By AMY HOAK

Brace yourself for another rough year in housing: The number of foreclosures is expected by many to increase in 2011 as more troubled mortgages work their way through the pipeline.

Tom Bloom

Next year could very well be a peak year for foreclosures, says Rick Sharga, a senior vice president at RealtyTrac, an online marketplace for foreclosure properties. The market is expected to tally about 1.2 million bank repossessions in 2010, up from 900,000 in 2009, he says. “We expect we will top both of those numbers in 2011.”

That’s partially due to issues the industry has faced with foreclosure processing that began in the fall and delayed a portion of foreclosures from being completed this year, he says. In the so-called robosigning controversy, some lenders halted foreclosures after learning procedures for signing off on foreclosure documents might not be in accordance with the law.

Continued high unemployment also is expected to exacerbate the foreclosure problem in the year ahead, as will upcoming interest-rate resets on adjustable-rate mortgages that will increase monthly payments for some homeowners, Mr. Sharga says.

In the meantime, data on the volume of loan modifications from the Treasury Department indicate that fewer borrowers were being approved for permanent modifications in recent months, says Greg Hebner, chief executive of MOS Group, a loss-mitigation service provider to mortgage lenders and servicers.

What’s more, there’s a growing feeling that modifying mortgages doesn’t get to the heart of the housing crisis: “There is the perception that the answer to this involves trying to get job growth,” which will help homeowners pay their loans and enable others to buy homes, said Jay Brinkmann, chief economist for the Mortgage Bankers Association, during a recent conference call with reporters.

For the longer term, however, the outlook for the foreclosure market is better since fewer homeowners are becoming delinquent on their mortgage payments. Thirty-day delinquencies are down 11% since the height of the recession in the first part of 2009, according to Mr. Brinkmann.

And loans 60 or more days past due are expected to fall nearly 20% by the end of 2011, to about 5% of all mortgages from an expected 6.2% at the end of 2010, according to a forecast released Tuesday from credit-reporting company TransUnion. Delinquency numbers are expected to continue to improve as unemployment slowly declines. (For its numbers, TransUnion uses a random sample of 27 million records from its database.)

“It’s good progress, but we are by no means out of the woods yet,” says Steve Chaouki, group vice president in TransUnion’s financial-services business unit. In a more normal market, 60-day delinquencies would be in the 1.5% to 2% range, he says.

So how does all this bode for housing prices?

High housing inventory, along with high unemployment, will likely add up to continued depressed home prices in the year ahead in many markets, says Nichole Jordan, banking and securities industry practice leader for Grant Thornton, an accounting and business advisory firm.

“It’s going to take several years to work through the excess inventory,” she says.

Ms. Jordan and others are looking to 2012 for anything resembling a recovery in housing. Even then, it’s going to be a long journey to stabilization; it historically takes five to seven years for prices to stabilize after a deep correction, Ms. Jordan says.

“Realistically, you’re not going to see home prices appreciate next year,” says Jason Kopcak, head of whole loans at financial-services firm Cantor Fitzgerald. In fact, many in the industry are expecting prices to fall another 10% next year on a national basis, he says. RealtyTrac’s Mr. Sharga says the national decline could be around 5%. Other economists are expecting prices to remain flat.

Next year “is going to be a wash, in terms of any meaningful recovery, and we’re looking toward 2012,” said Guy Cecala, publisher of Inside Mortgage Finance, during a conference call with reporters. And that’s assuming there are no other major problems or delays to contend with, he says.

Write to Amy Hoak at amy.hoak@dowjones.com  —Read more at marketwatch.com.

Well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes impacting their credit reports and scores, according to mortgage bankers and real estate agents.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Nearly 14 million Americans have errors on their credit report due to medical collections, according to the Commonwealth Fund, a non-profit organization focused on health care research.
• Unnoticed credit errors, such as small, unpaid balances on medical bills, can make refinancing a mortgage difficult or, in some instances, impossible.  If approved for a refinance, unpaid bills can result in the borrower paying higher closing costs.
• It is critical that consumers routinely review their credit reports to ensure the reports are accurate and up-to-date.  Consumers are entitled to one free credit report annually from https://www.annualcreditreport.com/cra/index.jsp.  The report does not include the credit score; however, the score can be obtained for a small fee.
• The U.S. House of Representatives passed a bill this fall that could provide relief for homeowners with medical-debt troubles.  The Medical Debt Relief Act, which is currently in the Senate, would remove settled medical debt from credit reports after 45 days, instead of the customary seven years.  source:car.org

