Pre foreclosure listings are a good start for individuals looking for investment opportunities, but a thorough analysis of risks should be done in order to lessen or remove the risk of losing investment money.

Pre-foreclosure purchases, when done correctly, provide the buyer with profit opportunities since pre-foreclosure properties are sold at much lower prices. But these purchases are also fraught with risks. The seller could disappear before the pre-foreclosure is completed or he could lie about the real conditions of the house and situations in the neighborhood.

There could also be liens or other claims that are not immediately posted on the deeds. Unpaid property taxes and utility bills oftentimes are among the problems faced by buyers of pre-foreclosures.

In California, there are laws that protect homeowners forced to sell their homes to avoid foreclosure. If the pre-foreclosure sale is not carried out according to state law, the sale could be rescinded and the seller could take back the property.

So if you are considering investing in pre-foreclosures, you need to know the laws and legal procedures on short sales or pre foreclosure sales in your state. You also need to make sure that the lender has really approved the short sale.

When looking at pre foreclosure listings to look for homes that you can further examine, it is best that you ask for the help of a buyer’s real estate agent who is an expert in the area where you like to buy a home.

It is also beneficial if you choose an agent or broker specializing in short sales or pre-foreclosure sales. These types of agents are well experienced in the typical time frames of short sales and foreclosures in your state. They will know if a short sale can be completed before the final stage of the foreclosure process is reached.

If the agent is familiar with your market, he can help you identify properties that can be acquired in pre-foreclosure sales. He will also know if sellers are able to work with buyers quickly to complete short sales.

Another risk that arises in pre foreclosure sales is bankruptcy filing. There are cases where sellers file for bankruptcy protection and then negotiate to sell their distressed homes in a pre-foreclosure transaction.

Lastly, when considering pre foreclosure listings, do not be enticed by the low prices and rosy investment projections. Ask help from an experienced pre-foreclosure agent and a certified foreclosure home inspector.

Meanwhile, veterans whose homes are in danger of becoming foreclosure VA homes should contact immediately VA counselors in their areas. The counselors will help them examine foreclosure prevention options available to veterans.

As a policy, VA do not guarantee subprime loans and other risky home loans, but because of concerns about the rising number of veterans losing their homes to foreclosure, the Veterans’ Benefits Improvement Act was signed into law in October last year to enable veterans to convert their home loans into more affordable and safer loans guaranteed by the VA.

Veterans can now refinance for 100 percent of the value of their homes, an improvement from the previous loan limit of 90 percent of home value. In addition, loan amount limits for VA refinancing have increased. Previously, VA loan refinancings were limited to $144,000. Now, loan refinancings can reach $729,750, depending on the location of the property being refinanced. High-cost areas have higher refinancing limits.

According to VA officials, the increased loan-value ratio and the increased loan limits will help veterans reduce their monthly loan payments, avoid the readjustment of their original loans to higher rates and avoid foreclosure.

Unlike non-VA ARM loans, VA controls interest rate increases over the entire life of the VA home loans.

Since 1944, the year VA started guaranteeing home loans after the enactment of the original GI Bill, the VA department has guaranteed over 18 million veterans’ mortgage loans worth $911 billion. In 2007, approximately 135,000 veterans, service members and survivors obtained home loans worth almost $24 billion. Over 90 percent of VA-guaranteed loans were provided without requiring down payments from veterans.

For veterans facing foreclosure, there are options available to them that are not available to homeowners with non-VA loans.

For instance, they can avail of the Servicemembers Civil Relief Act if they qualify for protections under the Act. SCRA provides a low interest rate for one year or a forbearance option.

VA also helps delinquent veterans with a supplemental assistance to restore the home loan to current status. VA runs eight Regional Loan Centers including 2 special servicing centers across the country to help veterans in default. VA Loan technicians will help veterans negotiate affordable loan repayment with their lenders to prevent foreclosure.

The free workshop features representatives from various organizations, including The Pro Bono Resource Center of Maryland, Maryland Department of Housing and Community Development, Civil Justice Inc. and Catholic Charities of the Archdiocese of Washington.

The workshop will provide homeowners with information and legal advice about their foreclosure problem and where to seek help to save their houses from REO property listing.

Director of social concerns at St. Peter Anne Marie Prangley explained that the church offered to host the event to help the state disseminate the information about various available programs offered for homeowners to help them handle their foreclosure-related problems.

