It is not just today – but for many decades foreclosure cases have been one sided with the borrowers having little or no chance against the lenders; the latter always won. The courts always gave their stamp to the taking over of properties by the banks. The word of the bank was never doubted.

This was the situation in the majority of the cases with the lenders sitting in the driver’s seat running over the hapless borrower. There was hardly any sympathy for the borrower who failed to repay loans. But the current crisis has opened everybody’s eyes. It cannot be that millions are in the wrong and the few lenders are in the right. Many borrowers were tricked into contracting mortgage agreements without being made to understand them. The banks never bothered to find out if the borrowers had the means and capability to repay them.

In most of the court rooms the drama is being enacted over and over again – an unequal battle between Goliath and David. But lately some of the judges have been making in depth searches into the rules so far being used by the lenders. Consequently a handful of lenders are getting slapped around.

One of these outstanding incidents occurred on 9th October in bankruptcy count in Southern New York. The ruling was given that the lender, PHH Mortgage had not been able to prove it claim to the house in question. Judge Robert D. Drain erased a mortgage debt on the property amounting to $461,263. It’s hard to believe but is true that thanks to a court ruling a mortgage debt vanished into the blue!

The judgment has totally changed the complexion of the foreclosure game. If the lender fails to produce proof of its ownership and the judge gives that angle importance, then the borrowers have a sharp tool to produce in court; so much so they may not only save the house from foreclosure but may also become free from the mortgage.

The reason why the lenders are failing to provide proof is that so many times the notes changed hands during securitization that the original note has got lost. Large pools of mortgages were made but some of the notes were never minutely checked during the partying days of the housing boom. There was a heady drunkenness of money making. Thus nobody really knows who is the owner of what.

The shoddiness of handling foreclosure cases will not disappear overnight but a point has been made that can be regarded as a turning point in one sided success.

The hangover after the initial burst of the foreclosure crisis needs analysis although foreclosures and unemployment are not a thing of the past and continue to plague American economy.

However many believe that the crisis is over as the stocks have gone up by 50% to 60% from the start of 2009. Gold prices have broken records and prices of commodities like oil are more or less buoyant.

On the international scene the trend to de-leverage the financial system of the West is continuing. Banks are raking in profits but a good number of financial entities continue to need funds. The worst hit banks like Citibank, Lloyds Bank, Spanish Bank Santander etc are continuing to talk about raising new capital or selling down their assets.

The governments are keen that the banks should lend. But in all likelihood the banks would like to clean their balance sheets before resuming lending. The mortgage securitization market is feeling most the de-leveraging effect. The market is still shaky about buying securitized debts because the future prospects of the real estate sector and business in general is still not clear.

Another trend is that it is obvious that from now regulations will be tougher. The regulators will be wary especially in supervising those banks in which states have a sizeable ownership because of having taken funds from rescue grants. The government has also guaranteed staggering number of deposits and thus acquiring a stake. The regulators will want to clamp down on generous bonus for bank executives. Reduction of risk taking will invariably impact negatively on the profits of the banks.

At the moment the banks are benefiting because they have not reduced their lending rates but the rate at which they borrow has gone down to nearly zero. But once normalcy returns and the banks start competing among themselves, the loans will be harder to get because of risk fears. Thus the golden age of investing in the banks is most probably over.

Another trend is that while the imbalances in the economy of USA continues the Asian supply line will move away from being export oriented towards developing a home market. It means there will be excess goods in the export section and reduction in profits.

The recovery noted in 2009 was mainly due to the massive infusion of funds and other fiscal measures taken by the government. But how far that can be sustained, only time can tell.

The MERS or Mortgage Electronic Registration System was the brain child of Freddie Mac and Fannie Mae together with some banking giants. It made its debut in 1997. With the green signal from the rating services a new game of securitization of mortgages began. The mortgages were made into packages, sliced, re-packaged and again cut into pieces and sold as CDO or collateralized-debt-obligations to global investors in remote corners of the world. These securities were backed by risky sub-prime mortgages. When the borrowers defaulted the value of the securities also fell causing huge losses to investors.

