The latest foreclosure figures indicate that, as expected, foreclosure rates have fallen in 2012 – but the new wave of foreclosures could be headed our way.

As anticipated by real estate analysts, foreclosure rates fell in the first quarter of 2012 by 17% from the first quarter of 2011 – placing the statistic at its lowest level since 2007. This is also the first quarterly figure to be below 200,000 properties (199,000) since July 2007, a milestone in and of itself.

This decline in foreclosure properties across the nation can be attributed to after-effects of the foreclosure hiatus that was declared in 2011 as a result of foreclosure fraud scandals that ripped through the market and ground the process to a screeching halt. Lenders, for the most part, are still hesitant to fully turn on the foreclosure process taps like before, even with a $25 billion foreclosure settlement agreement on the books.

That could soon change.

According to analysts, the backlog of foreclosure homes that built up gradually throughout 2011 is still there and hasn’t gone away. In fact, as banks become more comfortable legally and practically with initiating foreclosures, this quarter could be the last quarter that sees a substantial decrease – or any decrease at all – in filing statistics.

Foreclosure Filings Rise in March

One other statistic was released that unveils a more revealing aspect of the foreclosure market: monthly foreclosure filings.

Specifically, in March, the number of home foreclosures that received their first filings increased by 7% from February; this is the third monthly increase in a row. Foreclosure filings for the quarter may have decreased compared to the previous quarter, but on a month-by-month basis figures are beginning to pile up.

In other words, the market is akin to filing up a pool with water. While less water may be entering the pool than before, the rate at which the water is coming out of the hose is beginning to increase – which will eventually result in more water overall.

One notable difference: Filling up pools doesn’t drive down home prices.

Of course, for foreclosure investors looking for distressed property deals, more foreclosures equal more opportunity. Besides, the market needs to run its course completely before a true recovery can begin, which means foreclosure listings need to enter the market and sell. Only then will home prices really begin their nationwide recovery.

With April 17th quickly approaching, many people are dreading the deadline to file income taxes for the 2011 tax year, especially with the current economic situation in our country. However, if you own a home (or purchased a cheap foreclosure property in 2011), you can take advantage of some pretty incredible tax benefits that can help reduce the amount of money you owe the IRS (or beef up your tax return if you have already paid more than you share).

Regardless of where you stand for the 2011 tax year, if you are still paying on a home loan then make sure you take advantage of homeownership tax credits.

Homeownership Tax Credits

When it comes to buying a new home, you may spend a plethora of money on everything from closing costs to the home inspection. Unfortunately, these costs (many of which are currently being covered by those selling the home) are not tax deductible. Therefore, if you purchased a home in 2011 and had to pay for any of these home-related costs then it is important to understand that you cannot write these expenses off on your 2011 taxes. However, you can write off the interest for your home loan.

If you own a home, then you get to write off the interest you pay to the lender every single year. For example, if you purchased a home in May of 2011, then you can write off any interest that accumulated from the date of purchase until the end of the year. Similarly, every year you pay interest on your home loan you can write off that interest on your taxes. Believe it or not, these tax deductions can be pretty substantial and can significantly reduce the amount of money you owe to the IRS or can help raise your tax refund check.

Incentive for Buying a Home in 2012

Knowing that you can write off interest on your home loan should be a great incentive to consider purchasing a new home in 2012, especially if you wish to take advantage of high number of distressed properties currently on the market.

Not only will homebuyers in 2012 receive incredible tax benefits for purchasing a home when they file their 2012 tax returns, but they will also be able to purchase foreclosures and short sale properties for well below market value. Plus, interest rates are still incredibly low, further increasing the potential savings.

In the end, homeownership definitely has its advantages, especially when it comes to trying to save money each tax season.

If there is one thing we have learned about the foreclosure market lately it is that foreclosure happens to everyone and does not discriminate based on socioeconomic status, affecting both the rich and the poor. Over the last few years there has been an increase in foreclosure properties ranging from low-income homes to multi-million dollar properties.

It is true that when it comes to foreclosure, even celebrities are not immune. However, more often than not a multi-million dollar home will stay in the foreclosure process significantly longer than your average multi-family home.

Foreclosure of the Rich and Famous

There have been several celebrities who have faced foreclosure over the last few years including Nicholas Cage, Jose Canseco, and Toni Braxton. However, when a celebrity, like Nicholas Cage, loses 4 of his 15 homes it is often hard to compare this inconvenience to the effects of someone losing their only single family home.

When it comes to finances, even celebrities have a hard time managing their money. Many homeowners lose their home due to everything from unemployment to divorce, leaving one person responsible for paying a mortgage payment that was designed for a double income household. Jose Canseco understands how expensive divorce is (as he’s spent approximately $8 million on divorces) and lost his $2.5 million home to foreclosure. Even celebrities like Toni Braxton have lost homes due to bankruptcy, which plagues many average Americans.

