The cities of Covina, Montebello and La Puente passed laws that require banks and other property owners to track and maintain foreclosure properties on their portfolio. City code enforcement workers said that the abandoned home programs are designed to prevent crime in neighborhoods and to keep properties in good condition to attract buyers.

Residents of these cities said that vacant properties are the favorite hung-outs of teenagers who break in and party in them. Sometimes, squatters live in these abandoned properties and strip away everything that they could sell.

Industry experts said that cheap foreclosed home for sale that are not maintained could bring down the entire neighborhood, including pulling prices and values of surrounding homes. City laws require that banks and mortgage lenders notify local governments about the vacant properties and to maintain these houses.

Since Montebello launched its abandoned property program, nine property owners have already registered. Under the program, banks have to pay a registration fee of $120 for every foreclosed property. Property owners should also maintain the foreclosure homes or pay the fine of as much as $1,000 per day that it fails to provide maintenance or repair on abandoned properties.

In La Puente, its abandoned property law aims to make someone take responsibility for the maintenance of foreclosure homes that have been unoccupied for several months. Since the enactment of the program in November last year, La Puente already registered 51 foreclosure houses.

The program in La Puente is proving to be a success because of the cooperation between code enforcement workers and banks to make sure that vacant, foreclosed houses are in good condition and free of transients.

Aside from blights, city officials are also concerned about stagnant water, such as fountains and pools, which could be a breeding ground for mosquitoes.

According to market data, there were 21,850 cheap foreclosed home for sale in Los Angeles County from July to September, an increase from 17,073 reported for the same period last year. Industry experts said that more foreclosures remained unaccounted because banks are delaying making a report of their losses due to delinquent loans.

The most affordable units are being sold at prices starting at $280,000 while units that offer views of the bay and the city of San Francisco are priced from $600,000 through $850,000. One penthouse has been sold for $1.4 million recently.

The 134-unit condo complex, which is adjacent to Jack London Square, was foreclosed by financial firm Union Labor Life earlier this year after the original developers failed to pay their $77 million loan.

After absorbing a loss of $22 million from the loan, Union Labor chose Emerald Fund to take over the condo development and sell the condo units.

According to Oz Erickson, head of Emerald Fund, the condo units are really great buys not only for investors but also for homeowners because the units were built by the original developers as luxury units, but which are now available at substantially reduced prices.

Erickson also added that the quality of the units and the whole building is among the highest in San Francisco. He reiterated that anyone looking for a great property in foreclosure should take a look at units at The Ellington.

After the foreclosure, the building has been attracting attention not only because of the lower-priced units, but because of the expected contribution of the complex to the restaurant, retail and night life of the Jack London Square and the entire downtown.

William Nork of commercial real estate firm Cornish & Carey said he is glad that the condo complex is now achieving some success. He added that the progress of the development will lift all other projects in the area.

In recent years, the city of Oakland has been trying to encourage downtown residential development under its 10K project, which aimed to build thousands of housing units for people that will work and live downtown and will spend their money in shops and restaurants. All these activities were expected to rejuvenate downtown, to encourage the influx of people into the city and help the city more vibrant.

According to Erickson, sales have also been improving because of the approval of its application for Fannie Mae guarantees. Now, anyone buying a property in foreclosure in the complex can get affordable financing more easily.

According to Jared Thao, the trustee agent holding the foreclosure auctions at the county courthouse, the asking prices for the foreclosed properties are being lowered because oftentimes, there are no bidders.

He added that there are always residents attending the auctions, but they are not bidding. He contended that many of those in the audience were just observing how the auctions are conducted because they are concerned about their own mortgages which are already in default.

According to the Office of the County Clerk, a total of 1,120 default notices have been filed in the county since January. Statewide, over 358,000 residential units have been auctioned this year, with around 57,000 units still unsold.

Thao also added that one of the reasons why oftentimes prospective buyers do not bid despite seeing a cheap foreclosed home for sale is the requirement that the foreclosed properties must be paid in cash or with a cashier’s check.

Gene Albaugh, city manager of Nevada City, said one of the key reasons for foreclosures in the county is unemployment. He said that while Nevada County is struggling with an unemployment rate of 11.3 percent, the jobless rate for Nevada City is even higher – 17.1 percent, which is a record rate for the city that has 3,000 residents.