With AAA ratings given by the agencies authorized to do so, even teacher’s pension funds and the like came be invested in these. But the value fell to less the amount of the property causing a crisis of tsunami proportions.

The MERS by virtue of its computer capability noted the myriad of times the loans were sliced and changed hands. But according to the rules of the mortgage game each time a mortgage changed hands it was to be noted with the relevant authority in the county. It meant time consumption and also payment of fees at each point of transfer. All this was avoided by the introduction of the MERS.

The matter became further complicated with servicers standing between the loan giver and taker. These servicers, often large banks, did the job of collecting mortgage dues. For this the servicer gets handsomely paid although it had no stake in the deal – it had nothing to lose but everything to gain from it.

Thus there is in effect a huge gap between the loan taker and loan giver that becomes prominent when a foreclosure starts off. The borrower who wants to negotiate cannot pick up the phone and talk to the lender. There is a maze in which the borrower tends to get lost while the foreclosure engine chugs ahead relentlessly. The ordinary American does not have a clue as to who is the lender and from whom relief can be sought. The first door to knock on seems to be that of the servicer who has contact with both sides.

A ruling by Kansas Supreme Court has pulled the carpet from under the feet of MERS by barring its right to foreclose. Although the ruling does not apply beyond Kansas it has opened up a can of worms. Other judges and housing advocates are sure to pursue the matter. It involves 60 million mortgages and the ruling could be applied to foreclosures enacted two decades ago!

With a foreclosure rate of 1:4 in Florida the crisis continues to harass the state. The rate is the highest in the nation. With the lingering recession another wave is poised to break. In fact it has already started to appear in courts. These are not sub-prime mortgages and other exotic loans but the cause is grave unemployment, plummeting of real estate market and continuing recession.

John Tur based in Miami instructs people about real estate investment. He warned, “The second tsunami of foreclosures is coming.” The numbers are already gripping. This will cause recovery in Florida to be delayed – it being the worst foreclosure affected state in the country, according to Mortgage Bankers Association.

As per the findings of First American CoreLogic the second highest foreclosure rate was reported from Miami-Dade County – it ranking after Osceola County of California. Broward County ranked 6th. Homestead that was the ground zero of the housing boom only two years previously ranks first in new foreclosure filings. The fear is that the situation is worsening.

In the gated community in Homestead, property that had once been sold for $242,000 is now begging to be sold for $70,000 reported Karen Klores of The Keyes Company. Sometimes to the cursory eye a neighbourhood seems normal without foreclosures as the condo associations keep the garden trimmed. But many of the units are shuttered.

Leselee Ramos had bought her three roomed town house in Malibu Bay for $255,490 in October 2006 but today its value has dropped to $121,800. While Ramos had a job she remained current on the mortgage payments but now that she has become unemployed things have come to a head. The house has been foreclosed upon. It is a tearing experience as she will find it difficult to start life anew with the black mark of foreclosure on her credit scores.

The condos as well as the suburban sub-divisions are facing the full brunt of the foreclosure crisis. In 2008 foreclosure of single family units were higher than that of condos by three to one. But now condos comprise 41% of the foreclosures in Miami-Dade and 67% in Broward County. It is a staggering 83% in Florida Keys as per the findings of RealtyTrac.

Guy Cecala publishes Inside Mortgage Finance. He commented, “I don’t think there’s any question the first wave of foreclosures we saw up until this year was driven by bad loans — the sub-prime loans with squirrelly features of big jumps in rates or payments. This year, we’re feeling the full brunt of the deep recession in the country. It’s economic-driven.”

Post foreclosure evictions the census is running into difficulties but high stakes are involved. Related to population count depends grant and congressional representation. 2010 census is just around the corner and residents in most of the important cities areat risk of being left out. The census department is struggling with shortage of man and money power and yet it is expected to make an accurate count.