Despite the similarities, these celebrities have one thing that many people who lose their homes do not have—a place to live once they lose their home.

Foreclosure of the Working Class

When the working class faces foreclosure they are often losing their only home, leaving them with nowhere to turn. Instead of having 13 other properties to call home, many of these working families are moving out their entire family and may live in a car, with a relative, or in displaced housing. The working class may lose their homes due to bankruptcy, expensive divorces, and poor money management; however, unlike celebrities they tend to face serious financial restraints such as unemployment or inadequate income, health insurance, and food security.

Biased Foreclosure Process

Although foreclosure does not discriminate against socioeconomic status, the foreclosure process definitely does. More often than not, the foreclosure process is significant delayed for homes that cost over $1 million. For example, in parts of Tennessee home loans of $1 million were delinquent on an average of 278 more than your mortgages under $250,000. Therefore, even when it comes to foreclosure, the wealthy get more breaks.

Have you been considering purchasing a foreclosure property for everything from your primary place of residence to flipping houses? If so, there are some essential things you need to know about purchasing distressed properties to help you get the most out of your investment.

With real estate market recovery underway, now is a prime time to invest in foreclosure properties. However, it is essential to understand the current real estate market in order to make the best investment decisions.

Some important areas of information to understand include:

Home Prices: Despite the fact that current real estate market is on the road toward recovery, it is essential to understand that home prices are still very vulnerable. Fortunately, this instability allows you negotiate for incredible prices on handyman specials and other distressed properties, including government foreclosures. On the other hand, these prices will more than likely not climb very much in the very near future, which means you may have to hold onto this investment for a while if you are interested in flipping houses.

Rental Market: Similarly, it is essential to understand that the current real estate market has a plethora of opportunities for those looking to turn foreclosure properties into rentals. There is high demand in the rental market; therefore, you can make an immediate return on your investment (albeit with monthly payments instead of a lump sum payment provided when you sell a house). Therefore, purchasing distressed properties and using them for rentals may be your best bet until the real estate market fully recovers.

Location: Along with the low home prices and the current rental market, when purchasing a foreclosure property it is important for you to research the area in which you are looking to invest. For example, you can probably get the biggest discounts in places such as Atlanta, Georgia; Philadelphia, Pennsylvania; St. Louis, Missouri; Chicago, Illinois; and San Francisco, California.

Incentives: Finally, when looking to invest in foreclosure properties pay attention to incentives. Some lenders are offering huge incentives to investors looking to purchase foreclosure properties in bulk. Furthermore, by becoming familiar with homeowner incentives you can determine which areas are better to avoid. For example, some states (including Nevada and New York) are offering opportunities for homeowners facing foreclosure to rent their home, which will reduce the number of homes hitting the market in these areas.

If you are interested in foreclosure investing then make sure to examine everything from home prices and the local rental market to the location and lender incentives for your property.

The foreclosure fraud settlement – or National Mortgage Settlement Agreement, for the traditionalists out there – is signed and sealed (if not entirely delivered yet). No one expects it to put an end to foreclosure shenanigans in the banking industry, but most expect it to at least provide some measure of support to homeowners struggling to stop foreclosure as well as some compensation to foreclosure victims.

What many didn’t expect is for the settlement to actually boost the nation’s collective foreclosure process, resulting in even more foreclosure properties entering the market.

According to numbers released this week, that may have already happened. Foreclosure filings decreased from January to February by 2% and fell by 8% from February 2011, but that rate is the lowest decrease since October 2010. In other words, the rate at which the foreclosure process is running is actually increasing – after the settlement was put into place over a month ago.

Of course, that doesn’t mean the settlement itself is solely responsible. What it does mean, however, is that banks are increasingly picking up the pace processing foreclosure properties because they are no longer afraid of widespread litigation from foreclosure fraud victims and the government as a result of the negotiation process that led to the agreement.

That was the main reason why over a million home foreclosures were delayed until 2012 or beyond from 2011 – because lenders across the country largely put a halt to pumping foreclosure listings into the market.

Now, though, that fear of legal disruption has faded – and so has the hesitation to foreclosure on a delinquent property.

The report also pointed out that 21 states reported an annual increase in foreclosure activity from February 2010 to February 2011. That figure will probably grow when March’s numbers are released next month, and so on until we truly hit the bottom.

Until then, you can expect more foreclosure deals to hit the market and more bank foreclosure sales to litter the listings, especially in metro areas. Riverside-San Bernardino, CA, Atlanta, Phoenix, Miami, and Chicago head the list of cities with the highest foreclosure rates. Tampa also clocks in as a city with one of the largest annual increases. Of the top 20 largest metro areas in the country, 10 reported increases – and all of them were either on the East Coast or in the Midwest.

