CLEVELAND (AP) — The nation’s foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses, and some street people are taking advantage of the opportunity by becoming squatters.

Foreclosed homes often have an advantage over boarded-up and dilapidated houses abandoned because of rundown conditions: Sometimes the heat, lights and water are still working.

“That’s what you call convenient,” said James Bertan, 41, an ex-convict and self-described “bando,” or someone who lives in abandoned houses.

While no one keeps numbers of below-the-radar homeless finding shelter in properties left vacant by foreclosure, homeless advocates agree the locations — even with utilities cut off — would be inviting to some. There are risks for squatters, including fires from using candles and confrontations with drug dealers, prostitutes, copper thieves or police.

“Many homeless people see the foreclosure crisis as an opportunity to find low-cost housing (FREE!) with some privacy,” Brian Davis, director of the Northeast Ohio Coalition for the Homeless, said in the summary of the latest census of homeless sleeping outside in downtown Cleveland.

The census had dropped from 40 to 17 people. Davis, a board member of the National Coalition for the Homeless, cited factors including the availability of shelter in foreclosed homes, aggressive sidewalk and street cleaning and the relocation of a homeless feeding site. He said there are an average 4,000 homeless in Cleveland on any given night. There are an estimated 15,000 single-family homes vacant due to foreclosure in Cleveland and suburban Cuyahoga County.

In Texas, Larry James, president and chief executive officer of Central Dallas Ministries, said he wasn’t surprised that homeless might be taking advantage of vacant homes in residential neighborhoods beyond the reach of his downtown agency.

“There are some campgrounds and creek beds and such where people would be tempted to walk across the street or climb out of the creek bed and sneak into a vacant house,” he said.

Bertan, who doesn’t like shelters because of the rules, said he has been homeless or in prison for drugs and other charges for the past nine years. He has noticed the increased availability of boarded-up homes amid the foreclosure crisis.

He said a “fresh building” — recently foreclosed — offered the best prospects to squatters.

“You can be pretty comfortable for a little bit until it gets burned out,” he said as he made the rounds of the annual “stand down” where homeless in Cleveland were offered medical checkups, haircuts, a hot meal and self-help information.

Shelia Wilson, 50, who was homeless for years because of drug abuse problems, also has lived in abandoned homes, and for the same reason as Bertan: She kept getting thrown out of shelters for violating rules. “Every place, I’ve been kicked out of because of drugs,” she said.

Michael Stoops, acting executive director of the National Coalition for the Homeless, hasn’t seen evidence of increased homeless moving into foreclosed homes but isn’t surprised. He said anecdotal evidence — candles burning in boarded-up homes, a squatter killed by a fire set to keep warm — shows the determination of the homeless to find shelter.

Davis said Cleveland’s high foreclosure rate and the proximity of downtown shelters to residential neighborhoods has given the city a lead role in the homeless/foreclosure phenomenon.

Many cities roust homeless from vacant homes, which more typically will be used by drug dealers or prostitutes than a homeless person looking for a place to sleep, Stoops said.

Police across the country must deal with squatters and vandalism involving vacant homes:

_ In suburban Shaker Heights, which has $1 million homes on wide boulevards, poorer neighborhoods with foreclosed homes get extra police attention.

_ East of San Francisco, a man was arrested in November on a code violation while living without water service in a vacant home in Manteca, Calif., which has been hit hard by the foreclosure crisis.

_ In Cape Coral, Fla., a man arrested in September in a foreclosed home said he had been living there since helping a friend move out weeks earlier.

Bertan and Wilson agreed that squatting in a foreclosed home can be dangerous because the locations can attract drug dealers, prostitutes and, eventually, police.

William Reed, 64, a homeless man who walks with a cane, thumbed through a shoulder bag holding a blue-bound Bible, notebooks with his pencil drawings and a plastic-wrapped piece of bread as he sat on a retainer wall in the cold outside St. John Cathedral in downtown Cleveland. He’s gone inside empty homes but thinks it’s too risky to spend the night.

Even the inviting idea of countless foreclosed empty homes didn’t overcome the possible risk of entering a crack house.

“Their brains could be burned up,” said Reed, who didn’t want to detail where he sleeps at night.

Sometimes it’s hard to track where the homeless go.

In Philadelphia, the risk is too great to send case workers into vacant homes to check for homeless needing help, said Ed Speedling, community liaison with Project H.O.M.E. “We’re very, very wary of going inside. There’s danger. I mean, if the floor caves in. There’s potential danger: Sometimes they are still owned by someone,” Speedling said.

William Walker, 57, who was homeless for seven years and now counsels drifters at a sprawling warehouse-turned-shelter overlooking Lake Erie, has seen people living in foreclosed homes in his blue-collar neighborhood in Cleveland. He estimated that three or four boarded-up homes in his neighborhood have homeless living there from time to time.

Sometimes homeless men living in tents in a nearby woods disappear from their makeshift homes, Walker said. “The guys who were there last year are not there now. Are they in the (foreclosed) homes? I don’t know. They are just not in their places,” Walker said.

