How Times Have Changed, Mostly

The "F" word seems to be popping up a lot these days. No, not that "F" word ... foreclosures. As in, "Oh my God, what was I thinking back in 2005? I can't afford this place!"

What you see below is the sort of thing that now finds its way onto the main page at Yahoo! and appears elsewhere regularly on the internet and in newspapers - times really have changed in just a couple years.

At least now, with the number of distressed homeowners rising rapidly, there is much more information available on how to avoid foreclosures. It used to be that the only time you'd see the "F" word was on those little signs by the side of the road.

You know the ones - the little 1' x 2' signs attached to sticks that are plunked into the ground near traffic lights and stop signs. They had a much different message just a couple of years ago.

The stories on Yahoo! reflect the changing mood about real estate in the U.S. and offer some good advice - much better than what you'd likely get by calling a phone number on the sign above.

Six Steps to Avoiding Foreclosure
If you're a homeowner and are having trouble paying your mortgage, this article could save your house and your family's finances.

As I write this, several million Americans are in jeopardy of losing their greatest investment to foreclosure within the next 18 months. But help is available, and there are ways to work with your lender to help keep your home.
...
1. Call your lender immediately.
2. Ask to speak to the "loss mitigation" department.
3. Be prepared to review your situation in detail with your lender.
4. Know the ways your lender can help you avoid foreclosure.
5. Know where to turn if you aren't getting the help you need from your lender.
6. Be aware of the foreclosure process -- and consequences.

The logic of lenders working out a repayment plan or otherwise bending over backwards to permit a homeowner to keep a house that they really can't afford escapes me at the moment.

Protecting Yourself from the Wrong Mortgage
Talk about being late to the game.

After the past few months of mortgage delinquency rates and home foreclosures creeping ominously upward, a lot of government attention is suddenly being focused on the "shocking" fact that many borrowers ended up with nontraditional mortgages they had little chance of affording once the alluring introductory periods expired.
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Given that we're now heading into the home-buying season, here's what I recommend that every homebuyer -- and anyone contemplating a mortgage refinance -- should consider before signing on the dotted line:

1. Focus on the "what if" factor.
2. Know your limits.
3. Lower your price target.
4. Read the ARM fine print.

Wow! Talk about lowering your expectations - lower your price target? You mean, don't buy the biggest house you can afford because you'll grow into it? This logic worked quite well for generations - up until about 2001 when interest rates were pushed to levels that hadn't been seen in, well, generations.

But, not everyone is aware of the growing number of foreclosures or the rapidly changing mortgage lending environment.

This story on the front page of today's LA Times indicates that in some ways, opinions about real estate really haven't changed. Only a few homeowners seem to have noticed the increasing number of reports on the increasing number of foreclosures that will put increasing pressure on home prices in many parts of the country.

Faith in home values persists
Americans are worried about the economy and believe that a recession is looming, but their faith in real estate remains fierce, according to a Los Angeles Times/Bloomberg poll.

Nearly a third of those polled predicted home values in their neighborhood would increase in the next six months. Only 16% anticipated a decrease. The rest said values would hold steady.

Call it foolish faith or bold optimism, the forecast is at odds with the downward trend of home prices.

The National Assn. of Realtors recently reported that prices fell 2.7% in the last three months of 2006. Many economists expect real estate to have a rough ride this year, partly because of rising mortgage loan defaults.

Scott Richard Wallace, a San Diego carpenter, doesn't share that view. "Housing is always a good investment," he said in an interview after the poll. "I don't see it ever losing."

People like Mr. Wallace are part of the reason why they say real estate prices are "sticky down". Foreclosures have a way of making prices less sticky.