A recent report released by Pew Charitable Trusts noted that many cities have fewer resources in comparison to 2000. The officials of the city also feared about a poor turnout in 2010 because of displaced citizens thanks to the foreclosure crisis. Immigrants also fail to fill up forms in correct manner.

There was an appeal for a temporary halt to the proceedings to flush out the immigrants and give a boost to counting but the Commerce Department ruled it out. Joseph Salvo the chief of population division in New York City said, “Nobody is expecting a good census in 2010. I’m not optimistic. Since the last census we had 9/11, privacy issues, trust of government issues. And there’s been no public declaration that we’re going to suspend immigration raids like in 2000”

Pew has made a review of the ongoing preparations being made in 11 important cities that had undergone counts in 2000. It is feared that the undercount in five cities will be by 1.5% – Baltimore, Houston, Los Angeles, New York and Phoenix. The allotted funds were much lower than what it was in 2000 because of the recession.

Los Angeles is having difficulty location many of its citizens who are now occupying foreclosed houses, cars or sharing quarters with friends and relations. Nevertheless the budget of $770,738 for outreaching activities is nearly half of what had been sanctioned in 2000. Chicago had a calculated number of 32,000 citizens in 2000. Ten years ago it exhausted $1.3 million of its funds. This year no money has been allocated.  Philadelphia is the 6th largest city in the country. It has been lagging behind in census preparations. Ten years previously the city had kept aside $200,000 for census purposes but today there are no such funds. The other cities not having such funds are Atlanta, Boston, Detroit and Pittsburg.

To give a pep-up to participations, the Census Bureau is spending $300 million to spread the message through the national media. It is joining hands with over 80,000 groups to spread the word. But Robert Groves admits that there is a high risk of error and miscounts. The reasons are beyond their control.

Darlene Banks is not happy as Halloween approaches – she is afraid of foreclosure ghosts that haunt her in Detroit. The wooden bungalow next to her residence has been vacant for long five years. Darlene is afraid that like another vacant house the so-called ghosts will set it on fire. 10 other neighbouring houses had been engulfed by it. It was a flaunting challenge against the city authorities trying to contain arson during Halloween celebrations. The Devil’s Night has become a day of confrontation between law enforcers and law breakers.

This year the situation has worsened as many have left the city in search of jobs elsewhere. The unemployment figure has reached 27%. Meanwhile Halloween is knocking. There are thousands of vacant houses and buildings. Recently 40,000 have become empty thanks to foreclosures. These will be sitting targets for Halloween devils.

Fires have caught many like Banks by surprise. She said that she was lucky her modest house did not get burnt.

Devil’s Night is also known as Mischief and Cabbage. It is a night of pranks when often eggs are hurled at houses. But recently the pranks have been taking on a sinister look. The city has a surfeit of empty houses and the devils know this. In 1984 there were 810 instances of fire during the three day of Halloween festivities. Flames lighting up the sky were caught on television cameras and broadcast across the globe.

The firefighters and the police have become stricter in patrolling particularly those streets that have whole rows of vacant houses. Volunteers have joined the law enforcing units and this anti-fire operation was named Angel’s Night in 1996. The policing have met with success. In 2008 136 fires broke out. Of these 94 are said to be caused intentionally. In 2007 there were 142 cases of fire outbreak. Of these 111 were under a cloud of suspicion.

In general the number of fire outbreaks fell from 2007 to 2008 according to the fire department of Detroit. In 2008 there were 32,351 calls – a reduction of 3% from the previous year. The number of arsons fell to 1,230 calculating to a decrease of 17%. But 11 units were burnt down within less than an hour on 11th October. This has made the authorities worried about the forthcoming Halloween festival. This year there are many more properties to keep a watch on.

