Foreclosures are at an all-time high in America. Experts predict nearly 1.4 million homeowners will face foreclosure in 2008 and residents of Florida, California and Texas will take the hardest hit.

In 2007, Arizona foreclosures rose nearly 40-percent and Colorado reported one of every 345 households either filed foreclosure or were on the brink of filing. Currently, the only states immune from escalating foreclosure rates are Vermont, Maine and the District of Columbia. However, experts predict these states will experience an explosion of filings when adjustable-rate mortgages begin escalating later this year.

How did the housing crisis in America occur and why was it allowed to happen? Americans have always strived to reach the American Dream of homeownership. When zero-down, interest-optional balloon payment loans were offered, people were attracted to them like flies to honey. Millions of unsuspecting people were suckered into sub-prime loans and invested in houses way beyond their means.

As adjustable rates increased, mortgage payments doubled or even tripled. Individuals struggling to make their ,000 note payment were now looking at ,000 to ,000 monthly payments. The sad reality is they simply did not possess the financial means to pay their note. When the bubble burst, their dream quickly became a nightmare.

Foreclosures not only have a devastating effect on the homeowner, but the lending institutions and local community as well. Individuals who reside in communities with high foreclosure rates are forced to pay higher property taxes, local taxes and increased fees for utilities.

Additionally, the potential for crime increases. Vacant homes are a magnet for unscrupulous characters. Vandals destroy property, oftentimes breaking windows and doors or leaving graffiti on both interior and exterior walls. Criminals engage in illegal activities including the sale of illegal drugs or weapons.

Real estate experts claim each individual foreclosure costs lending institutions approximately ,000, while preventing foreclosure costs less than 00. If this is true, why are foreclosures skyrocketing?

The primary factor stems from the fact that many people facing foreclosure become paralyzed with fear. They avoid contacting their lender and instead wait for the sheriff to arrive with their eviction notice.

There are steps homeowners can take to stop the foreclosure process. First and foremost, individuals in financial distress should contact their lender. Foreclosures are usually handled by the lender’s Loss Mitigation Department. Additionally, the U.S. Department of Housing and Urban Development (HUD) offers free credit counseling through approved agencies and can assist homeowners negotiate with their lender.

Analysts claim America’s housing crisis will eventually make a turn for the better. However, they predict it will take three to five years to recover from the onslaught of foreclosures.

On the bright side, there has never been a better time for real estate investors. With an abundance of distressed properties being offered for pennies on the dollar, now is the time to buy. However, not every foreclosure property is a great deal and due diligence must be conducted before riding the foreclosure wave.

One of the best ways to invest in foreclosures is to seek out private real estate investors who purchase bank portfolios of real estate owned property. Investors are able to purchase properties in bulk and pass their savings along to interested parties. It’s not uncommon to purchase bank foreclosures from private investors with instant equity of 20-percent or more.

Although the real estate market currently looks bleak, there is hope on the horizon. If you are currently facing foreclosure take the first step and contact your lender immediately. If they are unable or unwilling to work with you, contact HUD. While the foreclosure process can be overwhelming, it can be overcome with persistence and patience.