By Trulia and RealtyTrac Staff

Semiannual Foreclosure Survey Reveals Concerns that Robo-Signing Scandal Will Delay Recovery

SAN FRANCISCO, December 7, 2010 – Trulia.com (www.trulia.com), a top site for homebuyers, sellers and renters, and RealtyTrac (http://www.realtytrac.com/), the leading online marketplace for foreclosure properties, today released the latest results of an ongoing survey tracking homebuyers’ attitudes toward foreclosed homes. Results of the survey conducted online from November 2-4, 2010 by Harris Interactive® on behalf on Trulia and RealtyTrac showed that Americans continue to grapple with uncertainty about the housing market, with 58 percent of U.S. adults expecting recovery to take at least another two years.

As a result of the recent robo-signing debacle, half of U.S. adults expressed that they now have less faith in mortgage lenders, banks and the government. Another 35 percent believe the robo-signing issue will delay the housing market’s recovery, while only 6 percent of U.S. adults think the robo-signing issue will have no effect on the recovery of the housing market.

When Americans think the housing market will recover

“More and more, American homeowners, -sellers and -buyers are tamping down their expectations for a swift recovery in the housing market and bracing themselves for a long, slow climb back to a healthy real estate market.  Fifty-eight percent believe recovery will happen after 2012 and more than one in five U.S. adults believe recovery won’t happen until 2015 or later,” said Pete Flint, co-founder and CEO, Trulia. “Government incentives have come and gone and historic lows in interest rates have done little to spur recovery.  Then, as if prospective buyers and sellers needed more to be concerned about, the robo-signing issue caused a ‘what’s next?’ fear to surface in the minds of consumers who, frankly, have lost faith in banks and their government to make good decisions.”

Under Water and Out of Options
Nearly half (48 percent) of homeowners with a mortgage admitted that they would consider walking away if their mortgage was under water, an increase compared with May 2010, when only 41 percent said they would consider walking away if their mortgage was under water. Interestingly, men (57 percent) are more likely than women (40 percent) to consider strategic default as an option for dealing with negative equity.

If they became unable to pay the mortgage payments on their current primary residence, two-thirds of U.S. adults with mortgages said they would consider calling the lender and trying to modify the terms of the loan as their first option. The next most popular solution is to have a tenant move in to contribute to the mortgage, but only 10 percent of U.S. adults would do this.

Interest in Buying a Foreclosure
Nearly half (49 percent) of U.S. adults are at least somewhat likely to consider purchasing a foreclosed property, up from 45 percent in May 2010. Despite the rising interest in buying a foreclosed home, an increasing number of U.S. adults also recognize negative aspects to buying a foreclosure. Over the past six months, the number of U.S. adults who believe there are downsides to buying foreclosed properties has increased to 81 percent, from 78 percent in May 2010. Among those who think there are negative aspects to purchasing a foreclosed home, the top concerns about purchasing a foreclosed property between November 2010 and May 2010 include

Expected Discount on Foreclosure Purchase
Two-thirds (67 percent) of U.S. adults would expect to pay at least 30 percent less for a foreclosed home than a similar home that was not in foreclosure, and one-third of U.S. adults  (35 percent) would expect to pay at least 50 percent less for a foreclosed home. Overall 97 percent of U.S. adults would expect at least some discount on a foreclosed home.
“It seems like consumer expectations and market realities are beginning to align when it comes to foreclosure discounts,” said Rick Sharga, senior vice president, RealtyTrac. “During the third quarter, foreclosure homes sold for an average of 32 percent less than homes not in foreclosure. It’s also not surprising that we’ve seen an increase in negative sentiment toward foreclosure purchases, where the recent robo-signing controversy has added more confusion to an already complicated process.”
For an infographic illustrating what U.S. adults would do if they couldn’t pay their mortgages, click here.

For an infographic illustrating when U.S. adults believe the housing market will recover, click here.

For an infographic illustrating how U.S. adults believe the robo-signing scandal will impact the housing recovery, click here.