In short, the settlement might help some homeowners in the short run – but in the long run, it frees up the market for more foreclosures.

Since the real estate market crash, foreclosure properties have made up a significant percentage of overall home sales each year, especially when compared to the number of foreclosure homes sold each year before 2006. Despite the increase, reports indicate that in 2011 the percentage of foreclosure properties sold actually declined to 2008’s level—which may initially be seen as improvement from the last couple of years.

According to the numbers, last year approximately 23% of all homes sold were foreclosures in comparison to under 1% in 2005. Although 23% is significantly larger than the 1% of 2005, it is important to remember that 2009 foreclosure sales reached nearly 1.1 million, which made up 37% of all home sales.

Taking all of this information into consideration, the 23% could be seen as an improvement as the percentage of foreclosure properties accounted for in the total number of properties sold last year is moving back toward pre-foreclosure crisis numbers as opposed to increasing. However, is the perception of improvement real or coincidental?

The Cause for the Decline

Now that we know that distressed properties made up less of the total number of homes sold in 2011, especially in comparison to 2009, we must take into consideration the reason for the decrease.

When thinking about the decreasing percentage, it is essential to remember that 2011 involved intense foreclosure settlement talks while lenders started better monitoring their foreclosure processes due to the robo-signing incidents that left many homeowners without their homes. The slower foreclosure process could have a lot to do with the decrease of foreclosure homes sold in 2011.

A Glimpse into the Near Future

Since the foreclosure settlement talks are no longer underway, many suspect that the foreclosure process will pick back up again, especially in non-judicial foreclosure states. Therefore, we could quickly see more foreclosure properties on the market over the next 6 months. With the increased number of short sales (due to many lenders encouraging short sales as opposed to foreclosure) and bank-owned properties on the market, it would not be surprising to see the 2012 percentage start to climb back toward the 2009 numbers as opposed to the 23% of 2011.

Opportunities for Home Buyers

But what, exactly, does all of this mean for homebuyers and investors? Opportunity! With the foreclosure settlement finally occurring and lenders pushing short sales, you can expect to see exceptional foreclosure and short sale investment opportunities in the near future. Keep your eyes peeled for the best deals as they are just around the corner.

The current real estate market may have potential homeowners weary and unwilling to purchase a new home; however, one thing is certain—there are incredible investment opportunities for anyone interested in the foreclosure market. If you are an investor with an interest in foreclosures then Fannie Mae may have an opportunity of a lifetime for you.

You may be asking yourself the following question: What’s the catch? There are three stipulations. First, you must be interested in purchasing foreclosure properties in at least one of 8 cities. Second, you must buy them in bulk. Finally, you must rent them out.

Fannie Mae Encourages Foreclosure Investing

Fannie Mae has 2,500 foreclosure properties throughout 8 cities that they desire to get off their inventory by selling them in bulk to interested investors. Where, exactly, are these foreclosure properties?

· Los Angeles

· Phoenix

· Atlanta

· Riverside

· Chicago

· 3 areas in Florida

Investors can expect to find incredible deals on everything from your typical single-family home to apartment buildings. These properties must be rented out for a specified number of years, plus the ones already occupied will continue on their current leases, preventing the buyer from evicting those currently occupying the homes or apartments.

Bulk Foreclosure Investing

It is essential to understand that Fannie Mae is looking to sell all of the properties in a single metro area to one buyer. Therefore, if you are interested in purchasing the 572 properties included in this deal from Atlanta, then all 572 must be purchased by the same investor. The number of properties that must be purchased varies depending upon the city.

Fannie Mae’s 4Q Loss

Fannie Mae is clearly trying to cut the losses by getting rid of these foreclosure properties, especially after receiving news of their 4Q losses which led them to request $4.6 billion from the United States government in an effort to stay afloat. The company desires to utilize the money they are requesting to help reduce their deficit. This request is rather controversial since the government bailed out both Fannie Mae and Freddie Mac in 2008, costing taxpayers a significant amount of money.

In the end, Fannie Mae is desperate to rid of their high foreclosure inventory, which provides an incredible opportunity for investors with deep pockets who are interested in purchasing foreclosure properties in bulk in a given metro area.

In what amounts to yet another chapter in the ongoing controversy surrounding mortgage giants Fannie Mae and Freddie Mac and foreclosures, California is petitioning the Federal Housing Finance Agency to halt foreclosure related to the two GSEs.

In a letter sent to the FHFA, the regulator in charge of Fannie Mae and Freddie Mac, California Attorney General Kamala Harris requested that all California foreclosure cases be halted by the agency so that the two GSEs could perform a “thorough, transparent analysis of whether principal reduction is in the best interests of struggling homeowners as well as taxpayers”.

According to the letter, roughly 500,000 California homeowners are either in the foreclosure process or are in danger of joining the foreclosure process at some point during 2012. California already has one of the highest foreclosure rates in the country, and that rate is only expected to increase throughout 2012, as it is nationally.

