Wednesday, December 30, 2009

Monday, December 28, 2009

HOUSING MARKET: Home Buyers Need a Good Credit Score Even if They Put 20% Down

Five years ago, if your application for a mortgage included a 20% down payment, your bank would have approved your loan by sundown and sponsored a parade in your honor. But in this new era of tight credit, having a big down payment no longer guarantees you’ll qualify for a mortgage. Starting this week, mortgage finance giant

Fannie Mae will require borrowers with a 20% down payment to have a credit score of at least 620. Previously, the cutoff was 580. Fannie Mae buys loans, providing an important source of financing for lenders. For that reason, its guidelines are considered the gold standard for mortgage loans. Most banks are expected to adopt the new standards, if they haven’t already.

“Credit scores have never mattered quite as much as they do now,” says Bob Walters, chief economist for Quicken Loans. In addition, Fannie Mae won’t approve loans for borrowers with a 20% down payment if more than 45% of their gross monthly income goes toward debt. Fannie Mae didn’t disclose the previous debt limit, but it was higher than 45%, says Fannie Mae spokesman Brian Faith.

The higher standards could frustrate buyers hoping to take advantage of low interest rates, depressed home prices and generous tax breaks that were recently extended until next spring. Even buyers who qualify for a mortgage may find that they’re ineligible for the best rates because lenders have tightened their standards across the board, says Gerri Detweiler, credit adviser for

If you’ve already found a home you’d like to buy, there’s not much you can do to raise your score before you apply for a loan. But if you’re just starting to tour open houses, there are steps you can take to improve your credit profile, including:

*Review your credit reports for errors. Go to and order your credit reports from the three main credit-reporting bureaus: Experian, TransUnion and Equifax. You’re entitled to a free credit report once a year from all three of the bureaus, but only if you go through this website.

Once you receive your credit reports, go through them and look for inaccurate information, such as accounts you never opened. All of the credit bureaus provide a process to dispute errors, says Craig Watts, spokesman for Fair Isaac, which created the widely used FICO score.

*Pay off credit cards and other debts. One of the factors used to calculate your credit score is your “credit utilization ratio,” which measures the amount of credit you have outstanding vs. your total available credit.

This ratio accounts for 30% of your score. Paying off balances will increase the amount of unused credit you have available, which will help your score.

But even if you’ve decided never to use credit cards again, don’t close your accounts. Closing a credit card account won’t help your credit score and could hurt it, Watts says. When you close an account, you reduce the amount of your available credit, which could hurt your credit utilization ratio.

Saturday, December 26, 2009

ENVIRONMENT & YOUR COMMUNITY: Start a Christmas Tree Recycling Program

More than 30 million real Christmas trees are sold in the U.S. each year. This holiday season, don’t toss yours in the dumpster. Instead, consider organizing a recycling program in your community.

Although some community groups raise money by asking for a donation when they pick up trees for recycling, the big payoff of “treecycling” is keeping discarded trees from taking up landfill space.

There are more than 4,000 treecycling programs throughout the United States, according to the National Christmas Tree Association. If your community doesn’t have one, starting one isn’t as difficult as you might think, especially if you partner with local and state recycling programs and organizations such as Earth911.

The community volunteers who run the treecycling program at The New Hope Borough Recycling Committee in Pennsylvania spent about 20 hours each helping to organize and promote the activity. A landscape contractor donates time and equipment to pick up about 100 trees curbside and turn them into chips for mulch.

How to start a treecycle program
 If you want to start a treecycling program in your area, begin by finding neighbors, small businesses, and members of local environmental groups who’d like to join your cause. Starting a program without any community support or resources would be costly and time-consuming, and far more effort than most people would be willing to undertake, so secure support and partners first before embarking on this project.

Once you’ve located partners, get everyone together for a meeting to decide how you want to recycle your trees.

Evaluate recycling options
According to the National Christmas Tree Association, trees can be reused and recycled in many different ways, from being turned into mulch to being left whole and used as nesting habitats for herons and egrets.

The most common recycling method is chipping, which requires special equipment as well as a qualified operator with liability insurance. Renting the equipment and getting licensed can be time consuming and expensive, so partnering with a local department of parks and recreation, private landscaping business, or tree service company is your best bet if you want to mulch the trees.

Thursday, December 24, 2009

Mass. Home Sales Surge In November

Federal tax breaks, historically low mortgage rates, and an improving economy sparked a record surge in Massachusetts home sales last month, but with the crucial spring selling season still to come, the question remains: Can it last?

