However, according to local analysts, the preponderance of adjustable rate mortgage loans in Tippecanoe County is among the major causes of defaults and foreclosures in the area. They noted that before the housing downturn in 2007, foreclosure activity was already surging in the Lafayette area.

Sharon Morrissey, a loan officer with First Republic Mortgage Corporation, said that a lot of unqualified borrowers were able to borrow during the heydays of housing because ARMs provided them with a way to buy homes with so little money.

Foreclosure filings have been rising in the county over the past 5 years, posting over 50 percent of increase from 457 filings in 2004 to 699 filings in 2009.

Statewide, a total of 41,405 filings were posted in 2009, equivalent to one foreclosure for every 67 housing units in the state. In January, the state of Indiana posted 4,622 filings, equivalent to one foreclosure for every 605 housing units. Both in the 2009 and in the January 2010 foreclosure charts, Indiana ranked 18th according to foreclosure rate.

Out of the more than 4,600 filings statewide in January, a total of 1,261 units were bought back by banks and recorded in their listings of repossession houses. Some of these will be sold through their agents and selected investors; others are set aside for future releases. Lenders have been known to ration out their foreclosure releases to prevent sudden home price falls.

The rise in foreclosure activity in Greater Lafayette has been matching statewide trends, according to Stephanie Reeve, head of the Indiana Foreclosure Prevention Network. In the fourth quarter of last year, 4.3 percent of all mortgaged homes were in foreclosure, she said.

According to real estate firm owner Sherrie Cocanower, foreclosure properties lower home prices in two ways: overloading the market with lower-priced houses, and cutting down the values of neighboring nondistressed homes, especially when they fall into dilapidated conditions.

Marie Morse, head of Homestead Consulting Services, said record numbers of distressed homes are not getting saved because homeowners give up so easily early during the foreclosure process. She explained that if loan modifications are not approved, the properties can be sold through short sales with the help of distressed property experts to prevent the properties from becoming repossession houses, which can drastically cut down credit scores.

In January this year, nearly 4,000 households statewide were hit with delinquency and foreclosure notices, with more than 2,000 of them already evicted or given eviction notices. Although the number marked a 17.8-percent drop from foreclosure actions in December 2009, it marked a nearly 7-percent increase from filings in January 2009, according to the Tennessee Housing Development Authority.

In Chattanooga, the county seat of Hamilton County and the fourth-biggest city in Tennessee, more than 7 percent of all mortgaged houses were in default by three months or more and another 1.7 percent of all households were already notified of delinquency or foreclosure.

In Hamilton County, the pace of foreclosure activity has surged more than three times over the past ten years and marked a 15-percent spike in 2009. During last year, almost four houses were being foreclosed upon every day, according to records from the Hamilton County Register of Deeds.

According to nonprofit housing counselors in Tennessee, the number of repossession properties for sale in Chattanooga and in other parts of Tennessee continued to increase compared to 2009 because of job losses and major family problems such as medical costs.

Jeremy Fitzsimmons, foreclosure counselor at the Homeownership Center of the Chattanooga Neighborhood Enterprise, said he and his teammates are trying their best to help homeowners save their homes, but they cannot do anything if the borrowers have no more jobs to depend on.

Ted Fellman, head of the Tennessee Housing Development Agency, said that in 2009, many lenders held back on their foreclosure actions because of several moratorium programs. Now, he said, foreclosure filings will increase as moratoriums are ended. He, however, contended that foreclosures will not spike in 2010, but will be higher in number than total filings in 2009.

According to reports from the National Association of Realtors, the median sales price for homes in Chattanooga has declined by more than 6 percent or by $8,300 since 2008, making a lot of mortgages underwater. With low property values, more homeowners are not eligible for refinancing under the federal foreclosure prevention program.

Nevertheless, the Tennessee Housing Development Authority is still doing what it can to save as homes as it can from becoming repossession properties for sale. It has helped train foreclosure specialists and has helped promote federal and state anti-fraud campaigns.

The total loss almost wiped out the estimated $3 billion earned by Georgia banks in 2007. They also earned the same level of profits in 2005 and in 2006.

The problems in the residential and commercial real estate sectors and the impact of the recession made 63 percent of 305 Georgia banks unprofitable in 2009, based on FDIC records. The percentage marked an increase from 49 percent of banks in 2008 and from 15 percent of banks in 2007.

According to Joe Brannen, president of the Georgia Bankers Association, the bank losses are expected because of the huge exposure of Georgia banks to property loans. They made record profits during the real estate boom, inspiring them to become more aggressive in their lending activities. The housing collapse that followed and the record numbers of repossession houses that arose battered Georgia banks and caused the closure of 32 of them in 2009, the highest number among states.

