No butter for me. Personally, I like my hot baked potato covered with sour cream and chives. Nowadays, I may have to add a side of presidential politics too!

In yesterday's local NBC morning newscast, Bob Pisani, Wall Street correspondent for CNBC, called foreclosures the “hot potato of the political season.” No sugar coating it. RealtyTrac’s latest numbers released this morning show that the top five states with the highest number of foreclosure filings in July accounted for 55 percent of all foreclosure filings in the country. (see related blog post below).

As Pisani was quick to point out, they also happen to be five of the states with the most electoral votes up for grabs. The five: California, Florida (the hanging chad capital of the western world), Michigan, Ohio and Georgia.

Just an FYI: in the upcoming 2008 presidential election, California will have 55 electoral votes, Florida 27, Michigan 17, Ohio 20 and Georgia 15. That’s 134 electoral votes out of a total 538 with 270 votes needed to elect a president. In other words, the five states with the most foreclosures in the country represent 25 percent of the available electoral votes, or roughly 50 percent of the votes it will take to elect our next president!

Already the candidates have entered the fray, taking turns passing the issue around like the hot spud it has become, mashing up the good intentions of investors on Wall Street and the world’s financial markets in its wake in recent weeks.

For their part, the Democrats are starting early, passing it around last week with Clinton, Obama, Edwards and Dodd proposing varying solutions while laying blame for the current mess up of the national economy on the front doorstep of the nation’s mortgage brokers. Even Bush put in his two cents worth, taking a more or less hands-off approach to the whole mess.

Edwards had to deflect some controversy last week as it was revealed that the former North Carolina senator reportedly has invested $16 million in a hedge fund involving subprime lenders that are presently foreclosing on homeowners in New Orleans after the devastation of Hurricane Katrina. However, the CNNMoney.com report does go on to say that Edwards has been an outspoken critic of subprime lenders and vows to help those victims.

Imagine. This is really just the gearing up for the real race which will most likely get intense in earnest after the first of the year. Investors, real estate professionals and potential home buyers looking to pick up a property at bargain prices should stay keenly focused on this election.

It looks like foreclosures are going to be a real HOT button of the political season and RealtyTrac will be following it closely to help you sift through the boiling waters as you continue your search for worthwhile investment/purchase opportunities, no matter how you like your potatoes prepared.

The early morning newscast today got me wondering if Angelo Mozilo, CEO of Countrywide Financial Corp., has Ben Bernanke’s number on his cellphone? As head of the nation’s largest mortgage lender, maybe Mozilo woke the Federal Reserve Chairman at some ungodly hour this morning from his long hibernation and complained, “Wake up and do something already!!!”

Well, something finally clicked because Bernanke and the members of the Federal Open Market Committee acted this morning, and started cutting rates (although not the rate most economists — and the real estate industry in particular — are waiting for them to cut).

The Fed sliced 50 basis points (one-half a percentage point) off of its discount rate — the rate it charges banks to borrow federal funds — from 6.25 percent down to 5.75 percent. According to this morning’s press reports the Fed has also injected billions of dollars into the nation’s economy in the past week alone to quell both building fears of tightened credit standards nationwide and the turmoil currently disrupting financial markets around the world.

Wall Street reacted immediately to the news this morning, rallying up over 300 points before settling back to around a 180 point advance. The market closed Friday up about 230 points, a welcome relief after the roller coaster ride of the past few weeks due, in large part, to the uncertainty in the mortgage industry.

Still, this comes a day after Countrywide Financial announced it was going to have to dig into it’s $11.5 billion credit line from 40 of the world’s largest banks in order to shore up its existing loan portfolio and keep its doors open and the lights on. Speculations were rampant that the company may even be on the verge of bankruptcy.

In a statement released Thursday, Countrywide President David Sambol justified the move, stating that his firm’s strategy is to “navigate the difficult conditions in today’s market” while the firm continues to shift the majority of its loan origination business to its subsidiary Countrywide Bank, FSB.