For an infographic illustrating how many U.S. adults would be willing to walk away from their upside-down homes, click here.

This November 2010 survey was conducted online within the United States by Harris Interactive via its QuickQuery(SM) online omnibus service on behalf of Trulia between November 2-4, 2010 among 2,034 U.S. adults aged 18 years and older. The sample included 1,329 homeowners, 1,000 of whom currently have a mortgage, and 652 renters. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact Ken Shuman.

About Trulia, Inc.
Trulia.com is the most comprehensive real estate site focused on empowering you with smarter tools to help you find the right home. Whether you are an active buyer, seller or real estate enthusiast, Trulia gives you all the information you care about from rich property data to a personalized search experience.  We are focused on helping you find the home that truly meets your needs, and delivers on what’s most important for you. Ultimately, we built a smart real estate search experience bringing together local information, community insights, market data and national listings all in one place, all for you. 

About RealtyTrac Inc.
RealtyTrac  is the leading online marketplace of foreclosure properties, with more than 1.5 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data. Hosting more than 3 million unique monthly visitors, RealtyTrac provides innovative technology solutions and practical education resources to facilitate buying, selling and investing in real estate. RealtyTrac’s foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to help evaluate foreclosure trends and address policy issues related to foreclosures.

About Harris Interactive
Harris Interactive is one of the world’s leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us — and our clients — stay ahead of what’s next. For more information, please visit www.harrisinteractive.com.

Media Contacts:
Chip Scarinzi for Trulia, chip.scarinzi@edelman.com, 415.486.3221
Ken Shuman, kshuman@trulia.com, 415.517.7211

Michelle Sabolich for RealtyTrac,     michelle.sabolich@atomicpr.com, 415.593.1233 source: realtytrac.com

Commentary: Falling prices once again threaten economy

WASHINGTON (MarketWatch) — The U.S. economy has made a lot of progress since the dark days of September 2008 — investors are happy, bankers are secure, markets are functioning and businesses are flush. No depression here.

But what about the rest of us? When does the recovery kick in?

The stock market has finally climbed back where it was on that fateful weekend when Lehman Bros. filed for bankruptcy, but there has been little relief for the average family.

For typical Americans, two things determine their financial well-being: Their job and the equity they have in their home. They get almost all of their income from wages and salaries, while most of their wealth is tied up in their house. When wages and house prices are rising, they are confident. When wages and house prices are falling, they are fearful.

Policy makers may have rescued the banks, but they haven’t figured out a way to bring back the jobs that were lost, nor have they found any answer to the problem that was the nucleus of the crisis: housing.

There’s been a lot of focus on employment in recent months by voters, politicians and economic analysts. The big question in Washington has been what can be done about the unemployment rate, which has been stuck near 10%. Hence the salesmanship of the two parties to market the tax bill as a way to create jobs.

But there’s been less attention paid to the other part of the family balance sheet: housing.

Building on a bubble

Housing is the forgotten crisis.

It wasn’t always so neglected. Early on in the downturn, the government dug deep into its policy tool kit to find answers for the collapse of housing.

They lowered interest rates in an effort to boost affordability. They took over Fannie Mae and Freddie Mac, and they told the Federal Housing Administration to lend freely. The Federal Reserve purchased more than $1 trillion in mortgage-backed securities and bonds to support housing. They approved tax credits for buyers, and extended those credits several times. They tried to get lenders to modify loans.

Nothing has worked. At least, not well enough. The housing market is still dead, and worst of all, prices are falling again.

For a while, it seemed as if housing was at least bottoming out, if not improving. The low mortgage rates and tax credits boosted sales, but only temporarily. And when sales fell back, so did prices.

Nationally, home prices are down about 30% from their peak. In some cities, such as Phoenix and Las Vegas, prices are down more than 50% from the high point, according to the Case-Shiller home price index.

According to the CoreLogic home price index, home prices fell 1.8% in September, the fastest decline since early 2009. Other price measurements tell the same story of falling prices since mid-summer. Recently, Fitch Ratings projected that prices would fall another 10% in 2011.

According to the Fed, the decline in home prices in the third quarter subtracted about $584 billion from the equity Americans have in their homes.

More trouble ahead

Since early 2006, American families have lost $7 trillion in home equity — more than half of their equity has simply vanished. Many millions, of course, have lost everything they put into their house, and more.