The banks left standing started repairing their loan policies to save themselves. They no longer renewed risky loans and became very strict in approving new loans. Total bank loans in Georgia last year dropped by 11 percent or by $23 billion.

Most of the loan cuts were made on home construction loans and on business and industrial loans. Based on FDIC data, house construction loans fell by 32 percent or by $12 billion while business and industrial loans fell by 20 percent or by $7.5 billion.

Rhajeev Dhawan, economist at the Georgia State University, said that more than two-thirds of banks in Georgia have been complying with regulatory orders to increase their capital and improve their operations.

The level of new loans has sharply declined because banks are making it difficult for loan applicants to borrow and prospective borrowers are not pursuing their plans because of fears about the unemployment situation and the generally weak business conditions.

However, lending in the small business sector shot up year-over-year by 83 percent in the final quarter of 2009. Since 90 percent of the loan amounts are guaranteed by the Small Business Administration, banks are more aggressive in making SBA loans.

The biggest bank loss in Georgia in 2009 was posted by SunTrust, which lost $1.5 billion, followed by Synovus, which lost $907 million. Part of their losses was due to large numbers of repossession houses in their portfolios.

Among the banks being accused of systematically forcing homeowners into foreclosure to increase their profits is Pasadena-based OneWest Bank, which acquired the distressed loan portfolio of IndyMac at a substantial discount of 30 percent when IndyMac collapsed in 2008.

According to more than ten legal actions filed with the Eastern District of U.S. Bankruptcy Court, OneWest Bank can gain more profits if it forecloses on more of the troubled mortgage loans in the books it acquired from IndyMac.

The complainants allege that due to a shared-loss contract with the Federal Deposit Insurance Corporation, OneWest can afford to take the easier route of foreclosure sales or short sales rather than loan modifications and other affordable repayment schemes because the shared-loss contract requires the FDIC to reimburse OneWest at least 80 percent of its losses from the distressed residential loan portfolio. OneWest can also keep all proceeds of the sales of the repossession houses.

In response, the FDIC denounced the claims by the complainants as blatantly false and told reporters that the shared-loss contract with OneWest contained provisions requiring the bank to modify troubled home loans.

Sacramento lawyer Peter Macaluso, who filed eight of the lawsuits, said that OneWest increased the monthly home loan payments of his clients, with some payments increased by over $1,000 after OneWest was informed his clients filed for bankruptcy. Macaluso’s clients in Sacramento were all IndyMac borrowers who sought bankruptcy protection through Chapter 13 bankruptcy filings.

Another lawyer who filed similar complaints against JPMorgan Chase and Bank of America was Elk Grove bankruptcy lawyer Mark Wolff. He said that the banks violated bankruptcy laws.

Elk Grover lawyer Sean Gjerde has also filed a lawsuit in Sacramento against OneWest for refusing to modify the IndyMac mortgage loan of his client.

During the housing boom from 2005 to 2007, IndyMac was the tenth biggest player in the Sacramento market, making $1.4 billion worth of home loans to 5,321 borrowers in Sacramento, El Dorado, Placer, Sutter, Yuba and Yolo counties.

Based on a Treasury Department report, out of 112,000 OneWest home loans in default across the country, the IndyMac acquirer has modified only 3,087 loans by January this year, forcing many of its distressed homes to turn into bargain-priced repossession houses for sale.

In Santa Clara, foreclosure activity stepped up in January by 37 percent compared to December last year while in San Mateo, foreclosures intensified by 71 percent.

Aside from the increase in foreclosures, the time spent to process foreclosures in Santa Clara also increased. While foreclosures were completed in August 2008 in 143 days on the average, the properties foreclosed upon in January took 221 days on the average to foreclose, equivalent to about seven months.

According to housing analysts, the increase in the length of time spent for the foreclosure process meant that the loan modification program and other foreclosure prevention alternatives have not been successful. They are just delaying actual foreclosures.

Some analysts, however, including Dustin Hobbs of the California Mortgage Bankers Association, say that despite the difficulties faced by the Home Affordable Modification Program and other schemes, they have been giving time for homeowners to prepare for their next moves and have been regulating the entry of repossessed homes for sale into the market. They say that a continuous trickle of foreclosures is better for the market than a sudden deluge of low-priced properties.

In January in Santa Clara, a total of 4,850 homes were scheduled for foreclosure auction, but because of loan modification efforts, short sales or other deferral alternatives taken by banks, only 437 homes were actually foreclosed at the end of the month. In January 2009, a total of 1,728 homes were scheduled for foreclosure auction, but only 457 homes were actually foreclosed.

Similarly in San Mateo in January this year, a total of 1,687 homes were scheduled for foreclosure auction, but mortgage lenders foreclosed on only 159 properties. One year earlier, in January 2009, 544 homes were scheduled for foreclosure auction, but only 114 foreclosures were completed.

