Mention the word “foreclosure” and most homebuyers and investors conjure up images of run-down and dilapidated properties located in undesirable neighborhoods.

But now some of the most opulent estates are increasingly becoming available for savvy investors and homebuyers as a growing number of well-healed homeowners are defaulting on their mortgage payments and property taxes.

Consider Veronica Hearst’s Manalapan mansion.

If opulence and grandeur is what you desire, then you might consider buying Hearst’s former Manalapan estate. The mansion was foreclosed on February 25th on the Palm Beach County courthouse steps.

The widow of one of America’s richest publishing dynasties, Randolph Hearst, lost her battle to maintain the mansion under the crushing weight of an astounding $40 million in defaulting loans, according to the Palm Beach Post.

Forty million dollars, however, doesn’t seem like a bad deal when you consider that the stately Villa Venezio in Palm Beach, Fla. comes complete with a rich history and a bloodline too. Indeed, this sophisticate short sale has it all. Sitting on 3.5 glorious acres of beachfront property, this 32,000 square foot trophy mansion come complete with 52 rooms and 12 full bathrooms. It was originally built in 1929 for the grandson of Cornelius Vanderbilt.

It went back to the lender for a cool $22 million. Before you decide to shell out 22 million big ones, you should be aware that this once-in-a lifetime opportunity will also set you back $405,378 each year on property taxes alone.

Who said the foreclosures are only happening to poor people?

Although they were up 57 percent from January 2007 and 8 percent from December, the January foreclosure numbers released today by RealtyTrac  do not appear to represent the massive wave of foreclosures that is expected to hit sometime soon thanks to the rash of risky loans given to borrowers as late as just last year.

It's too early too tell if the relatively meek January numbers mean more distressed homeowners are staving off foreclosure thanks to increasingly pro-active lenders and government intervention, or if they just represent the first few raindrops of what will prove to be a violent thunderstorm.

And in either case, does that make the current market a good one in which to buy or invest in real estate? Or is it better to wait until the market falls further? Of course, the answer will vary from region to region, but provide supporting evidence from your area.

View full report with state-by-state data.

Just a few short months ago President Bush stood in front of the press and swore that it was not the federal government’s job to bail out either lenders who made bad loans or speculative homebuyers who purchased more home than they could rightly afford utilizing the so-called “exotic” or “liar loans” popularized over the past few years.

Last week Treasury Secretary Henry Paulson threw out what the administration considers to be a life preserver to homeowners facing foreclosure. In reality what they threw out is no more than a bread crumb. Called “Project Lifeline,” it has the backing of Alphonso Jackson, Secretary of Housing and Urban Development, and Faith Schwartz, Executive Director of the Hope Now Alliance, a foreclosure prevention coalition of the public and private sectors.

The Administration has encouraged six of the nation’s largest lenders — Bank of America, Citigroup, Countrywide Financial Corp., JP Morgan Chase & Co., Washington Mutual and Wells Fargo & Co. — which are responsible for almost 50 percent of all mortgages in this country, to throw at least a bone to as many homeowners facing foreclosure as possible. The homeowners have to be more than 90 days behind on their mortgage payments, and call in once they get a letter from their lender asking them to reaffirm that they want to stay in their home.

On the plus side, the Lifeline program is not being applied to only subprime adjustable-rate mortgages (ARMs). It is also available to borrowers who have Alt-A and prime loans, so that is a good thing.

On the downside, however, the temporary freeze or moratorium they are offering lasts for only 30 days. Plus, the program is not available to borrowers who are within 30 days of the property’s foreclosure sale (in most states known as the Trustee’s Sale or Sheriff’s Sale and normally conducted on the local courthouse steps). This group of people is probably the one which needs this program the most, so long as they reaffirm their desire to continue to own the home.

Many homeowners who could not cure the default once it occurred, nor could sell their property outright given the current state of the real estate market in most parts of the country, wait until the 11th hour before waking up to the reality that they are about to lose their home to foreclosure.

A last-chance opportunity to take a step back and get a final break from the process long enough to consider other financial options may bring some light into an otherwise dark tunnel of financial ruin for these homeowners.  

The Lifeline program is a baby step that simply doesn’t go far enough. It’s a case of too little rope too late, with a life preserver attached that isn’t going to float for many people.