First-time home buyers, rushing to beat a possible Dec. 1 expiration of the $8,000 federal tax credit, helped November single family home sales jump by about 60 percent from a year earlier, according to both the Massachusetts Association of Realtors, a trade organization, and Warren Group, a Boston real estate tracking firm. Prices also stabilized.

The realtors organization reported the state’s median home price rose for the first time in more than two years, to $285,000 from $283,000 in November 2008, while Warren Group, which follows a larger number of transactions, reported a decline of just over 1 percent, to $274,000 from $277,500. Median prices are still down about 20 percent from 2005’s peak of about $350,000.

This plunge in prices has contributed to a sales turnaround heavily supported by the federal government, not only with the tax credit - which was recently extended to April and expanded to include long-term homeowners - but also by the Federal Reserve, which has taken several actions to drive mortgage rates below 5 percent.

With the Fed expected to begin pulling back from its stimulus programs next year, and the tax credits scheduled to expire, ma ny wonder whether the housing market “will have the vitality to withstand the withdrawal of government support,’’ said Nicolas P. Retsinas, the director of Harvard University’s Joint Center for Housing Studies.

“A sustainable housing market has to attract private capital,’’ Retsinas said. “The big test will come in the spring.’’

As 2009 comes to a end, though, the state’s housing market is in far better shape than earlier this year, when year-over-year sales were plunging at double digit rates, as were prices. Sales have risen from a year earlier in each of the past five months. With about 4,000 single family homes selling in the state last month, it was the best November since at least 2005.

Wednesday, December 23, 2009

FINANCE & THE ECONOMY: Did You Know? Household Net Worth Has Increased.

  • After seven consecutive quarters of decline, the net worth of households and non-profits increased for the second quarter in a row. The current net worth of households and non-profits is 53.4 trillion according to Federal Reserve Flow of Funds data.
  • This is a 5.3 percent improvement over the second quarter and a 10.2 percent improvement over the first quarter.
  • Net worth has improved as a result of declining liabilities (including mortgages), financial assets (particularly corporate equities and mutual fund shares), and tangible assets (including real estate for households).
  • At its peak, the net worth of households and non-profits was 66 trillion. Net worth is nearing its long-term average of nearly 5 times disposable personal income.
  • In the aggregate, real estate held by households has increased by $850 billion over the last two quarters.
By Danielle Hale, Research Economist for December 14, 2009

Tuesday, December 22, 2009

LEGAL ISSUE: Tough real estate choices for divorcing spouses

Another ugly reality of the recession: divorce. Here's what divorcing couples can do, legally, in regard to their real estate.

When a recession hits, divorce rates spike. Divorce often plays a major role in real estate transactions and decisions. The question posed today is what to do if you are getting a divorce and the marital home is “underwater” – that is, when the balance on the mortgage is more than the fair market value of the house.

Well, here are your choices:
1. You stay in the house with your divorced spouse until either one of you can afford to move out or refinance.  Seriously!? Yes! More and more people are doing so in this new economy because there is simply not enough money to go around. I know of divorcing spouses creating separate living quarters in a house, akin to an in-law suite with separate entrances, etc.

2. You and your spouse continue to co-own the house together until someone can refinance the property.  Either you live in the house or your spouse lives in the house. You could have a situation where only the person who’s living in the house pays for everything or everything is split 50/50. Either way, the couple will still own the house together.

3. Refinance. If you try to refinance, you will have to put up the money to make up the difference between what you owe and what your house is worth. That would be tens of thousands of dollars if not more. Some people have that kind of money but most do not.

4. Short sale. A short sale is when you get the permission of your mortgage lender to sell the house for less than what you owe on the mortgage and you get released from the balanced owed. With the enactment of the new Obama short sale regulations, which I wrote about previously, a short sale may be a good option for divorcing couples who are “under water.” The new regulations require that the lender agree to waive the outstanding loan balance on an approved short sale, so both spouses can wipe their credits clean of the mortgage obligations and move on with their lives.

5. You let the home go into foreclosure. This is not an ideal situation and it’s not generally recommended.

6. Loan modification. This is very difficult and very lender specific. Some will let you modify the loan or do an assumption whereby you don’t have to refinance the house and yet be allowed to remove a spouse’s name off the mortgage. It’s worth a try.

From a real estate perspective, preserving the value of the property is paramount and in the best financial interests of both spouses. The options are tough for those in the unfortunate predicament of divorcing in this recessionary economy.