Years of blood, tears and sweat equity gone. Remember, for most families, home equity accounts for most of their wealth. In the past, wealth in the form of home equity has often been the ticket to upward mobility; many a small business or college education has been funded from real estate wealth.

About 11 million families — about 23% of those with mortgages — now owe more on their house than it’s worth. Before the bubble burst, that figure was about 1%. About 5 million families owe at least 25% more than what their house would sell for; they are so far underwater that it could take a decade or more to regain any equity.

Another 2 million families could go underwater if their house loses 5% of its market value.

The impact of that much lost wealth could be severe if it continues, but the most recent declines haven’t had any visible impact on the economy. Housing remains invisible.

Rising housing wealth helped drive consumer spending in the middle of the last decade. The best guess by economists is that consumers will spend about a nickel more if their housing wealth rises by $1, or spend a nickel less if wealth falls by a dollar. The bubble boosted consumption by about 6 trillion nickels. .

When prices started to fall in 2007, consumers cut back on their spending, which helped to push the economy into a deep recession. Lately, consumers have been spending more freely, but with prices dropping again, consumers might get tight-fisted.

The upper middle class and the rich, of course, haven’t slowed down. Spending isn’t as volatile for them as it is for the rest of us. Their holdings of stocks, mutual funds and other financial assets are worth more than their home equity, so they feel richer than they did a year ago.

Not so for those in the middle or bottom of the income scale, who have fewer financial resources to buffer themselves from economic shocks. For them, the recession never ended. And it might be getting worse.

Rex Nutting is Washington columnist and international commentary editor for MarketWatch. source: yahoo/market watch

Rising mortgage rates and foreclosures will continue to be drag on market

WASHINGTON — The housing market will remain depressed, with record high foreclosure levels, rising mortgage rates and a glut of distressed properties dampening the market for years to come, industry experts predicted on Tuesday.

“We don’t see a full market recovery until 2014,” said Rick Sharga of RealtyTrac, a foreclosure marketplace and tracking service. He said that he expected more than 3 million homeowners to receive foreclosure notices in 2010, with more than 1 million homes being seized by banks before the end of the year.

Both of those numbers are records and expected to go even higher, as $300 billion in adjustable rate loans reset and foreclosures that had been held up by the robo-signing scandal work through the process. That should make the first quarter of 2011 even uglier than the fourth quarter of 2010, he said.

There have been allegations banks used so-called robo-signers to sign hundreds of foreclosure documents a day without proper legal review.

Mortgage rates will start to rise in 2011, further dampening demand and limiting affordability, said Pete Flint, chief executive of Trulia.com, a real estate search and research website. “Nationally, prices will decline between 5 percent and 7 percent, with most of the decline occurring in the first half of next year,” he said.

Interest rates on 30-year fixed rate loans will creep up to 5 percent, and that alone will add $120 per month to the typical mortgage payment on a $400,000 loan, Flint said in a joint news conference.

The two firms released a survey showing a marked deterioration in consumers’ views of the housing market, too. Almost half — 48 percent — said they’d consider walking away from their homes and their mortgages if they were underwater on their loans. That’s up almost 20 percent from when the same question was asked in May. “If that continues it would be an epidemic of strategic defaults,” said Flint.

Roughly 1 in 5 consumers said they expect it to be 2015 before there is a recovery in housing, according to the survey, conducted in November by Harris Interactive. Most respondents said they think recovery will come in 2012 or 2013. Would-be buyers suggested they wouldn’t really get serious about purchasing a home for another two years.

Sharga sees a big glut in distressed properties hitting the market. There are about 5 million loans that are at least 60 days overdue, he said. In the next 12 to 15 months, another $300 billion in adjustable rate loans will reset, and “they will default at pretty high levels.”

“Even with today’s low interest rates, you’re looking at an average of $1,000 or more in mortgage payments on loans that are overvalued by about 30 percent. That is where you will see a high level of walkaways,” Sharga predicted.

Not all markets will share equally in the troubles. Flint said he expects to see improvements in several markets, including Raleigh-Durham, North Carolina; Austin, Texas; Oklahoma City, Oklahoma; Salt Lake City, Utah and Omaha, Nebraska.

