We all know, foreclosure is bad. Your credit score can drop by as many as 300 points and will prevent you from buying another home for several years. Homeowners face deficiency judgements. Property values in the surrounding neighborhood are negatively impacted. Vacant bank-owned properties invite crime and vandalism.

However, until this recent directive by the US Treasury Department, avoiding foreclosure has been difficult. The loan modification and refinance programs (HAMP) have had some impact but many homeowners don’t qualify. And if the homeowners get their bank to agree to do a short sale, the process can take months longer than a traditional sale and is much more complicated, so much so that homes can still end up in foreclosure.

HAFA also seeks to streamline the short sale process by setting up standards (imagine that!) to make short sales occur more quickly, which increases the marketability of short sales.

There are eligibility requirements:

Homeowners need to first go through the HAMP program to apply for a loan modification.

Home is a principle residence.

Mortgage originated prior to Jan. 2009.

Mortgage is owned or guaranteed by Freddie Mac or Fannie Mae.

Borrower is delinquent or will be in the foreseeable future.

Homeowner has a hardship.

Borrower’s total monthly housing payment exceeds 31 percent of gross income.

Unpaid principal does not exceed $729,750.

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You Know You Live in West Hartford When…

A police officer in a Volvo may pull you over.

It’s not uncommon to see someone at the grocery store/shoveling snow/walking their dog in a full length fur coat.

There is a long line to check out books at the library. And the library is open on Sunday.

On a sunny day, you may get run over on your sidewalk by other people running/biking/dog walking.

From promoting a school play, political candidate, or opposing this thing or that, everyone has a cause.

You don’t have to actually ever leave town, other than to go to the hospital.

The downtown isn’t called the downtown. You call it the Center. And it’s hopping on a Friday night…not deserted.

Your dentist, Realtor, doctor, police officer, teacher, plumber all live in the same town - who needs to go anywhere else, right?

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Fairfield County saw the largest increase of nearly 30%.

Click here for my report of January’s real estate market.

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Get Ready for Higher Mortgage Rates- CNN

Marketwatch.com’s Steve Kerch predicted as much in October 2009, saying “Housing Could Take a Double Dip Down in 2010.” 

According to David Lowman, CEO of Chase Home Lending, ” if the Federal Reserve ends its purchases of mortgage-backed securities…we’re going to come to a pretty hard stop. We’re likely to see a much smaller mortgage market after the second quarter and later in 2010.”

Which is exactly what the Fed plans to do beginning March 31.

However, the Fed announced these plans last year and rates still haven’t gone up. Why?

CNBC’s Steve Liesman explains:

Anecdotally, I’ve heard from lenders that a lot of buyers have been antsy to lock in their loans now. Like farm animals before a tornando, maybe they feel it coming.

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Most likely you have it posted on the refrigerator, stacked in a pile or stuffed into a bin.  Not an attractive or useful way to display your kid’s creativity - at least that’s how I was feeling after jamming my daughter’s drawings into a storage bin every week.

While at Ikea (where so many good ideas are born), I came across the RIBBA frames in white. I thought, “I have wall space. I have kid art. And I have a hammer.” Here’s the end result - my kid art wall.

I could have fit another row of frames but I plan to put a low dresser on that wall.

It’s not the most economical way of handling my daughter’s artwork ($14.99/frame) but it accomplished a few things for me:

- I decorated my daughter’s room with original works of art that are very personal.

- I am now able to throw out my less favorite (or odd-shaped) items without guilt.

- The wall can grow with my daughter - as she ages and draws new things, we can easily change out the artwork.

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Buyers will like that prices have dropped. Inventory is up. Homes are taking longer to sell. Buyers have many more choices.

Sellers will not like that prices have dropped. Inventory is up. Homes are taking longer to sell. Buyers have many more choices.

The median sales price in January 2010 dropped from $219,750 in 2009 to $207,000. More homes are selling but they’re typically selling for less.