By Attorney Richard D. Vetstein for Boston Real Estate Now, Boston Globe December 9, 2009

Monday, December 21, 2009

COMMUNITY SPOTLIGHT: Lot to Show for Tax Credit; More House Hunters Look During Holidays

Archana Ailawadhi wants to buy a house or condo in time to qualify for the $8,000 first-time home buyers’ tax credit—and won’t let the holidays stand in her way. “I can’t stop now, because I’m knee-deep in (house hunting),” said Ailawadhi, a school guidance counselor who’s made offers on four distressed HUD homes over the past year but keeps getting outbid.

Experts say the Massachusetts housing market could skip its traditional post-Thanksgiving slowdown this year as house hunters such as Ailawadhi hustle to meet the tax credit’s April 30 deadline. “I think (the credit) will keep the momentum going and kind of boost the startup of the spring market,” said Gary Rogers, a Waltham real estate agent and president of the Massachusetts Association of Realtors®.

Bay State housing normally slips into low gear between Thanksgiving and February or March as bad weather and holiday commitments push many consumers to the sidelines. For instance, sellers had just 35,815 houses and condos listed on the MLS Property Information Network last December—way down from the 50,705 units up for sale that June. “Buyers don’t want to look at homes in snowstorms and sellers don’t want to show homes and have mud and snow tracked in,” Rogers said. However, a recent extension of the popular home buyers’ tax credit could change things this year.

Adopted by Congress in February in a bid to boost housing, the tax break was supposed to expire Nov. 30, but got a last-minute reprieve from lawmakers. First-time home buyers can now qualify for credits as long as they sign purchase-and-sale agreements by April 30. Lawmakers even expanded the program by adding up to $6,500 credits for non-first-time buyers. Few expect Congress to extend the program further, so Rogers believes many would-be purchasers will cut deals before the new deadline expires. “People will say: `Wow, we have a second bite of the apple here. We shouldn’t screw it up,’” the MAR president said. Randolph broker Todd Sandler expects most or all of his firm’s roughly 35 active listings to stay on the market this winter, and even foresees adding some new ones. “There’s definitely more inventory coming on the market right now than you would see traditionally coming into a holiday season,” he said. “I think (buyer’s) agents are telling clients: `We’ve got to get deals done between now and April 30. There’s no time to wait.’”

House hunter Ailawadhi agrees. “It’s really exciting to me that they extended the tax credit,” she said, “but the pressure’s still on to meet that April 30 deadline.” December 7, 2009

Sunday, December 20, 2009

MORTGAGE: Smart Homeowners Get Qualified

Watch this video and learn about pre-qualifying for a mortgage; an important step to buying a home or trading up to a new home.

Saturday, December 19, 2009

Friday, December 18, 2009

GREEN BUILDING: Changes That Pay

Take advantage of rebates and free audits to make your home eco-friendly (and cut utility bills).

Households use about a fifth of the total energy consumed in the United States each year and generate 21 percent of the nation's carbon dioxide emissions, according to the US Department of Energy. With growing concerns about climate change, government subsidies for renovating existing homes to a higher standard are rolling out as never before. Whether homeowners are looking at extra insulation, new heating equipment, or even solar panels, it's easier -- and more economical -- than ever to lower monthly utility bills by a third or more. Here's how to get started. 

1 Get Audited
The first order of business in improving energy efficiency is to set up an energy audit. This is typically a room-by-room inspection, often with specific tests to assess airtightness and insulation. An audit will “quickly reveal the weakest link in the chain,” says Mark Price, a sustainability specialist with building systems consultants Steven Winter Associates in Maynard. Often, the priority is to stop leaking air. “If there’s air leakage, extra insulation won’t work.”

MassSAVE, a partnership among the state, energy efficiency contractors, and utility companies, offers free basic energy audits for homeowners in one- to four-family structures ( or 866-527-7283). It will pay up to $2,000 for weatherization and up to $1,000 for efficient gas heating upgrades. Most state residents already contribute to the MassSAVE program. “Every utility has what’s called a conservation charge of $1.50 or $2 per month per customer,” explains program manager Jerry Hanna. “All of that is thrown into a pot for energy efficiency programs.”

Phyllis and Marc Theermann, who live with their two elementary-school-age daughters in Wellesley, accelerated their efforts to improve their 1920 home’s energy efficiency in September after a call from a Woburn company, National Energy Audits, which guaranteed a 20 to 35 percent reduction in energy bills. “I almost never answer those kinds of calls,” says Phyllis, a writer who blogs on sustainable living for Sears. “But we knew we had [air] leakage, because it’s an old house, and we knew there wasn’t enough insulation.”