Homebuyers who are willing to take risks and buy distressed properties are likely to see discounts of around 30 percent from prices on comparable homes that are not in distress.  source: msnbc

Nearly a quarter worry it won’t come till after 2015, Trulia and RealtyTrac survey shows

Nearly 60 percent of Americans believe the housing market won’t recover until 2013 or later, according to a survey released Tuesday by Trulia.com and RealtyTrac.

Conducted Nov. 2-4, just before the midterm election, the survey of 2,034 adults also showed 49 percent are interested in buying a foreclosure home but 66 percent are worried about hidden costs.

The recovery has already taken place, 5 percent said, while 10 percent expect it to occur next year and 27 percent in 2012. The post-2012 recovery is predicted by 58 percent — 24 percent in 2013, 12 percent in 2014 and 22 percent in 2015 or later.

“More and more American homeowners, sellers and buyers are tamping down their expectations for a swift recovery in the housing market and bracing themselves for a long, slow climb back to a healthy real estate market,” said Pete Flint, cofounder and CEO of the Trulia.com realty website.

Mark Marquez, president of the San Diego Association of Realtors, agreed that the recovery may be two or three years away, but that San Diego might recover six months to a year sooner.

“San Diego has a history of being first in and first out,” Marquez said. “That being the case, I anticipate our economy probably recovers quicker than the national pace.”

Half of adults said they have less faith in mortgage lenders, banks and the government and another 35 percent believe the “robo-signing” issue will delay the housing market’s recovery. Some lenders recently acknowledged that they had not followed proper paperwork procedures in handling foreclosures and were halting foreclosure proceedings temporarily. The problem was not as pronounced in California.

The survey revealed that 48 percent of homeowners would consider walking away from their mortgage if it was higher than their home value, up from 41 percent in May. More men, 57 percent, than women, 40 percent, had that attitude.

If their mortgage becomes unaffordable, two-thirds said they would consider calling their lender to try and modify the loan. The next most popular action, held by 10 percent, would involve renting a room to a tenant to help cover the mortgage.

Rick Sharga, senior vice president of RealtyTrac which monitors the foreclosure market, said interest has grown in buying foreclosures since May, when the interest in buying foreclosures stood at 45 percent.

If they buy a foreclosure, two-thirds of respondents said they would expect to pay at least 30 percent less than a similar home that is not a foreclosure. Sharga said an average 32 percent discount on foreclosure properties has shown up in RealtyTrac findings.

“It seems like consumer expectations and market realities are beginning to align when it comes to foreclosure discounts,” Sharga said.

But the public also sees some downsides to buying foreclosures, the survey showed. Sixty-six percent worry about hidden costs, though that figure was two percentage points less than in May. The process is risky, 54 percent said, up from 49 percent in May, and 33 percent thought the home might lose value, about the same as 35 percent in May.

Marquez said in San Diego, hidden costs top foreclosure buyers’ concerns but that it is unlikely the value will drop or that the buying process will be riskier than any real estate transaction.

The survey results were not broken down by individual market areas.

Roger Showley, (619) 293-1286, roger.showley@uniontrib.com, Twitter: @rmshowley

Can’t sell your home for a decent price? You’re not alone.

American homes are expected to be worth $1.7 trillion less in 2010 than they were worth last year, according to a report released Thursday by real estate website Zillow.

This year’s drop in home values is 63% bigger than the $1 trillion dip in 2009, and brings the total value lost since the housing market’s peak in 2006 to a whopping $9 trillion.

While the homebuyer tax credit helped prop up the housing market in the second half of 2009 and the first half of 2010, home values continued their slide in the second half of the year. Almost $700 billion in value was lost in the first half of the year, compared to Zillow’s estimates of $1 trillion in the second half of 2010.

“It’s a testament to the nearly irresistible force of the overall market correction that government incentives can only temporarily hold back the tide, and that the market will ultimately find its natural equilibrium of supply and demand,” said Zillow Chief Economist Dr. Stan Humphries.

And it may not get much better.

“Unfortunately, with foreclosures near an all-time high in late 2010 and high rates of negative equity persisting, it does not appear that the first part of 2011 will bring much relief,” Humphries said.

Only 24% of the 129 markets Zillow tracked increased in total home value this year. Home values increased $10.8 billion in the Boston metropolitan statistical area (MSA), and $10.2 billion in San Diego MSA.