What do you think? Let us know.

There is no doubt that foreclosures are on the radar screen of all three leading presidential candidates these days — although probably more publicly on the Democratic side of the aisle, where the subject has been discussed constantly during many television debates.

Trying to keep her candidacy hopes alive, Sen. Hillary Clinton, D-N.Y., has been stumping in Ohio, a very important state in terms of picking up delegates. Appearing Friday on The Today Show on NBC Clinton told show co-host Meredith Vieira about a woman she recently met in Cincinnati who broke down in tears because she had lost her home to foreclosure. It’s an observation that is worth mentioning in these less-than-ideal economic times.

Discussing what she considers the failed economic policies of the past seven years under the Bush Administration, Clinton was concerned about whether the home foreclosure crisis can be stopped before too many more families end up like that woman in Cincinnati.

“There’s no reason why our country should leave our people in such a state of pain, anxiety and insecurity. And I think it’s wrong!,” Clinton said about the present state of the nation’s economy.

Pain, anxiety and insecurity. Three mental states that legitimate real estate investors should be keenly aware of when dealing with distressed homeowners on the verge of losing their homes.

Although Clinton is using it for political gain, it’s a good reminder for real estate investors. Especially investors who choose to deal with homeowners who are in the pre-foreclosure stage.

In these uncertain economic times there are plenty of mortgage scammers and con artists out there ripping people off, stealing what little equity they have, and in some cases the title to their home as well. The news is full of stories about these crooks and how local and state governments are busy trying to sue them and legislate them out of existence, while victims are busy trying to retrieve their homes from them through the court system.

Fortunately for the good investors of the world there are organizations out there watching out for their interests at the state and federal level, looking to prevent or modify any anti-investor legislation. One such organization is the National Association of Responsible Home Rebuilders and Investors (NARHRI).

Even with organizations such as NARHRI out there, the point remains that if you’re an investor who is going to deal with distressed homeowners early on in the foreclosure process, you should tread carefully, caringly and with understanding of their financial situation. They are in denial enough as it is, and you’ll get a lot further and prosper more from a little bit of kindness up front.

Are you a real estate investor with a good story to tell about how you helped out a homeowner in distress? If so, we’d like to hear from you.

The far-reaching implications of the nation’s foreclosure crisis continue to snowball a little more every day. In its latest evolution, what started out as the lending industry selling undesirable loans to undeserving/unqualified borrowers who are now going into foreclosure by the thousands, has now filtered down to a lack of jobs for day laborers around the country.

People feel sorry for the distressed homeowners who are losing their homes as their adjustable rate subprime mortgages reset to higher-than-affordable interest rates. And they felt really bad when the story broke about all the pets being left behind by foreclosed homeowners who either couldn’t afford to take the pet with them, or thought someone would find them and take care of them.

But is the American public ready to feel sorry for all those guys who stand on the local street corner day after day, waiting to get picked up by building contractors or homeowners for a day’s work around the house?

According to a recent story by BusinessWeek, consumers (homeowners) are cutting back on spending, affecting contractors who then go out and hire day laborers to dig ditches, landscape and do other labor-intensive jobs. The greatest fear seems to be that many of the more than 100,000 of these workers who are looking for work every day may end up homeless and thus become further open to ridicule for being illegal aliens at a time when illegal immigration is a hot campaign issue during a closely contested presidential race.

As a group, they do have a voice in the form of various organizations, such as the National Day Laborer Organizing Network (NDLON), representing their interests.

This seems to be a tangential effect of the overall foreclosure crisis. But at the end of the day, is it something real estate investors need to concern themselves with when it comes to dealing with homeowners who are in the midst of financial crisis or the banks when buying an REO property?

Maybe, if you’re still trying to flip property and utilize day laborers to help clean up an investment property. Otherwise, probably not, unless these laborers also happen to be homeowners in distress about to lose their homes to foreclosure as well.

What do you think? We’d like your opinions and feedback on this issue. Please make a comment below and let’s get the conversation going.

As requested by Jack in a previous post, here is a fourth quarter foreclosure activity map for Montgomery County, Ala. Certainly, the activity is not as dense here as in some of the other maps we've posted, but there still seems to be a good amount of activity.