Harris’s concern is predicated on the controversy surrounding Fannie Mae and Freddie Mac’s alleged tendency to foreclose first and ask questions later, often spurning chances to engage in loan modifications or principal reductions. As a result, according to critics, many home foreclosures could’ve been avoided if the two GSEs were more open to engaging in loan modifications, which seems to be the preferred course of action of the Obama administration.

Right now, Fannie Mae is fine-tuning its plans to make its first foreclosure properties available for rental units through private investors at some point this year, probably before the end of summer. Two locations in California – Los Angeles and Riverside – will serve as test beds for the foreclosure-to-rental rollout along with six other locations across the country. Roughly 23% of the foreclosures currently being rented out will be sold at the California locations.

It is unclear whether or not the FHFA’s decision could impact this separate plan. The FHFA so far has not responded, and it is unlikely that they will completely halt the foreclosure process. It is also unlikely that a halt in the process would impact the foreclosure rental program because the potential properties up for sale soon are already foreclosure properties.

Regardless of the response, Harris evidently is intent on pushing the issue of California foreclosures now and into the future, even after signing the National Mortgage Settlement Agreement in early February. Time will tell if this latest initiative will work.

There’s good news and bad news for the nation’s mortgage delinquency rate.

The good news? The rate actually fell, dropping by 2.2% from December, 2011 to 7.97% and falling by 10.5% from January, 2011.

The bad news? The number of home mortgages that are late on payments – including those in foreclosure – is still massive, at 6.08 million loans.

Of the mortgage delinquency tally, a significant portion – just over 33% – includes home foreclosures. Plus, the foreclosure rate actually increased by 1.1% monthly from December, even if it did drop slightly by 0.1% from January of last year.

Approximately 3.99 million of these delinquent loans represent accounts that are 30 days or more past due but haven’t yet received an official foreclosure filing, suggesting that banks are still struggling with existing foreclosure cases that are lingering from 2009 and 2010 – predominantly as a result of the foreclosure fraud scandals that first broke out in the fall of 2010. Roughly 40% of this number includes home loans that are more than 90 days delinquent.

Of the states, Florida once again tops the list when it comes to delinquent home loans and foreclosure properties. Mississippi moved up to replace Nevada, which fell slightly to third. New Jersey and Illinois rounded out the top five. On the opposite end of the spectrum, Montana topped the list of states with the fewest non-current loans, followed by Alaska, Wyoming, South Dakota, and North Dakota.

The results also help further correlate delinquent home loans and foreclosures with unemployment. The five states listed above with the lowest foreclosure rates have some of the lowest unemployment rates in the country – especially North Dakota, which boasts the lowest unemployment rate (3.3%) in the nation.

Inversely, all five of the states with the highest foreclosure rates have above-average unemployment rates. Nevada leads the country with a staggering 12.6% unemployment rate.

One must be careful to note that the mortgage delinquency rate – 7.97% – does not include properties that are already in the foreclosure process. It is a measurement of all home loans in the country that have at least one payment past due, not counting foreclosure properties. As a result, the real mortgage delinquency rate could be interpreted to be significantly higher than what it appears to be.

Still, any decline in the rate is good news for the Obama administration, trying to find some way to prop up an ailing housing market and spur significant recovery.

With the new foreclosure settlement, critics are suggesting that 2012 could easily exceed 2011’s foreclosure numbers and even compete with 2010 for the worst year on record for the foreclosure crisis.

According to the reports, foreclosures increased by 8% from last December to January 2012. This figure is 15% below the totals for January, 2011, but that year-over-year gap has shrunk. Now, experts are expecting the bulk of one million delayed foreclosures from 2011 to hit in 2012, significantly adding to this year’s totals.

Sifting through data and trying to extrapolate can result in a messy analysis of current situations, but what is clear is that banks are beginning to step up their foreclosure processes and try to resume clearing out their backlogs of inventory, which are dangerously close to overflowing for many institutions.

Many investors, in fact, are banking on the premise that more foreclosures are coming – which is why private equity firms are preparing to enter the market and purchase foreclosure properties in bulk, either from the federal government or from lenders who will attempt to unload their surplus inventory at some point this year.

Bulk purchases of foreclosures will not change the foreclosure rate but will help shore up housing prices at a time in which housing prices are anything but stable. Investors then would be in a good position to realize profits in the short term while rehabbing a significant portion of properties for greater long-term profit.

Indeed, it could be as early as 2013 when prices begin to rise enough to make a significant portion of purchased foreclosure listings profitable. The year after – 2014 – looks even more promising, as that is the target date many analysts have set for a turnaround in the market.

Until then, though, investors and society alike must wade through the potential negative effects of an increased foreclosure rate this year – a year that could be one for the record books.