According to Prangley, foreclosures may not be a big problem in Maryland, particularly in Olney county, but still, she had received calls from homeowners who were concerned about the issue. Maryland offers several programs that could help distressed homeowners facing the threat of REO property listing, including the availability of about 800 pro bono lawyers who are trained to handle housing options and foreclosure cases.

Prangley said that many distressed homeowners are hesitant in coming out about their problem, with some refusing to acknowledge the fact that they are on the brink of losing their properties to foreclosures. She pointed out that coming forward and acknowledging the problem are the only way that troubled homeowners could get and receive help.

Workshop participants are advised to bring with them all documents pertaining to their former and current mortgages, including settlement papers, loan applications, notices of foreclosures, lender statements, threats of foreclosure and a copy or copies of their monthly home budget.

The Olney area, compared with other Maryland areas such as Germantown, Silver Spring and Gaithersburg, has not been severely affected by foreclosure. Out of the 78 resale houses on the REO properties listing, 18 are either bank owned homes or short sales.

Meanwhile, out of the 54 properties under contract in Olney, about 22 are either bank owned properties or short sales.

The free workshop to help distressed homeowners save their homes from REO property listing will be held at St. Peters Catholic Church on June 27.

U.S. Representative Jim Costa of California claimed that drought-hit Los Banos did not receive media attention as much as those received by cities battered by other disasters because drought is not as television-friendly as hurricanes and tornadoes.

Another California lawmaker, Representative Dennis Cardoza, said that there is a California not touched by beaches and movie stars ? a place of blocks and blocks of abandoned foreclosed houses.

Cardoza and Costa testified in June before members of the House Financial Services Committee who are reviewing a draft legislation aimed at declaring regions hit by disasters as economic disaster zones. These zones would be given special funding for the rehabilitation of private and government repo houses, creation of jobs and management of community development projects.

Los Banos is a San Joaquin Valley city with a population of 36,000. Due to the three-year long drought, the jobless rate has long surpassed the 21 percent rate level and the pace of private and government repo activities have reached the staggering rate of one foreclosure for every five homes in the city.

Because of inadequate water delivery, acres and acres of farm fields have been left uncultivated.

Los Banos Mayor Tommy Jones was also called by the committee to appear before lawmakers. The lawmakers were bothered by the report of the city that one in five households has been foreclosed and that the unemployment rate has gone beyond 21 percent. The city previously submitted to the federal government a request for funding to increase the number of its police officers.

Mayor Jones said that the national lawmakers wanted to make sure that the city did not err in its report of the number of households losing their homes to private and government repo actions.

Massachusetts Democratic Representative Barney Frank, chairperson of the finance committee, said that the hearing represents the start of the committee?s response to the problems in the San Joaquin Valley, considered the country?s biggest agricultural region.

However, Texas Republican Representative Jeb Hensarling questioned whether revising the Community Development Block Grant program is the correct solution to the region?s problem.

In response, Representative Cardoza reiterated that Los Banos cannot survive without getting the same level of funding received by other cities from the government repo prevention program and other community development programs run by the federal government.

The LNHS has experienced a rise in visits and telephone calls from distressed homeowners who are at risk of losing their houses to foreclosures.

The housing assistance agency aims to reach a great number of distressed borrowers to help educate them about how to avoid and deal with foreclosures. According to LNHS’ Marie Morse, most troubled homeowners wait for about a week before they make contact with the housing assistance agency to ask for advice on how to save their homes from foreclosure.

Morse said that most homeowners are embarrassed about their financial situation and do not want other people to know about their predicament. She explained that the free workshop that LNHS will sponsor is not just for troubled homeowners who are on the brink of losing their properties to foreclosures but also for those who want to be prepared in case they lose their jobs.

She added that the agency wants to give people advanced knowledge and to teach how to deal and cope with life changing situations such as foreclosures and unemployment.

The workshop, entitled “Buying time if your money is running out,” will be presided by Home Ownership Matters LLC Founder and President Mildred Wilkins. According to Wilkins, almost everyone is currently feeling the impact of the economic crisis. However, she pointed out that there are some strategies that people can use to cope with the crisis.

She said that those who will participate in the workshop will learn why bankruptcy is not a way to avoid foreclosures. She plans to provide tips to participants on how to extend the family’s income, such as reducing household expenses and grocery shopping costs.

Meanwhile, Morse said that the LNHS has hired a full-time and a part-time counselor to handle requests for help over the telephone. The housing assistance agency serves nine counties in Indiana and is providing counseling to nearly 200 individuals a year.