Luther Keith of Arise Detroit said, “With the foreclosure issue and the abandoned homes, it becomes a temptation to some people. We know we have mischief makers. They don’t care about lighting the house that could destroy someone else’s property, or hurt or kill someone.”

Foreclosure rescue scams are netting in more vulnerable homeowners. In these dark days this is one line of business that is flourishing. The scammers hardly have to make any initial investment. They do not need expert training either, having learnt their skills during the time of the housing boom when they lured in gullible borrowers to contract sub-prime mortgages.

Pundits opine that these scammers will continue to flourish so long as the housing crisis continues. It is the worst crisis the country is passing through since the time of the Great Depression in the 30’s. Keith Slotter of FBI in San Diego said, “Rescue scams are the real growth industry. All you need to target people is a computer and know-how to set up a website and you’re in business. These groups can set up quickly, target people across multiple states, shut down and move on before they’re detected.”

Operating in mortgage fraud was fairly easy during the time of the housing boom. Many pundits are of the opinion that it was the prominent role fraudsters played during the time of the boom that the crisis came to be born. It forced the country into recession towards the end of 2007 and erased property value worth trillions in dollars.

Now rescue scams are gnawing into whatever is left in the pockets of the homeowners. Time is being wasted that could have been better utilized by the borrowers in talking with lenders and or the right counseling groups. This delay is causing foreclosures that could otherwise have been avoided. The net result is a prolongation of the recession thanks largely to these foreclosure scams.

Melinda Opperman of Springboard, a housing counseling group said, “There are a lot more people we could help if it weren’t for rescue scams. This could end up slowing down any potential recovery.”

One of the easy preys was a couple – Salvador and Blanca Jimenez of Los Angeles. They purchased their first house paying $430,000 in 2005 taking an ARM loan. But when their monthly mortgage paying spiked by $800 to touch $2,691 in the early part of 2008 they could no longer afford it. They started lagging behind. At this point they were contacted by mail by a company named Direct Lender. The firm offered to reduce the monthly payment for a fee of $3,995. The couple went to their smart showy office and when they spoke in Spanish the couple felt comfortable and trusted them. Taking their advice the couple stopped paying the mortgage money to the lender and instead began to pay Direct Lender. Soon they got a notice from the bank. The couple explained the situation but the bank said they have never authorized any third party to collect money. The couple has now turned to the law for help.

Peter S. Goodman in his latest book writes how dreams of easy money have vanished with daylight breaking accompanied by foreclosures. The past years were indulged in senseless borrowing by the borrowers and bankers. That thinking has lost its magic touch and days of harsh reality have woken up Americans.

Goodman is a correspondent of The New York Times. He does not go too far but it is obvious that Alan Greenspan of the Federal Reserve is Peter Pan – the flying fellow in a world of fantasy who refused to grow up to battle the world of the adults. The idea of markets correcting itself does not work in reality – at least not in the way one wishes it to operate. So Peter Pan and his team of Lost Boys continued to hibernate in Neverland. If Ben Bernanke and his boys are allowed to continue in their dream of Neverland there would come about another round of financial disaster.

In forceful penmanship Goodman shows how both Bernanke and Lawrence Summers the economic adviser of White House, together with the moguls of Wall Street as well as the plutocrats of the last 20 years became captivated by the dream cooked up by Greenspan of the Chicago school that the financial entities can be relied upon to police each other sans any government controls. Summers had spoken strongly against the regulating of credit derivatives while he was part of the Clinton administration. He helped to open the gates to wild trading that ultimately brought down Wall Street to its knees. Bernanke did not realize that the risks of sub-prime lending would vanish on its own, until it was too late.

Greenspan admitted to his folly last October but all that is of no use now except that he has retired from the arena and cannot do more harm. Bernanke and Summers continue to hold key posts and they are stumbling. They have failed to identify in clear terms where Greenspan went wrong and how they now intend to draw up a new blue print for banking and regulation of finance.