Across California, the jobless rate has already hit 12.5 percent, indicating a total of 16.2 million jobless Californians.

In August, based on data from a foreclosure research firm, 95 default notices were filed in Nevada County, a substantial increase from filings in August last year.

Another reason for rising foreclosures in the county is the difficulty of homeowners in negotiating loan modifications with their banks. Lawyer Stephen Munkelt who is in default related that he has sent loan modification documents in March and up to now, his lender has not responded.

Additionally, many home loans provided to borrowers in the county are adjustable rate mortgages, which featured low initial monthly payments. Borrowers were made to believe that their houses will increase in value as their interest rates go up.

If you are considering buying a cheap foreclosed home for sale in Nevada County, visit the office of the Nevada County Clerk.

In Los Angeles County, the median sales price reached $321,000 in July, a substantial increase from the $300,000 median of the past several months. In Orange County, the median home sales price climbed up to $420,000, a significant increase from the $370,000 median in January.

Based on real estate records, the number of houses hit with foreclosure filings in California is still high despite a slowdown in foreclosure sales. In July, almost 125,000 homes across the state were listed for foreclosed home auctions, nearly twice the number of foreclosed houses in July last year.

Housing analysts contend that lenders have been delaying repossessions because of various reasons. Aside from federal foreclosure prevention compliance and pricing factors, lenders may be deferring foreclosures to reduce the value of non-performing assets on their books and result to more attractive quarterly results.

In Burbank, according to the analysts, only around 130 single-family houses priced below $1 million are on listings, but over 350 units priced similarly have been hit with foreclosure filings previously. Even if the median sales price in Burbank dropped by 4 percent to $519,000 this July, the number of single-family houses sold in July remained the same as last year’s July sales.

Across Southern California, the lower-priced sector of the home market is getting increased demand. Bidding wars have been observed in price ranges below $500,000. Home sales across the region increased by 19 percent in July, compared to sales in July last year.

In the Southland area, the median house price remained at $268,000, which is far below the $505,000 peak price in 2007.

The median price across Southern California in July was $268,000, still 23 percent lower than the median in July 2008. But compared to the past three months, the median price has been rising, increasing by 6 percent to $265,000 in June and by 1 percent in July.

Meanwhile, sales of houses and condo units priced below $500,000 comprised 80 percent of sales in July, a decrease of 85 percent from March.

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Industry experts who believed that recovery is in the offing, pointed out the steady increase in the median price of single family homes in the county, reaching $520,000 last month from $399,000 in February. Last month’s figures were the highest sales in the state in three years.

Adding to their optimism is the drop in listings for eight consecutive months already. They pointed out that inventory of houses on the market for sale accounted for about six months worth of supply, a precursor that prices are starting to stabilize.

But experts who believe that more trouble is ahead in the county cited the over 50 properties scheduled for foreclosed home auctions this month, which is the highest record in the area. Added to the bleak picture is the over 1,300 homeowners who are behind on their mortgage payments and the increase in the number of default notices issued last month compared with the same period a year ago.

Furthermore, almost 27 percent of mortgages in the country are underwater, meaning that homeowners owe more on their mortgage than what their properties are worth at. And 4 percent of borrowers are nearly underwater. Many borrowers are complaining that their lenders are not willing to modify their troubled loans despite encouragement from the federal government.

Among communities in the county, Watsonville is the hardest hit by the foreclosure crisis. The increase in foreclosures means more listings and more foreclosure properties coming on the market for sale. This means home prices will also go down.

In Watsonville, prices that increased almost twice during the housing boom dropped dramatically, with some for as low as $100,000. However, low property prices attract more buyers which give life to the real estate market in the area.

Industry experts noted that a home priced at $400,000 could receive more than a dozen offers from prospective buyers. They pointed out that foreclosure houses that used to sit unsold on the market are now being purchased. They said that many cash-laden buyers are still out there but are bidding their time hoping to find a low-priced attractive property.

According to industry analysts, there were just so many homeowners at risk of foreclosures last month. They also noted the decline in foreclosure sales, attributing the drop to the voluntary compliance of banks to the request of state to hold off foreclosure activities.