The areas suffering the biggest drops in home prices include New York City, which lost $103.7 billion in value and Los Angeles, where home values fell $38.6 billion.

The steep declines in home values are pushing Americans further under water every year. In the third quarter of 2010, 23.2% of single family homeowners with mortgages owed more on their mortgage than their home was worth — up from 21.8% in 2009. source: money.com

The average American has saved less than 7 percent of his desired retirement nest egg and will likely have to keep working in retirement to supplement his income.

Middle-class Americans think they need $300,000 to fund their retirement, but on average have only saved $20,000, according to a survey released on Wednesday by Wells Fargo [WFC  28.54    0.07  (+0.25%)   ] .

“Middle class” is defined as those aged 30 to 69 with $40,000 to $100,000 in household income or $25,000 to $100,000 in investable assets and those aged 25 to 29 with income or investable assets of $25,000 to $100,000.

“Too many Americans have their heads in the sand in the face of obvious savings deficits,” said Laurie Nordquist, director of Wells Fargo Institutional Retirement Trust. “Barring a miracle, a winning lottery ticket or a big inheritance, they’re going to be forced to dramatically cut back their lifestyles after retirement.”

Even those fast approaching retirement age are not well-funded.

Respondents aged 50 to 59 have saved an average of only $29,000 for retirement.

Consequently, more than a third of respondents believe they will have to work during retirement in order to afford the things they want or just to make ends meet.

Many are also still relying on Social Security to fill the gap, though confidence in this funding varies considerably by age.

Seventy-seven percent of respondents aged 50 to 59 believe that Social Security will contribute to their retirement income, while only 22 percent of 30-somethings thought there would be enough left in the pot to fund their retirement.

The vast majority of respondents admitted they need help figuring out how much money they need to live on in retirement and picking investments for their 401(k)s.

But in a negative twist for financial advisers, more than two-thirds said they were not willing to pay for this advice.

This puts more responsibility on employers to offer advice and planning tools through their workplace 401(k) plans, said Nordquist.

“If people aren’t willing to pay for advice they are going to get a more vanilla approach to planning,” she said. “But a simple plan is better than no plan.” souce: cnbc.com

NEW YORK (AP) — Millions of foreclosures and weak demand from buyers are forcing home prices down in most major U.S. cities.

Prices are falling even in places like San Francisco and San Diego, which had posted strong increases just a few months ago. Analysts say many markets won’t improve until they see fewer foreclosures and more job gains.

“Unemployment is still high, people are afraid of losing their homes and credit is hard to get,” said Maureen Maitland, vice president of Standard & Poor’s indices.

A report Tuesday underscored the weakness. Home prices declined in 18 of the 20 cities, according to the S&P/Case-Shiller 20-city index. Prices fell 0.7 percent in September from August, marking the second straight monthly drop.

A separate report Tuesday showed Americans are gaining more confidence in the broader economy. The Conference Board, a private research group based in New York, said consumer confidence rose to a five-month high in November.

Still, the housing market remains depressed.

The biggest weight on prices going forward is foreclosures, which sell at steep discounts and lower nearby property values. About 2 million loans are in foreclosure, and another 2.4 million borrowers have missed at least 90 days of mortgage payments, according to LPS Applied Analytics.

Foreclosed properties and other distressed sales are dominating the Tampa, Fla., market, said Stephanie LeFew, owner of Tampa Home Buy Realty. The number of homes there that received a foreclosure notice rose 7 percent in the July-September quarter from the previous quarter, according to foreclosure tracker RealtyTrac Inc.

“Buyers are getting discounts of 50 percent and more,” LeFew said.

Prices there hit their lowest point since 2003, dropping 0.8 percent in September from August, according to the Case-Shiller index. The median price in Tampa was $115,700 in the third quarter, according to Internet real estate service Zillow.

Miami and Phoenix are also being greatly affected by foreclosures. One in every 41 Miami households received a foreclosure filing in the July-September quarter. Home prices there declined 1.2 percent from August to September.

In Phoenix, the foreclosure rate was one in 44 in the July-September quarter; home prices fell 1.5 percent from August to September.

Las Vegas has the nation’s worst foreclosure rate. One in every 25 households received a foreclosure filing in the July-September quarter.