The Obama government is trying to make the Securities and Exchange Commission more powerful and attempting to weaken speculation in derivatives. But the initial steps are now running out of momentum. The book of Goodman points to the fact that the seeds of future mayhems have already been sown.

Goodman with his vast repository of experiences covering economics, technology and industry has done a great service by highlighting how market manias may change but the core content remains fixed.

Census count poised for the big operation is facing a challenge from foreclosures. It is going to be more difficult and costly to obtain accurate statistics in 2010 as the foreclosure victims have shifted to live with families, cars or shelters. Many have been rendered homeless. This fact has been admitted by Director Robert Groves of the Census Bureau.

He said some of the questionnaires would be mailed in 2010 but in all probability these will reach empty homes in those areas that have been worst hit by the foreclosure crisis. It means the workers of his department will have knock on each door to find out if the persons enlisted are living in these houses. It meant more expenses. Speaking to reporters at Los Angeles Groves said, “One absolutely unambiguous impact of the foreclosures is there’s going to be more people knocking on doors. It’s going to be more expensive to do that.”

Unemployment has affected over 13% of the homeowners in America having mortgages to lag behind their dues. This is leading to foreclosures according to a recent report by Mortgage Bankers Association. The worst trouble spots are Arizona, California, Florida and Nevada.

Some experts are of the opinion that next year there will be a fresh wave of foreclosures after many lenders who had kept the process on hold will have no other alternative but to proceed with it.

Groves wants the workers of his census department to concentrate on contacting those families that are living with friends and relations to tide over this critical period. He said that many are convinced that the housing situation will soon improve. But nevertheless wherever they are there is the urgent need to count them.

He also stated that the workers are giving extra attention to the counting of those who have become recently homeless – like the families that had been considered middle class just a short while ago. Recession has pushed them down the ladder.

The Census Bureau is hopeful that the new method of mailing questionnaires that were shorter and dispatching bilingual forms in the areas dominated by the Latinos would address these problems. To locate these areas the bureau has increased the strength of its staff. But Groves added that it still unclear whether it will be successful to obtain the 67% response that had been noted in 2000. He said, “I think it is a harder job for us this census.”

The US real estate sector is in the dumps. With unemployment reigning high, people are faltering on mortgage payments. Hence, foreclosures have become common. Now the housing market in North Texas has reached the bottom after prices declining for over a year. However, experts say that it may take a while for the housing market to recover.

The chief economist at the Real Estate Center at Texas A&M University, Mark Dotzour, says that the value of every commercial building in the US has depreciated by almost 30 per cent. The buildings of Texas have been adversely affected by the downturn.

The condition of the homebuyers is much better, Dotzour said at a real estate conference. This seems to be the best time to buy a home in Texas. Perhaps what is stopping the people is the fear of losing jobs. Home prices, Dotzour says, will not decline any further. The financing cost will also go up.

Mortgage rates have plunged and it will not be this low again. It is unimaginable that the industry will ever witness a 5 per cent mortgage. The prices already the lowest since 1970 are expected to dip even further next year. The builders are on a tight leash. There have been a decline in house construction and this is expected to continue for a while.

The stock of homes is also on the decline as builders make fewer homes than earlier. This has been happening for the last three years. The inventory of new homes is almost depleted. According to Metrostudy, there is not even a 90-day supply of new homes in Texas. Houston and Dallas-FW are the leaders in sales of new homes. The stock of new homes may have got depleted but there has been a spurt in foreclosed properties.

It may be noted that one in every four homes being sold this year is by a banker. The property is no doubt a foreclosed one.  The market has no chance of recovering unless these foreclosed properties are flushed out of the system.

The commercial real estate sector is also plagued by foreclosures. The number of foreclosures in this sector has already increased by 10 per cent. Industry experts worry that things could get even worse. There are many buildings that have absolutely lost value. The numbers are set to increase in 2010. What’s more, banks are delaying foreclosures.