Kevin Stein, a top officer of the California Reinvestment Coalition, said that the government loan modification and refinancing programs are not effective in saving distressed borrowers because they do not address the real issues that are driving defaults and foreclosures – job losses and negative equity.

Stein said that federal housing officials should be more aggressive in making more homeowners qualify under the program and making lenders comply with the program.

In California in January, the pace of foreclosure rose to nearly 18,000 foreclosure filings, many of which are already counted as repossessed homes for sale.

According to data from a California-based foreclosure research firm, foreclosures in the area soared by almost 50 percent year-over-year to 9,794 filings in 2009 and shot up by more than 360 percent compared to 2007 filings. Filings in 2009 represented 1.44 percent of all households in the metro area.

The Peninsula area, a part of the bigger Hampton Roads metro area, also experienced a staggering increase in foreclosures in 2009, posting 2,735 foreclosures, a significant jump from the 86 households notified of foreclosure in 2006.

Among counties in the Peninsula area, James City County posted the highest foreclosure rate at 1.5 percent in 2009 and ranked 27th among 134 counties and cities surveyed in Virginia. Newport News was 34th, followed by Hampton, which ranked 36th.

According to the Virginia Peninsula Association of Realtors and the Real Estate Information Network, almost 25 percent of existing homes resold in Hampton Roads in December were repo homes for sale and distresses properties, the highest percentage reached since the start of the housing crisis.

Jill Simmons, a HUD-certified counselor with Catholic Charities of Eastern Virginia, said that a record number of distressed homeowners have been seeking housing counselors in 2009, but the number has been declining in the early part of 2010.

Simmons said that distressed homeowners may have been contacting their lenders directly or may have given up on their loans. She said that the services offered by Catholic Charities are free and advised troubled borrowers to work with a HUD-approved counselor who is familiar with the federal loan modification policies and who already knows what banks require.

Luanne Gallagher, director for the housing and financial counseling department of Catholic Charities, said that the percentage of troubled homeowners in danger of losing their homes because of unemployment or reduced income has surpassed the percentage of those who are distressed because of exotic mortgages or large loan amounts taken.

According to Tom Sullivan, head of the realtor association, more repo homes for sale are expected in the Hampton Roads area this year largely because of the record number of adjustable-rate mortgage loans that will reset this year.

In Lehigh Acres, where foreclosures pulled down the median home sales price to only $55,500 in 2009 from the $237,965 median peak in 2006, home builders have been fixing foreclosures and reselling them to continue giving work to their employees while waiting for the time when they can build new homes again.

Advantage Builders and American Dream Builders have been fixing foreclosure properties for owners or have been selling bargain properties in the area. Once in a while, they get calls for the new homes they constructed before the housing meltdown. They have not been staffing their model homes because fulltime work for selling the new homes has been a losing proposition.

Executives from ten firms which have built houses in Lehigh Acres hope that in the next few years, the number of foreclosure properties drop and resale home prices increase so that they can begin building again.

Fort Myers builder Ray Scalero said that his firm was selling about 40 new houses per year in Lehigh from 2004 to 2006. Now, all home builders in the area cannot compete with bargain-priced foreclosed houses. He said that the cost of permit fees, impact fees and builder insurance already equal about 25 percent of the price of a pre-owned house, excluding the cost of the land and construction.

According to real estate executive Bob Oxnard, of the more than 4,600 single-family houses sold in 2009 in Lehigh Acres, almost 76 percent were foreclosures, the price median of which was $54,000.

During the boom in 2006, the median price for single-family houses in Lehigh was $237,965. It dropped in 2007 to $200,000 and plunged steeply in 2008 to $94,000. Last year, the median was only $55,500, just $1,500 above the foreclosure median sales price.

KenMark Construction, meanwhile, has been doing remodeling, extensions and steel buildings while waiting for better times. Cypress Homes, which sold about 75 new houses in 2006, has accepted nonresidential projects such as constructing the $7.5-million church building of the New Life Assembly of God over 15 months.

According to Jim Boggs, owner of Cypress Homes, it is not practical to build homes at a cost of about $130,000 per unit when existing homes and foreclosed houses can be purchased at half the price.

According to a California real estate broker, the state is currently fifth in number of distressed and foreclosed units available for sale. More than 87,000 residential units are currently in lists of properties for scheduled county auctions.

In Riverside County, there are nearly 17,000 foreclosed houses for sale while in neighboring San Bernardino County, there are almost 15,000 foreclosures ready for sale.

San Diego County, meanwhile, has more than 12,000 foreclosed units for sale and Orange County has 10,573 units in foreclosure listings.

Last year, California again topped all other states in total number of foreclosure postings, with nearly 633,000 of its housing units getting hit with delinquency or foreclosure sale notices.