Since we've posted a foreclosure activity map for both Stockton and Detroit, I thought we should probably also include a map of Las Vegas, given it's one of the top three on our list of 2007 metro foreclosure rates. Just like in Stockton and Detroit, the foreclosures are stacked on each other. In fact, we could only include activity from December because there were just too many foreclosure filings from the fourth quarter to fit on the map.

Any of you living there in Las Vegas want to clue us in on what you're seeing on the ground?

It was the usual suspects topping the 2007 MSA Foreclosure Rate Rankings released by RealtyTrac today. Detroit, Stockton and Las Vegas were the top three, each with more than 4 percent of total households in some stage of foreclosure during the year.

Five other California metro areas joined Stockton in the top 20: Riverside-San Bernardino at No. 4, Sacramento at No. 5, Bakersfield at No. 7, Fresno at No. 14 and Oakland at No. 16. Four Ohio cities were in the top 20: Cleveland at No. 6, Akron at No. 12, Dayton at No. 15 and Toledo at No. 19. Florida accounted for three metro areas in the top 20: Miami at No. 8, Fort Lauderdale at No. 10 and Orlando at No. 20.

To give you a more graphical view of the on-the-ground implications of foreclosure activity at the neighborhood level, we've created a map showing Detroit fourth-quarter foreclosure filings geographically. We've color-coded the foreclosure filings by type of filing. Even at this zoom level (which doesn't even capture the entire city), it appears that the foreclosure properties are stacked on top of each other in some areas. No doubt this high concentration of foreclosure activity will have a big impact on many neighborhoods in Detroit.

Do you see evidence of foreclosure activity in your neighborhood? What affect is that having on the neighborhood? Are residents starting to panic or most people in it for the long haul and not too concerned with this downward part of the cycle?

View full report for top 100 metro areas.

It’s a presidential election year. A time when politicians come out in droves to complain to the American public about pork-barrel spending and the massive red tape involved by increased Washington bureaucracy. But Sen. Christopher Dodd, D-Conn., doesn’t have to worry about that. He’s officially out of the race. 

As the national economy continues to languish, politicians like Dodd are looking in earnest at the foreclosure crisis, which may provide the final push over the edge and asking what can be done. 

As chair of the Senate Banking Committee, Dodd is at least offering up a potential solution to the crisis, taking his lead from the time of the Great Depression some 75 years ago.

What Dodd suggested last week, at least as a temporary fix, is for the federal government to create a new agency called the Home Ownership Preservation Corp. Fashioned after the Home Owners’ Loan Corp. formed in the 1930s to deal with foreclosures, the new agency would assist homeowners in refinancing their subprime mortgages — many of which are now resetting at much higher interest rates, resulting, in many cases, in foreclosures, according to a report in the Los Angeles Times. 

Not surprisingly, Senate Republicans are not so quick to sign off on this plan, arguing it puts taxpayer dollars at risk. It was only a few months ago that President Bush declined to accept any alternative that would act as a bailout of either subprime lenders or homeowners who were greedy enough to buy more home than they could rightly afford, and then benefit from their greed. 

If Dodd’s plan were to go forward, it could require initial seed money of some $20 billion to purchase failing subprime loans at “steep” discounted prices and help homeowners refinance at more favorable terms. Still, the Wall Street Journal calls the plan a “political long shot.”

At least one industry analyst, Alex J. Pollack, a resident fellow at the American Enterprise Institute, a conservative think tank, told the Times that he thought the plan was “a reasonable project” during hard economic times that has historical precedent.

Dodd is scheduled to hold a private meeting with Federal Reserve Chairman Ben Bernanke to discuss the state of the national economy and the deepening housing crisis.

ForeclosurePulse.com will continue to follow this and other stories concerning the impact foreclosures are having on the national economy, the Washington hierarchy and the presidential election.

A Miami real estate agent and blogger was sued last week by a real estate developer for $25 million, according to the Miami Herald.

Developer Tibor Hollo filed a defamation lawsuit against Miami real estate agent Lucas Lechuga, who claimed in his popular blog — Miami Condo Investments — that Hollo went bankrupt in the 1980s and that one of his current South Florida developments could be headed for bankruptcy, according to Inman News.

