the two law firms allocated almost 50 percent of their process-serving operation to the group of Fiorillo.

Bendett and McHugh and Hunt Leibert are the only law firms in Connecticut named by Freddie Mac and Fannie Mae as designated counsel to handle foreclosure actions on properties on bank forclosure listings.

But based on interviews with buyers at open houses, many are still waiting for the market to reach its lowest level. A two-bedroom house in Brooklyn priced at $699,000 has been on foreclosure listings for over two months and has been examined by 14 buyers, but no one made a bid.

Housing analysts said many potential home buyers are confused by conflicting reports about the true estate of the housing market. Some reports showed the sales of existing homes declined by 3 percent in the first quarter while other reports showed that sales of new homes have bottomed out. Homebuyers also read about announcements by economists that home sales will recover about 6 months before housing prices reach a stable level.

Mark Zandi, the chief economist of Moody’s Economy.com, said that the home price decline will continue through the summer and will start to stabilize in the last quarter.

Last month, the median price tag for new homes dropped by 12 percent from March 2008 levels to $201,400. The median price tag for existing homes fell also by 12 percent from the same period to $168,200.

The speed of recovery for home sales and prices also varies by areas. According to the report released by The Associated Press and Re/Max, sales of new homes, existing homes and homes from foreclosure listings in February and in March have been rising at various rates in the country’s top 50 metropolitan areas.

Home sales in March increased compared to sales in March 2008. Most cities battered by foreclosure listings and bargain home prices, such as Las Vegas, San Diego, Phoenix, Los Angeles, Orlando and Miami, have home sales increases at rates over 50 percent compared to last year.

Meanwhile, in Cleveland, Ohio and in Detroit, Michigan, sales of homes including properties from foreclosure listings are still declining because of the departure of jobless workers looking for work in other states or cities.

While many prospective homebuyers are encouraged by bargain prices of homes in foreclosure listings and by the $8,000 tax credit, many others are worried about the rising number of bankrupt businesses and mass layoffs.

Nevertheless, many realtors are encouraged by the number of potential homebuyers showing interest in buying. According to the National Association of Realtors, first-time homebuyers comprised 50 percent of buyers of new homes, existing homes and homes from foreclosure listings sold in March.

Under the government foreclosures program, more loan modifications can be completed and more Americans could be saved from losing their homes to foreclosure if judges are given the power to order lenders to modify the mortgage loans of homeowners filing for bankruptcy.

As the Republicans in the Senate keep on stalling, more and more Americans are being forced out of their homes due to private lender and government foreclosures.

Moody’s Economy.com has estimated that 3.4 million mortgage borrowers will default in 2009 and that 2.1 million will be forced out of bank forclosed homes. These estimates are even too optimistic according to some analysts as they were based on the assumption that President Obama’s government foreclosures program will succeed.

The success of the government foreclosures program however is minimal if one of the key schemes of the program is not carried out – the loan modification scheme. The loan modification scheme sets up qualifications and guidelines for troubled homeowners. It also gives cash incentives to both lenders and homeowners to work out reduced monthly payment plans that can be sustained by the borrowers.

The authority of judges to order loan modifications will force lenders to prefer loan modifications over risking their mortgages to be brought to bankruptcy courts. The bankruptcy reform will also give distressed homeowners a last recourse to save their homes if their lenders refuse to modify their loans or if they cannot afford to pay even reduced payments.

President Obama’s government foreclosures program was intended to help 3 to 4 million homeowners avoid foreclosure by reducing their monthly payments. Economy.com has estimated that up to 2 million loans will be modified under the government foreclosures program and up to 1.25 million loans will be modified under bankruptcy processes.

If the Senate Republicans do not pass the bankruptcy reform, all the loan modification estimates would fall by over 50 percent. Some political analysts claim that Republicans are concerned about impacts of the reform on political fund raising, as the American Bankers Association and financial lobby groups remain fiercely opposed to the reform.

The Washington Times cited documents showing that Senator Feinstein volunteered in 2008 to help the Federal Deposit Insurance Corp. obtain federal money to help solve the foreclosure crisis. The documents showed that the senator sent her letter to the FDIC a few days before the FDIC chose CB Richard Ellis Group, headed by the senator’s husband Richard Blum, to sell foreclosure properties acquired by the FDIC from bankrupt banks.

In January this year, Senator Feinstein also introduced a bill that would allocate $25 billion to the FDIC to fund its foreclosure prevention programs.

The Washington Times contend that the senator’s support for the FDIC’s finances was unusual. The publication mentioned that Senator Feinstein is not involved with the Senate Committee on Banking, Housing and Urban Affairs, which has jurisdiction over FDIC.

A former federal official, Kent Cooper, who specialized in political ethics, said that legislators should be careful in introducing bills that cause people to see conflicts of interest.

Similarly, Melanie Sloan, head of the Citizens for Responsibility and Ethics, said the FDIC documents highlight the conflict-of-interest problems of a legislator with links to a business that gets contracts from the government.

Real estate specialists like Colorado agent Cynthia Kenner whose specialty is in bank owned foreclosed properties said that CBRE got above average incentives and that CBRE’s specialty is not in foreclosure properties.

Meanwhile, the FDIC argued that the contract was given to CBRE after a fair competition. FDIC said it gave CBRE above-average incentives to hasten the sale of the foreclosure properties it held.

Gil Duran, spokesman of Senator Feinstein, said the senator did not know about the CBRE contract with the FDIC when she introduced her bill. He also said the senator’s husband does not manage the daily operations of the firm, including the firm’s contracting activities.

In addition, CBRE spokesperson Robert McGrath argued that CBRE’s position as the largest real estate business in the country makes the firm the most qualified to sell FDIC’s foreclosure properties.

Based on Senator Feinstein’s financial disclosure statements, the position of her husband as board chairman is part-time. Blum became CBRE chairman in 2001 and owns an investment company that controls 14.4 percent of CBRE.

In March, FDIC officials said they allotted 507 foreclosure properties worth $221.7 million for sale to CBRE. The real estate company said it is already working on purchase contracts for 23 foreclosure properties worth $11 million.

In California, the number of lawsuits related to disclosure issues is also rising as sales of bank owned properties increase and as foreclosure listings across the state increase.

In 2008 and in the first months of 2009, California foreclosures have put the state among the top states in charts of foreclosure rates and foreclosure listings.

As foreclosure listings continue to grow, more and more homeowners are turning to short sales to prevent their credit records from being dirtied by foreclosure listings.

According to Jones, founder of Danville-based Shannon Jones Law Group, his firm and other law firms are experiencing an increase in lawsuits over short sales involving real estate agents and brokers. She said some cases arise from agents’ attempts to provide legal advice, such as encouraging homeowners to undertake short sales rather than allow their houses to be added to foreclosure listings. Lenders later sue real estate agents because of deficiencies in the short sales.

Jones advised real estate agents to make records of all communications with clients in writing. She also told them to advise their clients to talk with a lawyer first before undertaking the short sale process as a way to preserve their credit ratings from being diluted by foreclosure listings.

Additionally, agents were also advised to use the short-sale supplementary form developed by the California Association of Realtors. The form includes termination agreements by the buyer and provides steps on how to manage short sale offers.

Notwithstanding the rise in lawsuits related to short sales, Jones said that nondisclosure cases still constitute the majority of cases against real estate agents. She related that 85 percent of lawsuits against real estate agents are due to nondisclosure. These lawsuits include cases where the agent did not tell the homebuyer that the home being purchased is near a freeway bypass project.

Nondisclosure lawsuits also include cases that involve issues related to water shortages, recent deaths and neighborhood troubles caused by problems other than foreclosure.