However, analysts pointed out that government pressure on banks to help as many troubled homeowners as possible has not prevented them from placing more distressed homes on foreclosure process.

Analysts noted that because of the worsening economic condition and rising unemployment, many homeowners are falling behind their mortgage payments.

In July, about 3,519 properties were placed on foreclosure auctions in Silicon Valley, representing a 14 percent increase from the previous month and 90 percent higher from July the previous year.

Market data showed that the number of repossessed homes that were sold plummeted by 30 percent to 414 in July compared with 591 in June, and 36 percent below from the same month last year.

On the other hand, the number of foreclosure notices received by homeowners in Silicon Valley rose to 1,543 last month from 1,494 in June. The July figures were the second monthly highest posted in the region.

The number of homeowners who received notices of foreclosure auctions rose to 1,138 or 33.5 percent last month compared with 852 in June. The growing figures only showed that the foreclosure crisis in the Valley is far from over. Santa Clara County still holds the 45th position in the ranking of California counties based on foreclosures per capita.

Statewide, foreclosure sales dropped by 22.7 percent. But trustee’s sales notices increased by 36.1 percent while default notices remained unchanged. Receiving a notice of default is a sign that homeowners are on their way to foreclosure.

According to industry analysts, the drop in foreclosure sales was likely due to the increase in the number of homeowners who qualified for trial loan modifications. This indicated that the Obama Administration’s loan modification program is on its way to achieving its goal of helping homeowners across the country avoid foreclosures.

Additionally, foreclosure cancellation in the state rose by almost 25 percent last month, compared with June and 86 percent higher from the previous year.

The money will be in the form of private and public bonds that cities can use in their economic development projects.

Under the federal economic stimulus package launched this year, counties and cities across the nation were allocated a bond debt of $10 billion while private companies were allocated a bond debt of $15 billion.

Jim Morris, who works for San Bernardino Mayor Patrick Morris, said the bonds will help the city address the problem of foreclosed properties and fund economic development projects.

San Bernardino can borrow up to $17.7 million in public and in private bonds while Ontario can borrow up to $17.8 million in public and in private bonds. Fontana can borrow up to $13.5 million in private and in public bonds.

The loans will not be provided by the federal government, but cities and private companies will receive assistance in the payment of loan interests.

Morris said cities need to examine whether they really need the money and whether their target projects are really feasible because the money is still a loan even if it is a very low-interest loan.

San Bernardino received relatively large allocations because of record numbers of unemployed in the region. In May, the areas covered by San Bernardino, Riverside and Ontario reached a jobless rate of 13 percent, the second highest rate among large metro areas with a population of one million or more, based on a report released by the Labor Department in June.

San Bernardino’s jobless rate in May was higher than the nationwide unemployment rate of 9.1 percent. It is joblessness which is driving record numbers of foreclosed properties in the region.

Meanwhile, according to a report on foreclosure notices and foreclosed properties nationwide, nearly 51,000 homes in the San Bernardino-Riverside metro area received default and foreclosure notices in the first quarter of 2008. In June, 1.25 percent of all households in the metro area were in foreclosure.

All in all, even if the nearly $50 million bonds are loans, San Bernardino cities can still take advantage of the low interest loans as long as they craft viable projects that address the problems of foreclosed properties, joblessness and poverty.

LaCour-Little said that mortgage loans taken out by borrowers who really could not afford to pay them even at the start also caused the collapse of the housing market, but not as much as the effect of second mortgage loans.

He also said that the abrupt and fast acceleration of home prices is also to blame as very high home values enticed many homeowners to take out second mortgage loans.

He explained that many analysts and homeowners believe that home appreciation is good for the market because it cuts down the risk of default. But according to him, home appreciation is bad, especially if the appreciation is artificial – meaning home prices reverse their upward trend abruptly after a short time.

LaCour-Little argued that price appreciation entices homeowners to borrow money on their home equity. If the economy goes bad and home values go down, the borrowers are left with nothing but big loans and bargain-priced homes – which is what happened in the current foreclosure crisis.

When home values fell down to their lowest levels, hundreds of thousands of American homeowners became underwater borrowers – the values of their homes fell far below the amount of their loans.