On the other hand, Morse noted that there is so much pressure on individuals who lost their jobs, especially to homeowners who had been paying their mortgage payments for a long time. She said that five years ago, most people who came to the NHS were seeking counseling on mortgage rate adjustment. Now, most of them are seeking help to avoid repossession houses.

Large numbers of former owners of foreclosed homes have paid thousands of dollars in upfront fees to companies promising them mortgage loan modification and reduction of monthly payments.

Treasury Secretary Timothy Geithner pledged to find these predatory companies and shut down their operations. The Federal Trade Commission has mailed official warnings to 71 companies identified to have been running deceptive foreclosure prevention advertisements.

In March, the FTC filed lawsuits against New Hope Modifications LLC and Hope Now Modifications LLC. This week, it filed lawsuits against three more firms, namely Bailout.hud-gov.us, Federal Loan Modification Law Center LLP and Home Assure LLC, including the owners and executives of the firms.

Attorney General Eric Holder announced the FBI has been investigating more than 2,000 fraud cases related to mortgage loans and foreclosed homes, an overwhelming increase of 400 percent from mortgage fraud levels in 2004.

Holder also pledged to find and punish individuals and companies discriminating against and taking advantage of borrowers distressed by the possibility of their dwellings turning to foreclosed homes.

According to FTC officials, some of the signs of mortgage scams are the use of federal housing agency trademarks, the use of business names similar to government agency names and the provision of 99-percent guarantees against foreclosure.

State attorneys and housing officials have been advising homeowners to call and receive advice for free from HUD-approved counselors working in various nonprofits across the country.

They are advising owners of distressed homes to stay away from loan modification companies that demand upfront fees before starting counseling. They reiterate that foreclosure prevention counseling is provided free by nonprofit counselors trained under HUD guidelines and that paid information provided by fraudulent counselors is freely available from the HUD website, the Making Home Affordable website and official websites of state housing agencies.

According to government investigators, some of the scammers are former real estate agents, brokers and appraisers who have lost their legitimate real estate businesses due to the housing market downturn and who have seen the opportunity to make money from foreclosed homes in a deceitful way.

While some state attorneys used state fraud statutes to file criminal cases against people and companies that have caused homeowners’ financial losses and worsened the situations of former owners of foreclosed homes, the other state attorneys have filed civil cases.

Market forecasters made the nationwide projection that prices for new, existing and repo homes will reach its low point by the end of 2009 on the assumption that President Barack Obama?s various housing recovery programs will show some progress this year. Some of these housing recovery programs are foreclosure prevention, bank lending and tax credit for homebuyers.

However, Mark Zandi of Moody?s Economy.com said that if Obama?s recovery program would not have some effect soon, prices for new, existing and repo homes will reach its low point at the latter part of 2011.

Meanwhile, Weiss Research real estate analyst Mike Larson said that after prices of new, existing and repo homes reached their low point, they will most likely remain at the bottom as the country?s economy struggles to get back on its feet.

He added that it will take another decade for prices of new, existing and repo homes to gain back their 2006 level.

Industry experts offer this purchasing, investing and selling tips to current homebuyers:

• Get a sense of home price trends in the area where you plan to buy a property.
• Do not buy a house in an area where prices of properties are expected to drop for more years.
• When buying, negotiate a home deal that will factor in the expected price drop of the current year.
• Repo homes are still the best buy. According to RealtyTrac, foreclosure homes sell 20 percent or 30 percent less than their market value.
• When buying foreclosure properties, hire a home inspector to determine the things that need to be repaired and the cost involved.
• Find short sale deals. Short sales are transactions in which banks allow owners of distressed homes to sell their properties for less than what they owe. The deal could give homebuyers savings of as much as 10 percent.
• To get a good mortgage rate, homebuyers should have no less than 720 credit score and make a 20 percent down payment.
• Buy a property in an area where unemployment is manageable and the economy is strong.
• Lastly, before you scout the neighborhood for a possible buy, get a pre-approved loan first to ensure that you will qualify.

Brian Bethune of IHS Global Insight supports the program and cites the modification scheme as the central feature of the program. He said the more lenders that implement the modification scheme, the faster the foreclosure crisis is resolved and the faster the states recover as their foreclosures by state are mitigated.

Some however see the program as lacking in some aspects. Lawrence Yun, leading economist of the National Association of Realtors, said a scheme to subsidize mortgage rates for Americans planning to buy a home or for borrowers planning to refinance their loans would have been very helpful. Lower mortgage rates would have been a more effective way to lower foreclosures by state and the national foreclosure rate.

