You'll laugh. You'll cry. You'll identify.

If you're not reading the Love in the Time of Foreclosure blog, you're missing out on some great writing.

At  the very least every real estate agent/broker ought to be reading this.

But I'd argue that it deserves a larger audience. I hope they're reading it at the White House.

A smarter agent/blogger would no doubt have waited to write this blog. Emotions are still pretty raw.

I learned today that a house I have listed for sale in Fauquier has gone into foreclosure.

We've had this listed as a short sale for at least seven months. For slightly less than six months we've had an offer on the table, an offer very close to what the bank's own BPO came in at. We've been unable, despite daily phone calls, to get the bank to move forward with that offer.

In the interim, as the house has sat empty, it's been repeatedly vandalized. The first incident resulted in the theft of both heat pumps. The most recent theft involved copper plumbing and the water heater.

And, over these six months, property values have continued to decline.

The bank is now sitting on a property worth substantially less than the offer they had in their hands.

The owners will have a foreclosure on their credit record rather than the short sale that would have been less damaging.

The potential buyers have wasted all these months and so many hopes and dreams on a house they won't be buying any time soon.

I'm out many months of work for no compensation at all.

And, it didn't have to work this way.

This is the first short sale that I haven't been able to get to settlement. I'll admit to being angry as well as sad.

Would I take another short sale where this same bank held the note? Absolutely not! Will I be warning other agents about dealing with this particular bank? Of course!

If there are days I seem less than sympathetic to the losses being suffered by many financial institutions, here's a good reason why.

I was supposed to have a settlement yesterday. My clients are buying a foreclosure. (The one that we've been working on for months and months and months!)

I know it will come as no surprise to many of you that the settlement didn't happen.

Why, you ask......?

The original estimated settlement statement (HUD1) differed from the final numbers by.....TEN CENTS.

Ordinarily, the change would be made and we'd have approval from all parties for the change in a matter of minutes and would proceed with settlement.

But, this ten cent change had to go back up the chain of command on the bank's side. And, so, we're still waiting. Since this was Friday and no bank is going to give us final approval over the weekend settlement won't happen before Monday.

Except that this week, Monday is a holiday. So, now we're looking at Tuesday at the earliest.

So, how much do you think it cost the bank, to approve this ten cent change? How much in lost time (wages) for the employees who worked on this? How much did it cost them to have this money in my clients' pockets and not theirs for these extra few days?

This is the culmination of months of negotiations as the bank continued to get lower offers from my clients after they rejected higher ones. And, in one case, lowered the price while we had a higher offer on the table!

There are very well managed financial institutions in this country. This isn't one of them.

With more and more families locally going through foreclosures or short sales, the question is going to become, when can they get another mortgage?

Well, we finally have some guidelines from Fannie Mae, Freddie Mac, FHA and VA. Courtesy of Beth Goodwin at First County Mortgage, here's what they look like:

You can also reach Beth on her e-mail at beth.goodwin@firstcountymortgage.com

Given that the bulk of sales in our area are either short sales or foreclosures, home warranties are becoming increasingly important.

Most short sales and foreclosures are sold "as is" meaning that the owner is not willing to repair any defects in the property. So, if the refrigerator doesn't work, too bad.

These are the properties buyers are snapping up and they're getting excellent deals. But it's a higher risk transaction and home warranties are one way to take away a little bit of that risk.

There are a couple of things to keep in mind if the seller is buying the home warranty, an increasingly common occurrence in this market.

Home warranties typically have basic coverage with options available for additional coverage. The additional coverage can cover things such as the roof, well and septic, swimming pools, etc. Depending on the property you're buying, it may make sense to consider purchasing the additional coverage yourself.

If the seller buys the basic coverage, most companies will allow the buyer 30 days to add additional coverage. Note that this is not meant to allow you to find problems and then buy insurance retroactively to cover them! So, the best way to do this is really at the settlement table.

When you're buying foreclosures or short sales, you should really have a home inspection before making an offer. But if you don't, a home warranty can be a very good investment!

For more information, check out my previous blog post on this subject.

Since foreclosures are such a big part of the market right now, I'm going to do a few posts on some of the issues that are likely to arise if you're buying a foreclosure.

Today I'm going to talk about settlement companies.

Once the bank has given you a verbal agreement that they've accepted your offer, you'll get an addendum (or, more likely, multiple!) One of the clauses you're going to see in that addendum concerns your choice of settlement agent.

The bank is going to want you to use their settlement attorney and there are several ways they may try to make this happen.

One is to incentivize you. The addendum will basically offer you some discount or deal if you use their settlement company. The most common one here is free title insurance. The problem with these incentives is that (as with new construction) you will very rarely actually save any money. Reports are now coming in about the padded fees for these settlement companies in order to make up for giving away the title insurance. In short, you'll be lucky if you save $50 and may actually end up paying more.

The other way a bank can try to get you to use their settlement agent is to simply say in the addendum that you, the buyer, are obligated to do so.