Still, the city is beginning to show signs of stabilizing. For the second consecutive month, home prices ticked up 0.1 percent, according to the Case-Shiller report. Buyers are taking advantage of prices that are now more than 50 percent below their peak from four years ago.

“We’re seeing retirees from California and New York especially, buying homes with cash,” said Steve Harless of Realty One Group.

Washington was the only other city to post an increase month over month in the Case-Shiller index. The nation’s capital has had fewer foreclosures and one of the best economies. The metro area added 56,100 jobs in September from a year earlier, the largest gain in the nation.

The outlook for California’s cities is more mixed. Three California cities in the Case-Shiller index — Los Angeles, San Diego and San Francisco — have seen home prices rebound sharply in the last year.

Yet, prices have softened in the last two months in those cities. Demand has weakened since federal home-buying tax credits expired in the spring. The Case-Shiller index is a moving, three-month average. The September figures are comprised of prices in July, August and September, so it would be the first month to show the full impact of the end of the tax credits.

“It doesn’t surprise me. The market around here in the spring was quite strong. You could almost call it hot. Now I actually have noticed there’s definitely a slowdown going on right now in real time,” Darin DeRenzis, a partner with L.A.-based Peninsula Sotheby’s International Realty.

The absence of the tax credit is having an impact on lower-priced markets too, where it was a bigger financial help, said Zach Pandl, an analyst at Nomura Securities.

Cleveland and Minneapolis recorded the largest monthly declines in Se

Big banks are having trouble restarting the foreclosure process after this fall’s “robo-signing” scandal, and the once booming market for foreclosed homes has been hit hard as a result.

According to ForeclosureRadar, the number of properties coming to auction in hard-hit western states — Arizona, California and Nevada — has dropped more than 30%.

In San Diego, according to broker Scott Cheng of Cheng Realty, who puts investors together with foreclosed properties, the number of auctions scheduled has fallen from 500 a day, to 300. “That part of my business has dried up,” Cheng said. “A lot of my investors have stopped looking.”

Cheng used to be able to find about three or four suitable homes a month for investors looking for a bargain. Now, he hasn’t done one of these deals since August.

“The ones who are really upset are the investors, who buy on the courthouse steps,” said Kevin Berman, a broker with Bankers Realty Services in Fort Lauderdale, Fla. “There used to be sometimes 700 sales a day. Now there are like, seven.”

In September, several banks — including Ally, Bank of America, and JPMorgan Chase — acknowledged problems with their foreclosure procedures. Employees had been signing as many as several hundred documents a day in which they sometimes attested to facts that they had no personal knowledge of, calling into question the legitimacy of the foreclosures. (See “I was a Robo-signer“)

The banks initiated foreclosure moratoriums, promised a full review of all cases, and to resume foreclosures quickly. But the review process has been slow-going.

Investors had been doing brisk business, buying distressed properties on the cheap, sprucing them up and flipping them. But now they are being far more cautious.

“Their concern is that homeowners will be more aggressive in fighting foreclosures even after the auction sale,” said Sean O’Toole, CEO of ForeclosureRadar.

For vulture investors, speed is essential — they do not want to tie up investments for months while attorneys argue.

They are also worried about being able to unload the property. Berman represented one investor who had purchased at auction, fixed the home up and went to contract with a buyer, who then backed out of the $240,000 deal. “His attorney told him he could find out the foreclosure wasn’t done right,” said Berman.

Pressure on the market for distressed properties could last if delinquent borrowers are less likely to give up on their homes, according to Duane LeGate, CEO of Georgia-based House Buyer Network.

Troubled borrowers go to LeGate for help selling their homes in short sales, in which they sell for less than the price of their mortgage. LeGate says his business dropped more than 30% the week after news of the robo-signing scandal broke, and has stayed down since. His theory: homeowners think the bank will have a tough time kicking them out in this environment, and that they can live for free for a while. He says he’s got two friends who intend to do just that.

“After that, they’ll just take their medicine,” said LeGate. In the meantime, they can pay off other debts and build up nest-eggs.

O’Toole believes the legal issues involved in robo-signing will ultimately be settled in favor of the banks.

“The fear that has been created in based more in hype than in law,” he said.

Whether the hype is to blame or not, the last thing the weak housing market needed was to shake the confidence of already nervous consumers.