There are also other factors that will affect the success of the administration’s program, now called Making Home Affordable Program. The unemployment rate is continuously rising as more and more businesses are downsizing or closing, increasing foreclosures by state.

The program is also voluntary, similar to the foreclosure programs launched by the Bush administration. It is hoped however that the cash incentives, which were not offered by the Bush programs, will entice mortgage lenders to work out modifications. The lenders need to show their investors that offering loan modifications to distressed borrowers will reduce foreclosures by state and will improve the conditions of states in which they are investing, in addition to improving the national economy.

For Americans who have been paying faithfully their loans month after month, Obama’s program will prevent further depression of their home?s current value. If the federal government does nothing to reduce foreclosures by state, home prices will continue their downward slide pulling down with them all properties, whether owned by responsible taxpayers or by foreclosure-distressed borrowers.

John Taylor, chief executive of the National Community Reinvestment Coalition, is optimistic about Obama’s program. He said the program has a real chance of succeeding in solving the foreclosure problem. He is hoping the mortgage lending industry cooperates with the administration.

Arizona is one of the top three states hardest hit by foreclosures in the past months, with almost 117,000 residential properties given foreclosure notices in 2008. According to foreclosure tracking firm RealtyTrac, Arizona foreclosures make the state’s housing market the third hardest hit by the economic crisis.

Across the nation, over 2.3 million homeowners received foreclosure notices in 2008. This figure is expected to increase further in 2009, according to RealtyTrac. Credit Suisse also estimated that about 10 million residential properties will be foreclosed from 2009 to 2012.

The case of construction worker Tim Iverson illustrates the difficult situation of laid-off workers across the country. Iverson, who lost his job in November 2008, worries about his mother and their situation as they are at risk of losing their home to foreclosure. They refinanced their house in 2005 for $212,000. Now, they can not sell it for more than $160,000 and can not pay fully the monthly payments with just his unemployment money and his mother’s social security benefit. Understandably, Iverson is one of many in Arizona hoping that their president will come and bring some relief.

President Obama’s plan is expected to make significant reductions in borrowers’ monthly payments so that more homeowners can save their homes from foreclosure. Analysts say that the plan could offer both incentives and pressures to mortgage lenders to work out loan modifications with troubled borrowers.

The goal for modifications would be the reduction of monthly payments to about 30 percent of borrowers’ gross income. The payment reductions could be achieved by reduction of interest rates, reduction of the remaining principal balance, extension of the payment period and other flexible payment plans.

Several are also expecting that the president would endorse a proposal empowering bankruptcy judges to modify the provisions of a loan. Despite the opposition of mortgage lenders to this proposal, consumer advocates say that the mortgage industry need to bear some of the burden for everyone’s good.

There are also those who are concerned about the repercussions of using the taxes of responsible Americans to help pay off the loans of others who did not behave responsibly and who brought themselves to foreclosures. Mark Goldman, a real estate broker and mortgage lecturer at San Diego State University, has an answer to this concern. Goldman says that the taxpayer should not focus on what is fair, but on what will protect the value of his property.

RealtyTrac reported that Arizona, Florida, California and Nevada are the top 4 states that generated half the total number of foreclosures a year ago.

People living in those states are only holding a quarter of the country’s mortgages, but their foreclosures continue to rise since the middle of 2007.

Legislators are planning to use $100 billion from the bailout funds to possibly stop foreclosures. The plan was pressed by President Barack Obama a few weeks ago, and the disagreement will be an additional problem for the already puzzled homeowners, economists and politicians.

Jan Hatzius, Chief Economist of Goldman Sachs, said that there are plenty of unsold properties in the market, thus making the prices fall by 20-25 percent by 2010.

Louisiana Republican Sen. David Vitter said that using billions of dollars to assist homeowners may not be the solution to the rising problem.

Some say that the 4 states should not be blamed in terms of foreclosures. Washington D.C., Cleveland, Detroit and Minneapolis are also some of the cities that have high foreclosure rates but are not located in any of the said states.

Lawmakers and economists think that the housing crisis is getting worse, since a lot more people are losing work and cannot pay mortgages.

Meanwhile, University of North Dakota Economics Professor David Flynn questions why people who make the wrong decisions in the financial aspect are always supported. There are some people out there who make the right decisions, but were left ignored.

In all fairness, not all delinquent borrowers were irresponsible. In some cases, loan terms were not fully explained and further assistance were not given.