Let's make it clear right now, that you are not obligated and nothing a bank says in an addendum can make you obligated. A buyer in Virginia always has the right to choose their own settlement agent. And, a bank's attempt to get you to use their settlement agent without disclosing the financial relationship between them is a violation of Federal RESPA laws.

The problem becomes that many buyers desperately want the house and are afraid if they don't agree with the addendum without any changes their offer will still be rejected. I understand wanting the house. But it's my job as your agent to also make sure you're protected.

So, go ahead and sign the addendum and get the whole thing ratified. Then your real estate agent should write a notice, informing the seller (in this case, the bank) that you'll be using "X" settlement company instead.

Any clause in any contract forcing you to use their settlement agent is not enforceable. And, in all honesty, once they have a ratified contract in hand and the money is in sight, they're unlikely to balk.

By the way, the other reason you may not want to use the settlement company recommended by the bank is that the process is already slow enough! Since there are very few settlement companies working with these banks, most of them are completely overwhelmed. Good luck getting a settlement done in a timely fashion!

And, last, but not least, the settlement company is going to be doing the title search and make sure you really do own your house when you actually close. You want that done as thoroughly as possible by someone who cares about protecting your ownership interests. The bank's settlement agent would seem to have someone else's best interests at heart!

It's time to tell another story about a specific local house!

This house is located in Amissville in Culpeper county on a quiet country road. As with many local properties, it was once part of a larger farm. And, in fact, one of the things I love about this house is the old farmhouse that is at its core.

It's been nicely renovated in ways that allow you to still see the original and it's special character. The second floor is all hardwood floors, a very rare thing these days, but fairly common in 1940 when this house was originally built. It sits on just under 2 acres with some nice fencing.

There are 4 bedrooms and 2 full baths. The kitchen is modern and large with lots of light. It's got that great front porch and some beautiful mature trees. In short, there's lots to love about this house.

For horse people, there's adjoining pasture that rents pretty cheaply. ($200/mo.)

The house sold in December, 2004 for $314,000 with a $9000 subsidy to the buyers to help with closing costs. It was on the market for 127 days before selling. In 2004, that was actually a long time. And, at that point in time the $9000 help for the buyers was also unusual.

It next sold in May of 2007. This time it was on the market for 292 days before being sold for $360,000.

It's back up for sale now. It's been for sale for 86 days. It was originally listed at $349,900 and is currently listed at $299,900. It's a short sale this time around, meaning that the owners owe more to the bank than the home will sell for. The possibility of foreclosure looms if the property does not sell.

If the home sells for full price (unlikely in this market) it will be 17% off the highest sales price. That's a little less than the price declines we've seen overall in Culpeper County.

I believe, overall, this home is a pretty good value in this market. Part of why it's lingering at this price is the fact that it's a short sale. Real estate agents are reluctant to show short sale properties. There are a number of reasons for this, including a lengthy/complex process that frustrates their clients and usually produces a smaller paycheck for them.

It may also be sitting because of the new home that's being built nearby. While there's enough distance between them that it's not intrusive if you're a city person; people moving out here often want no sign that neighbors even exist!

Still, for someone with horses and not a big house hunting budget, I think this has a lot of appeal.

Surrounding sellers will no doubt be unhappy with the low price on this. If this sells for under $300K, and it ultimately will, many surrounding properties are clearly overpriced. Or, at least, that's what potential buyers and appraisers are likely to think!

There have always been homeowners who, for whatever reason, one day have trouble making their mortgage payments. Circumstances change, people lose jobs, medical bills overwhelm or any number of bad things happen. It can happen to the best of us. It's beginning to happen more often in many parts of the country as some of the adjustable rate mortgages suddenly require much larger mortgage payments. And, some buyers who were encouraged to stretch more than they should have to buy a home, will now find themselves in trouble.

If you know you've got a problem, the first thing to do is not panic.  It's so easy to say, so hard to do! Don't panic, but also don't avoid the situation. It's important to intervene early in order to have the best chance of a good outcome for you and your family. Approach your lender immediately when you know you've got an issue. Many of them want to work with you to find a way for you to keep your home if at all possible.  Remember that it's expensive for them to take your home and resell it. And, in this buyer's market it's definitely not easy money for them! Often lenders will try to help you restructure your mortgage. That may mean adding a little to future payments to make up for missed payments. It may even mean they forgive some debt. Your situation and your lender's policy will be unique. But rest assured that there are other options than walking away or declaring bankruptcy.

There are foreclosure counseling services out there, but you should be very careful. Many of them are simply looking to prey on people who already are feeling desperate. HUD (Housing & Urban Development) a federal government department has certified certain homeowner counseling agencies. You can be sure that these agencies are not looking to take advantage of your situation. You can find a list of these agencies on HUD's web site at: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

And, if I can ever be of assistance, please don't hesitate to call! There have always been people available to help me when things looked dark. I'm happy to pass that along when I can!