The Theermanns’ audit included a blower door test. A powerful fan that mounts into the frame of an open exterior door pulls air out of the house, depressurizing the inside; higher air pressure on the outside then forces air back into the home through any openings. “You can actually feel where the draft is coming in,” Marc says. An infrared camera is often used while the blower door is running to detect hard-to-find air leaks and areas of missing insulation. The blower door and infrared tests can cost several hundred dollars or more, but both MassSAVE and National Energy Audits provide it free if the homeowner opts to go ahead with energy upgrades, as the Theermanns did.

Cador Pricejones, a project manager with Newton builder Byggmeister, wanted to improve his own home’s energy efficiency even more -- by 75 to 80 percent. He tapped Energy Efficiency Associates in Stow to rate his two-family in Somerville according to a scale called the Home Energy Rating System (HERS). Says Pricejones: “It’s like an advanced energy audit” that uses computer simulation to pinpoint areas for improvements.

On the HERS scale, less is more. Most new homes rate 100, whereas older, draftier houses can rate 130 or more. To earn the government’s Energy Star label, new homes must rate 85 or less, a level many in the business say is still too high. Increasingly, green building advocates and researchers at the US Department of Energy are trying to achieve Net Zero Energy homes that have HERS indices of zero or less. These super-insulated homes use no energy or actually produce energy from solar panels or some other renewable source. The Pricejones home, built in 1914, started with a HERS index of 120. The target? Thirty-seven.

2 Seal Up Your Home
The audit on the Theermann house showed it was losing heat from its foundation, which the contractor handled by applying a nontoxic insulating foam along the rim joist. The home also needed extra insulation. Because the house is clad in brick, cellulose (recycled newspaper) insulation was blown into the exterior walls from the inside through a series of drilled holes. “We had already installed many energy-efficient windows a few years [before], leaving only a few left for us to switch out as time and budget allowed,” Marc says. With tax rebates -- about $2,000 from the utility company National Grid and another $1,500 in federal tax credits -- the couple wound up spending nothing on the $3,500 job. “The results are amazing. There is almost no fluctuation in heat anymore,” Marc says. “I would estimate that we will save at least 25 percent on our heating bill this winter.”

In Somerville, a “deep-energy retrofit” of the Pricejones home included applying 4 inches of closed-cell polyurethane foam insulation on top of the old siding and trim. “It’s like putting a down comforter around the whole house,” Pricejones says. New wood siding and wood trim went over the foam. To stop air leaking from old, inefficient windows but still retain their original sash and rippled glass, Pricejones took the unusual approach of installing new dual-glazed windows -- at about $400 each -- over the old. The new windows act like super-efficient storm windows, while the old now function as a third glazing, which reduces heat transfer -- the principle behind high-tech triple-glazed windows, which would have cost about $800 each, he says.

Thursday, December 17, 2009

HOME BUYING: Buying now, a risk worth taking?

Holidays may see less competition, better deals. Recent good news about the housing market has many homebuyers wondering whether now is a good time to buy. For example, home sales activity increased 9.4 percent nationally in September, a 26 percent increase from a low point in January, according to the National Association of Realtors.

However, this doesn't mean that the housing market has bottomed out or that we're heading toward a seller's market. It could take years for the market to level out and turn around.

The $8,000 first-time buyer tax credit has had some effect on stimulating the market. The Nov. 30, 2009, deadline for taking advantage of this credit has been extended, and a tax credit of up to $6,500 is now available to repeat homebuyers who qualify. Income restrictions apply. To take advantage of these credits, the buyer needs to have an accepted offer no later than April 30, 2010, and close no later than June 30, 2010.The home-price limit for both credits is $800,000.

An active first-time buyer market helps the move-up market as sellers move from smaller to larger homes. Low interest rates and an improvement in the home financing arena makes it possible for the middle-level home sellers to sell and move up or scale down. Lenders are processing home mortgage applications more quickly than they did earlier in the year and there is more jumbo financing available.

Many buyers are having difficulty finding a home to buy. The inventory of good listings on the market is low in many areas because many prospective sellers who don't have to sell now are waiting for a better market. To aggravate the situation, many sellers who need to sell now often take their home off the market after Thanksgiving and will bring it back on the market next year.