LaCour-Little said that he based his conclusions on his study of foreclosure properties in the first weeks of every November since 2006 in the California counties of Los Angeles, Orange, Riverside, San Diego and San Bernardino.

From his study of foreclosure properties, he discovered that a lot of people took out home loans to purchase homes and simultaneously took a second home loan to finance the whole cost of their home purchase.

From his studies of 2,358 foreclosure properties in November 2008, the former owners of 79 percent of the properties took out a second home loan. More than 50 percent of the houses were bought before 2005 and 2006 when home values peaked.

At the time the properties were foreclosed in 2008, the average home loan owed by the former owners was $551,000, about 170 percent of the average home value.

According to LaCour-Little, the big second home loans taken out by homeowners during the boom caused houses to turn into foreclosure properties when home values fell down to their lowest levels.

However, only 16 percent of properties scheduled for auctions were actually put on the auction block. Year-to-date comparison showed that 49 percent of foreclosed properties were auctioned off.

Additionally, 40 percent of last month’s delayed repossessed homes auctions were requested by lenders, while 33 percent were postponed as a result of the agreement between homeowners and lenders.

According to industry experts, the data showed that lenders are doing their best to help distressed homeowners and delay foreclosures. They claimed that there was less number of properties being foreclosed compared with the percentage of homes scheduled for foreclosure or in default.

Also last month, the number of homeowners who received notices of default dropped by 4 percent from a month ago and 3 percent from the April total the previous year. The total number of statewide foreclosure filings was 40.870.

Notices of default are the first stage of foreclosure proceedings. It occurs when a homeowner missed paying his mortgage installments.

Meanwhile, May foreclosures scheduled for auctions declined by 30 percent to 17,871 compared with the same month a year ago. Furthermore, 84 percent received opening bids lower than the outstanding amount of loan. An average opening bid for repossessed homes was 59 percent of the total loan amount.

For example, if a foreclosed home with a loan of $100,000 was scheduled for auction, the average opening offer would be around $59,000. On the other hand, of the total number of distressed properties that went into the auction block in May, almost 88 percent were withdrawn by lenders when third-party bidders failed to win the property.

Usually properties that remained unsold after the auction were taken back by lenders to sell on private auctions or open market.

Meanwhile, California’s May foreclosure rate was the second highest in the country despite the 4 percent drop in the state’s foreclosure activity from April. One out of 144 homeowners received a foreclosure filing last month, totaling 92,249 properties.

The number of foreclosure filings last month represented a 23 percent increase from the same month a year ago. On a positive note, bank repossessed homes in California declined 1 percent from April to May and defaults inched down by 18 percent.

A task force has been formed to address the growing repossessed house rescue fraud in San Joaquin Valley. The task force is made up of local, state and federal agencies, including the Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), Department of Housing, Secret Service and county district attorneys.

The task force has been established with the sole purpose of investigating repossessed house rescue fraud and going after these perpetrators of fraudulent activities connected to the housing market boom and the crisis that followed.

As part of the campaign against mortgage fraud, the FBI has established 65 similar units to curb the spread of fraudulent schemes which is blamed for as much as $6 billion losses in the real estate industry.

Steve Dupre of the FBI Sacramento said that it is typical for the FBI to organize task forces regularly to address violent crimes. However, setting up task forces that will focus on repossessed house rescue fraud indicates the prevalence of the problem.

In 2008, the estimated number of loan fraud cases in the country reached 63,000. From January to February of this year, the FBI received about 28,873 complaints of mortgage fraud activities and it has 2,000 pending cases.

About 734 fraud cases were opened in the United States in 2008, a significant increase from 295 mortgage fraud cases reported in 2003.

Supervisory special agent at the FBI office in Fresno Harriet Dugal said that so far, no arrest has been made but the agency is working on several cases from Bakersfield to Stockton.

Industry experts agree that the foreclosure crisis has become a breeding ground for unscrupulous people preying on desperate homeowners who want to save their properties from foreclosures.

Market studies showed that most vulnerable to repossessed house rescue fraud scheme are minorities. The Department of Housing has received 90 suspected mortgage fraud cases in the area.

And most of these fraudsters advertise their repossessed house rescue service through radio programs and word of mouth.