Foreclosure filings declined on a month-over-month basis in California from August to November, but filings resumed their upward direction in December, with an increase of almost nine percent from November.

While foreclosures in the state are concentrated in four battered counties of Southern California, with about 55,000 foreclosed units ready for sale, investors and occupant buyers can also buy foreclosure properties in Northern and Central California counties, where there are currently around 20,000 foreclosed houses for sale.

Total house sales in California slowed down in December compared to the previous month, but showed an increase of almost 2 percent compared to sales in December 2008, based on sales figures from the California Association of Realtors.

The median home sales price in December across the state was $306,820 and the median in Los Angeles County was $338,000, marking a 5.6-percent jump from the median in December 2008.

CAR officials said that the overall sales figures were positive, showing a continued interest in home buying and in taking advantage of the federal tax credit and lower mortgage rates.

However, not all analysts are optimistic. Jack Kyser, economist for the Los Angeles County Economic Development Corporation, said that housing market recovery is still far away. He said that major lenders are still regulating the release of their foreclosures into the market. He also has doubts about the continued demand for homes and whether Congress is called upon again to extend the federal tax credit for the second time.

Nevertheless, investors can still buy foreclosure properties from the thousands of units available for sale at price levels that are profitable. CAR analysts expect the median home price to hover around $300,000 this year.

Unless you have done your homework thoroughly, received a rigid training on live auctions or have set a price ceiling for each property that you intend to bid on, it is prudent for you as a beginner to observe and gain experience first.

According to real estate professionals, the frenzied bidding can lead you to a price level higher than current market levels and can lead you to bid on properties that you have not researched before the auction.

These months of January and February, there are public and private foreclosure auctions that will be held. You can observe or participate in them and increase your knowledge and expertise about live and online auctions.

In Nevada and Arizona, Texas-based auction firm Hudson and Marshall will auction off about 127 homes priced between $35,000 and $525,000 in the last week of January. All properties have clean titles and have title insurance policies already paid for.

In Austin, Texas, a total of 1,286 housing units will be sold off at a foreclosed home auction in the first week of February by the Travis County court, marking a two-percent jump from foreclosures in February 2009. In contrast, the number of properties to be auctioned off dropped in Hays County from February 2009.

Another auction firm which has been holding foreclosure auctions is Real Estate Disposition Corporation. It has recently sold off 36 homes in a foreclosure auction in Boston.

Auction experts advise prospective participants to arrive early at the auction site to get a feel of the place and to observe other bidders. Parking will also be less of a problem for early attenders. There could also be important changes announced just before the auction.

Prospective bidders also need to take a look at the properties before the auction as most properties are sold as is. The interiors of some units can be inspected, especially those sold by auction firms, but those sold at public auctions oftentimes are locked and cannot be inspected inside. Auction firms also show the details of their properties on their websites.

In every foreclosed home auction, a deposit of 5 to 10 percent is required. Some auctioneers give 30 days for the winning bidder to pay the balance; others require the full amount the same day or by the afternoon of the following day.

According to San Francisco-based LaOrange, he has purchased and resold two distressed homes last year, after he decided to take advantage of the foreclosure market when he could not get work in the accounting world.

His partner, Burris, also turned into real estate when he lost his job in 2008. LaOrange added that he and Burris are not the same as other flippers who quickly buy bargain-priced foreclosures and just as quickly sell them at a profit. A big part of their success is their willingness to fix and renovate properties before selling them.

LaOrange is fortunate because he is able to borrow money from his mother when he and his partner need to buy in cash. He and Burris made around $25,000 on the first house they bought and resold. The second house they bought made them more money – around $40,000. They bought a foreclosure home for sale in a good neighborhood in Santa Rosa for $239,000, renovated it and then sold it in five days for $275,000.

The partners lower their investment risk by buying mostly from banks, which give them the opportunity to inspect first the properties before finally signing the purchase contract.

For prospective investors thinking of buying at foreclosure auctions without first inspecting the properties, auctions are being held by courts and trustees in the Bay Area. But according to LaOrange and Burris, they need to do their homework before plunging into the foreclosure buying and selling business.

San Francisco-based broker Stafford is another real estate professional making money from foreclosures. He said that 2009 was his best year, posting his highest sales number in his 17 years in the real estate sector.

Stafford has sold bank repossessed houses in San Francisco and in East Bay, including one bank owned Danville home that was considered wrecked, but was fixed and resold for $1 million.

According to Stafford, LaOrange and other investors, there are still a lot of foreclosure homes and distressed homes in the portfolios of banks, which are waiting for the right time to release them. So anyone who is able to duplicate what LaOrange and other flippers are doing can earn money from a foreclosure home for sale.