NEW YORK -California community groups called on Wednesday for a moratorium on mortgage foreclosures by Countrywide Financial Corp (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender.

In a letter addressed to Bank of America Corp (BAC.N: Quote, Profile, Research), which has agreed to acquire Countrywide, the groups said California is in the midst of a mortgage foreclosure crisis, with half a million homeowners on the verge of losing their homes.

“Countrywide’s bad lending practices are ruining the dreams of thousands of Californians — Countrywide borrowers and employees alike — and Bank of America has the opportunity to rebuild them,” said the letter, signed by 91 community groups and addressed to Bank of America CEO Kenneth Lewis .

Countrywide said last week that foreclosures and late payments rose in January to record highs, reflecting the nation’s deepening housing and credit crunch.

It said the foreclosure rate on the 9.02 million mortgages on which it collects and processes payments rose to 1.48 percent, up from 0.77 percent a year earlier and 1.44 percent in December.

There are risks involved in buying them, but such properties can often be bargains

It’s harsh but true: You can benefit from others’ misfortune. The rise in foreclosures means that those in the market to buy a home can find great deals on houses that have been reclaimed by lenders. They are often sold for prices well under their market value because their owners are eager to unload them. The cheap prices do come with potential downsides: Some homes have liens against them or mortgages associated with them, which can be inherited by their new owners. It can also be hard or impossible to inspect such homes in advance of their sale, which means there’s no time to check if the basement is flooded or if the air conditioning still works.

1) Search bank websites. Banks often list their foreclosed properties for sale online. At Bank of America, for example, about 800 residential listings are posted, including 156 in California. Prices, photos, and home descriptions are listed along with agents’ contact information. Willie Williams, a real estate agent in Inkster, Mich., says that it’s a useful resource but warns that listings are often limited. He recommends also checking the online listings of Fannie Mae and Freddie Mac, which purchase mortgages from banks.

2) Look up government-owned listings. The Department of Housing and Urban Development lists the foreclosed homes that it owns on its website as well as through local real estate agents. Once you find a home you’re interested in, you can make an offer through the agent representing the property. The department warns that the homes are sold “as is” and that after the sale is made, it is not responsible for any repairs or problems.

3) Visit your county‘s offices. Foreclosure information is filed with county offices, some of which post it online. In Boulder County, Colo., for example, current foreclosure listings, as well as weekly sales, are published on the county website, where users can search by ZIP code or street address. Sheryl Del Rosario, a deputy public trustee in the office, says interested buyers can search from home or come into the office to use the public computers. They can then bid on available properties every Wednesday morning.

4) Pay for a foreclosure-listing service. Some companies, such as RealtyTrac, offer comprehensive foreclosure listings for a fee. At RealtyTrac, $49.95 a month gets users access to around a million listings that cover about 75 percent of the nation’s counties. They include homes already in foreclosure as well as those approaching it. (Website visitors can search a simplified version of the database free of charge.) Users can make offers online for many of the properties, which aren’t binding but get the process started, says spokesman Daren Blomquist. Users usually work with either the agent or owner listed in order to complete the purchase. The database also provides estimates of the property value based on comparable sales in the area, which Blomquist says helps buyers determine whether they are getting a good deal.

5) Work with a real estate agent. Real estate agents often know about local properties that are nearing foreclosure because they network with other agents and are familiar with the local market, frequently working directly with banks and other lenders. Donna Dickson, an agent with Burgdorff Realtors in Maplewood, N.J., says that while online listings often include properties that are already under contract with new owners, real estate agents can help buyers find deals before it’s too late. She suggests developing a relationship with an agent who will quickly let you know about new foreclosed properties.

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A consumer group has looked into California’s future and seen a home loan payment shock looming this year for tens of thousands of people who borrowed to buy or refinance homes two years ago using subprime mortgages.

A disproportionate number of these loans are held by black and Latino home buyers, the Consumer Federation of America reported Wednesday.

The non-profit group analyzed 2006 federal home loan data, which showed an increase from the previous year in the use of subprime mortgages. Additionally, the data indicates that many of these involved home purchases in which “piggyback” loans were used to pay for as much as 100 percent of a home’s price.

The “shock” could occur because many subprime loans started with low two-year rates that will reset this year to much higher levels. That will come as falling housing prices mean that many of these loans are bigger than the value of the home, the group said.

The combination could “potentially put more than a quarter million homeowners at risk of losing their homes to foreclosure,” the study’s author, Alan Fishbein, said in a statement. That’s because homeowners who cannot make the higher payments also will have trouble selling their homes at a high enough price to pay off their mortgage.

Some 316,769 California borrowers received subprime loans in 2006, the study said. The foundation said that in 2006, more than 90 percent of subprime mortgages in California were adjustable-rate mortgages and the “dominant type” of subprime loan was one that reset in two years.