“My opinion is that this development is doomed,” wrote Lechuga on Jan. 10, predicting on the blog that at least half of the buyers in the 635-unit Opera Tower at 1750 Bayshore Drive would default and the units would be taken over by the lender.

Lechuga, who worked for the prestigious Coral Gables brokerage firm of Esslinger-Wooten-Maxwell, lost his job over the postings, the Miami Herald reported.

The Miami Herald reported Hollo as saying: “I guess when you’re running a blog [you] think [you] can say anything about anybody, and that’s just not true.” He called the postings “plain, unadulterated lies.”

ForeclosurePulse Bloggers: Does the threat of lawsuits endanger the First Amendment rights of Internet bloggers or does a developer have the right to sue whoever they feel has defamed them?

Per a request from Roland in our blog post about Stockton, Calif., foreclosures, below is a map showing foreclosure activity in Oklahoma County, Okla.. You may notice that this map is not as crowded as the Stockton map. That reflects a foreclosure rate in Oklahoma County that was below the national average for 2007, with 0.915 percent of its total households in some stage of foreclosure. The county's foreclosure rate was third highest among Oklahoma counties for the year despite a 19 percent year-over-year decrease in foreclosure activity.

Search Oklahoma County foreclosures.

For millions of Americans facing foreclosure, the Federal Reserve’s interest rate cut this week was welcome news that could possibly help save thousands of homeowners from default by giving them the opportunity to refinance their adjustable-rate loan into a fixed-rate mortgage with a lower interest rate.

But for many U.S. homebuilders the risk of foreclosure through bankruptcy has sharply risen under the pressure of the grim housing market.

This week, Florida-based homebuilder Tousa Inc. filed for bankruptcy protection. With assets of $2.3 billion and debts of $1.8 billion, Tousa is the largest publicly traded homebuilder to file bankruptcy and is one of 14 builders who have recently filed bankruptcy, according to Builder Magazine. Last year, the tumbling housing market claimed such large builders as Fort Lauderdale, Fla.-based Levitt & Sons, Elliott Building Group in Pennsylvania, Turner-Dunn Homes Inc. in Arizona, Kara Homes Inc. in New Jersey, and Neumann Homes Inc. in Illinois.

 “We’re in the worst housing recession in modern history,” Antonio B. Mon, Tousa’s president and chief executive officer, told the Dallas Morning News. “What’s happening in the housing business is unprecedented.”

Sales of new homes have suffered the biggest decline since records began in 1963. New-home sales plunged 26.4 percent in 2007, the industry’s biggest drop in four decades, the Commerce Department said.

The risk of bankruptcy among the big U.S. homebuilders has risen sharply as the pain of the housing slump trembles across the nation. Homebuilders, meanwhile, have been frantically selling off properties at huge discounts, laying off employees and selling undeveloped land to raise capital and remain liquid.

But many homebuilders — both publicly and privately held — will become extinct in 2008. The builders most at risk are Standard Pacific Homes of Irvine Calif., K. Hovnanian Enterprises in New Jersey, Beazer Homes in Atlanta, William Lyon Homes in Newport Beach, Calif., and Meritage Homes in Arizona. Many of these homebuilders have lost more than 80 percent of their stock value — and have reported hundreds of million in losses to their balance sheet.

What does all the bleak news in the building business mean for first-time homebuyers and investors?

To move the glut of unsold inventory quickly, some builders are staging flashy promotions, slashing prices and throwing in “free” incentives like new appliances, new cars, granite counter tops and other sales gimmicks to try and lure nervous buyers back into the market. Other developers are resorting to auctions to sell huge inventories of new homes, townhouses and condominiums.

But the sales strategy has failed to make a dent in inventories: the backlog of new homes on the market ticked up last month to 9.6 months’ supply based on the current sales rate, according to the Commerce Department.

Sales of new homes were down in most regions of the country, with the steepest declines in the South and West. So homebuyers and investors should start investigating these regions for bargains. If 2007 was the year of the extinction of subprime lenders, then 2008 could shape up to be the year that decimated U.S homebuilders. In future blogs, RealtyTrac will pinpoint specific developments where buyers can purchase new homes for a song.