Having taken a direct hit to its subprime loan division, the company is now focused on tightened lending guidelines to assure the secondary mortgage market that in the future it will originate only “conforming loans” (those that conform to standard requirements for securitizing set by Fannie Mae and Freddie Mac) and a problem that wiped out a number of hedge funds for mortgage-backed securities on Wall Street very recently.

This all sounds eerily familiar to me. Wasn’t it just about a month or so ago that Mr. Bernanke was telling Congress that the subprime mortgage mess was not going to have a major impact on the nation’s economy? Well, guess again Mr. Bernanke!

This nation’s economy is based on consumer confidence to go out and spend money, using credit cards, taking out car loans and home mortgages. If major firms like Bear Stearns and Countrywide Financial can be directly affected, I’d say the nation’s economy might be in trouble.

In a roundabout way the FOMC’s statement released this morning is leaning more towards admitting that fact. “Although recent data suggest that the economy has continued to expand at a moderate pace…the downside risks to growth have increased appreciably,” the unanimous policy announcement stated.

In fact the “R” word (recession) is starting to be heard more frequently once again. In the meantime, attention will now turn to the next official meeting of the FOMC on Sept. 18 to see if economists — and the real estate industry — get what they’ve been begging for since August 2006, a cut in the Federal Funds Rate, the short-term rate banks charge to lend each other money overnight to maintain the required cash reserves on hand.

Even if the Fed does finally give in, the train has already left the station for homeowners who took out those risky interest-only and other exotic mortgages between 2004 and 2006. Foreclosure is a foregone conclusion for many of those as they go through the system. So the opportunity for real estate investors to pick up some good bargains will continue to exist in many parts of the nation for the foreseeable future, and RealtyTrac is here to help.

Stockton, Calif., reported the highest midyear foreclosure rate, one foreclosure filing for every 27 households during the six-month period — more than five times the national average.

Detroit’s foreclosure rate of one foreclosure filing for every 29 households came in second place, and the nearby Warren-Farmington Hills-Troy metro area placed No. 25 with a foreclosure rate of one foreclosure filing for every 80 households.

Florida cities in the top 25 were Miami at No. 7; Fort Lauderdale at No. 11; Jacksonville at No. 21; and Tampa-St. Petersburg-Clearwater at No. 24. Ohio cities in the top 25 were Cleveland at No. 10; Dayton at No. 16; Akron at No. 18; and Columbus at No. 20.

View all 100 rankings.

Not only are foreclosures unhealthy for the economy, apparently they can be unhealthy for people as well. At least unhealthy enough that, in an unprecedented move, California State Commissioner of Financial Institutions, Michael A. Kelley, sent out an official notice last Tuesday requesting that all state licensees in the financial services industry clean up any stagnant water located around vacant properties — many of which are foreclosures.

So far in 2007 four people have died from West Nile Virus — two in Kern County, one in San Joaquin County, and one in Colusa County — prompting Gov. Arnold Schwarzenegger to declare a state emergency in counties hardest hit by the mosquito-carried disease.

Anything from a small puddle to pools, spas, waterfalls, ponds and other water features can become active breeding grounds for mosquitoes if left alone for a month or more. One of the downsides of taking back foreclosed properties for the lender is the obligation and cost associated with managing those REOs — some of which are bound to be vacant for a while, especially with the extended time it is currently taking to sell real estate in the Golden State.

Although West Nile Virus in particular may not be a nationwide medical crisis at the moment, this is a case where investors looking to purchase foreclosed properties which have sat vacant for some time would do well to have a property inspector come in and check out any water features the property may include.

Stagnant water and disease/bacteria have never been a good mix. And a sharp investor will include any cleanup of water features in the cost to rehab the property, no matter if the investor intends to flip the property or hold it and rent it out.

In the meantime, California’s Department of Financial Institutions is asking the CEOs of all industry members to help stop the spread of the virus by draining the water at all vacant properties currently under their management.

Look to the News and Events page of the RealtyTrac website and the ForeclosurePulse blog for future updates on this and other foreclosure-related news.