In 2006 there were 12,672 foreclosures in California, according to DataQuick Information Systems. In 2007, there were 84,375, an increase of 565.8 percent.

Kevin Stein, associate director of the California Reinvestment Coalition, a consumer group that’s turned its attention to foreclosure-prevention issues over the past few years, said his organization has estimated that as many as 500,000 California homeowners could risk foreclosure in the next few years. The Consumer Federation’s calculation, he said, “seems reasonable, and it probably underestimates the number of people at risk of foreclosure.”

To some extent, lower interest rates could help some of these borrowers. Many adjustable mortgages are tied to the London Interbank Offered Rate, or LIBOR, which has been dropping recently along with the prime rate, noted Peter Ogilvie, president of the California Association of Mortgage Brokers.

He said that without looking at the study, “the general trends are accurately described but I’d like to confirm the numbers myself.”

Ogilvie said the subprime problem is particularly acute in the San Joaquin Valley, where people who were willing to make the long commute to Silicon Valley bought homes. “It’s going to be a real problem for them,” he said. “It’s showing already.”

According to the foundation’s study, a sixth of all California borrowers received subprime home purchase loans in 2006. A third of all those buying homes used piggyback mortgages, and these buyers were more than three times likely to receive subprime loans as borrowers without piggyback loans.

The highest incidence of these loans were in the San Joaquin Valley and the Mexican border region, the study found.

Latino borrowers were three times more likely to have received subprime loans than white borrowers, the study found. A fourth of Latino buyers and nearly a third of African-American buyers received such loans.

In the San Jose-Sunnyvale-Santa Clara area Latinos were four times more likely than white borrowers to receive subprime loans - 17.8 percent of Latino borrowers compared with 4.4 percent of white borrowers, the foundation reported.

LEE COUNTY: So just who are the casualties of this housing bust and what did they do to put themselves in a money pit? NBC2’s Patrick Flanary uncovered the common thread to losing a home.

SACRAMENTO (AP) — California’s state senate narrowly defeated a bill Wednesday that targeted the growing problem of foreclosed homes sitting vacant for months, drawing squatters and creating blight.

Lenders would have been fined $1,000 a day for not maintaining vacant properties, and they would have had to give four months’ notice before mortgage payment increases of 10 percent or more.

“The purpose of this bill is very simple: to keep people in their homes,” said the bill’s sponsor, Don Perata, a Democrat from Oakland and the Senate leader.

Republicans in the sharply divided Senate said during debate that the bill would unfairly burden banks and mortgage companies.

“This bill will make a bad situation much worse,” said Sen. Dave Cox, a Republican from the Sacramento suburb of Fair Oaks. He predicted the bill would scare lenders away from California.

California has the nation’s largest volume of foreclosures and a foreclosure rate among the top five.

“It’s not unheard of to see three to four houses going to seed in a neighborhood — which affects everybody else,” Perata said.

Sen. George Runner, a Republican from Lancaster in Southern California, said the Legislature should focus on homeowners who lied about their income to obtain larger loans and on unscrupulous lenders who enticed borrowers into loans they couldn’t afford.

The measure, which needed a two-thirds majority to pass because Perata submitted it as urgency legislation, failed with 26 votes in favor and 14 opposed.

Perata acknowledged that fraud, speculation and unrealistic financial planning were partly to blame for the state’s high foreclosure rate.

But he argued that homeowners affected by the ongoing subprime mortgage meltdown need more protection from balloon payments and constantly rising interest on adjustable-rate loans. The rates on about 300,000 loans are to reset in California this year, Perata said.

Sen. Mike Machado, a Democrat from Linden in the hard-hit Sacramento Valley, said he hopes to rework the bill to remove legal hurdles it created for banks. But — even with cooperation with the Assembly — the reintroduced bill would not likely land on Gov. Arnold Schwarzenegger’s desk before fall.

Parallel legislation introduced last week in the state Assembly would mandate that people who want to buy a home can actually afford the mortgage, property taxes and insurance.

A state law passed last year tightened rules governing California mortgage brokers and real estate agents to match federal lending guidelines.

Thieves have looted empty homes, stripping them of electrical appliances or valuable copper wiring and pipes that can be sold as scrap. In Sacramento last month, one household was robbed in the midst of moving out of a foreclosed property.

More than half of delinquent homeowners don’t know their lenders may offer ways to help them keep their homes, and 56 percent don’t know that free counseling exists to help them. That’s according to a survey released today by Freddie Mac and Roper Public Affairs and Media.

What to do when you’re in trouble:

1. Call your lender and see if they can work with you. For a partial contact list of loan servicers. DFI recommends filling out this worksheet of information before you call. Here are some of the questions you should ask:

How much time is the lender willing to give you to complete a work-out?
What are your obligations under the work-out package?
What are the specifics? Be sure to ask what is due and when.
Will a foreclosure sale of your property be put on hold while your lender looks at the possibility of a work-out package?

2. Get help from a non-profit housing counselor.