Going forward, there are nearly 3,000 homes actively on the market - and only 301 closed in January.  There are almost 1,000 pending sales but a good percentage of those will not close. There is nine months of inventory on the market - a strong buyer’s market.

There’s always a backlog of homes on the market at this time of year so we will work through some of this inventory come Spring.

My overall feeling is that prices will continue to fall. Slowly but surely. I don’t know how much more but I don’t think we’ve reached the bottom.

Does that mean I would wait to buy? Not exactly. Prices are better than they’ve been in years and interest rates are low. If you’re living in Mom’s basement rent-free and putting away money every month for a down payment, then waiting may make sense for you.

But if you’re renting, have decent credit, can qualify for the tax credit, and can stay in your home for a few years, buying may actually be worth it - even if you home declines in value in the next year.

It also makes sense if you are handy. There are so many homes available now that need work - more than I’ve seen in the five years I’ve been in business. If you can make upgrades  - like fixing up bathrooms, kitchens, and easily adding square footage (such as finishing off the attic in this cape below) - you will insulate yourself against price declines.

Details for this listing: 336 Oak Street, New Britain, CT - $129,999

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“Low rates and compelling opportunities to refinance into shorter term loans have arrived at the same time as large consumer demand…With some exceptions, a 1/2-point to a 1-point drop in rate will generally make refinancing worthwhile…”

Refinancing from a 30-year mortgage to a 15-year mortgage is a smart idea if you have plans on staying in your home longer and can afford a higher payment.

“The current difference between fixed 15-year and 30-year interest rates is significant, making refinancing into a shorter-term loan a compelling opportunity. This can save hundreds of thousands of dollars over the life of a loan and shorten the time to payoff with sometimes only a slight increase in monthly payment.”

The article also suggests refinancing into an FHA mortgage to pay for home efficiency projects - another good idea if you need to make some improvements but don’t have the cash. Generally, I don’t like the idea of refinancing your home to buy something else.  But since these improvements are likely to add value to your home, it’s not the same as refinancing to buy a car or go on vacation - never a good idea.

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I don’t get it. I get banking at the grocery store.  I get renting a movie. I get the need for a pharmacy.

But real estate transactions don’t really qualify as a “quick stop.”

And I can’t imagine that the RE/MAX brand, which is built largely upon the experience and expertise of its seasoned agents, will benefit from this. I have trouble imagining top agents doing business in this environment. I also have trouble imagining that a lot of potential buyers and sellers will be drawn in if there isn’t that quick transaction (check cashing, ATM,etc) to attract them.

What I really think this about is RE/MAX opening more offices and getting more agents. More offices and agents=more fees to RE/MAX. Not a bad thing but if “more” lowers the quality of agent and level of service, then I think RE/MAX is compromising the very thing that attracts many agents and customers to its brand.

But I hope I’m wrong…maybe you’ll see me next year at your neighborhood Stop & Shop. Always the optimist, at least I won’t have to go far to get a cup of coffee or deposit my commission checks.

Read The Real Estate Bloggers post, I’ll Take Some Eggs, A Gallon of Milk and a 3 Bedroom Ranch.

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It took me 3 years to find this house (looking regularly).

It took 4 months to close after we had an accepted contract and after the deal almost fell apart multiple times.

One week after we owned the house, we had a major plumbing issue in the house. Of the backed-up toilet variety.

It’s taken 3 months to renovate it enough so we can move in. In fact, we don’t officially move for another two weeks. I’m literally surrounded by boxes.

I know how stressful and all-consuming buying or selling a home can be. I haven’t written a blog post in three months…just no time.

I know you have doubts about the decisions you’ve made. I know that sometimes you don’t trust everyone involved in the sale/purchase. I know you’re feeling a lot of pressure to be in the new home by a certain date or that you need to be out by a certain date. I know how stressful it is to have people walking through your house day after day and no one seems interested in making an offer.

We’re not done working on our new house yet. Maybe we’ll never be done.

For now, I’m getting back into blogging and hope to share some things I learned along the way.

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