Buyers may find there's very little on the market to choose from for the next several months. However, they may also find that many buyers will drop out of the market over the holiday season, leaving less competition for the listings that are on the market during this period.

HOUSE HUNTING TIP: If you're having trouble finding a home to buy this winter, ask your real estate agent to search in the multiple listing service for listings that were either temporarily taken off the market or canceled. Find out if these sellers still want to sell. If so, ask if they would be willing to show you their home and entertain an offer.

Keep in mind that some of the listings that were withdrawn from the market didn't sell because they were priced too high. The appeal of not having to put one's home back on the market is a big draw for many sellers, perhaps enough to convince a seller to accept a realistic offer.

Wednesday, December 16, 2009

HOME DESIGN: Designs by Boston Architects

Here are three fun and interesting home designs by local architects.

STACKED HOUSE, by Kiel Moe For this 1,200-square-foot, two-bedroom, two-bath house, shipping containers are used to increase the scale of the small footprint. The bedrooms are on opposite ends of the one-level house with public areas in between. The design calls for a hydronic radiant heating and cooling system in a concrete floor and the narrow plan enables ample daylight and cross ventilation to maximize energy performance.

THE CRANK HOUSE, by over,under This 2,400-square-foot design presents a creative spin on a box-like structure. At the entrance, the living room offers views in three directions. One half-flight up from the entrance is a home-office. Another half-flight up are two bedrooms with two full bathrooms, and access to a small roof deck at tree-top level. The stairs circulate around the perimeter, connecting some rooms visually and separating others for privacy.

STANLEY AND OLIVER, by Project. At 1,500 square feet, the house features two connecting structures: one with a single story and another with two stories. The entrance is on the lower level, along with a bedroom and the living room, which opens up to outdoor views through large expanses of glass and connects directly to the kitchen and dining room. The staircase, which appears to float next to the dining room, leads to two additional bedrooms and a bathroom.
By Jaci Conry, Globe Correspondent | Oct. 22, 2009

Tuesday, December 15, 2009

GREEN BUILDING: Big solar statement for Fenway Center - Complex to have 1200 panels

The proposed solar components at Fenway Center feature an array on top of the shared-use air rights garage and a vertical array on the south face of the garage. 

The developer of a $500 million complex in Boston is dramatically expanding its solar installation, creating the largest private solar facility in Massachusetts, and one that -with its prominent location next to Fenway Park - will become the most visible example of the state’s embrace of renewable energy.

John Rosenthal’s Fenway Center project will have 1,200 solar panels on the rooftops of its five buildings that will generate up to 650 kilowatts. The panels will supply all the power needs of a new commuter rail station Rosenthal is also building, making it the first energy-neutral transit facility in the state.

Yesterday state officials granted Fenway Center its most important environmental approval, paving the way for Rosenthal to soon begin construction after more than a decade of planning and delays.

Patrick administration officials cited the expansive solar facility as a key factor in its favor. It is also a particularly per sonal achievement for Rosenthal, a longtime environmental activist who was jailed three times in the late 1970s and 1980s for protesting nuclear power plants. “To leverage my business to produce green power is a dream come true for me,’’ he said. “This is certainly a wonderful turn of events.’’

Rosenthal had previously planned a smaller solar installation at Fenway Center, but decided to increase it substantially after the state and federal government boosted the value of tax credits that developers can use to finance such projects. It will cost $7.5 million to build the 650-kilowatt array, but Rosenthal estimated the tax credits will allow him to recoup his installation costs within four years. He will then use the proceeds from electricity sales to pay off the debt used to purchase the panels themselves.

“The Fenway Center project is demonstrating that advanced environmental measures can be incorporated into private real estate development on a compelling economic basis,’’ said Ian Bowles, state secretary of Energy and Environmental Affairs.

Rosenthal has created his own power company, Here Comes the Sun LLC, and in addition to supplying electricity to the train station, he expects to sell power to tenants of Fenway Center. He also hopes to add another 100 kilowatts of solar generation at a later date. The complex is huge: 330 apartments, 370,000 square feet of office space, 90,000 square feet of stores, and a garage with 1,290 parking spaces, spread over 4.5 acres between Brookline Avenue and Beacon Street, on the Fenway Park side of the turnpike.

Monday, December 14, 2009

FINANCES: What Info Makes Up Your Credit Score?

Have you ever wondered what information is used to give a consumer a credit score? Who decides and how do the different companies actually score you?

Sunday, December 13, 2009

NEWS: Employer-Assisted Housing Forum Helps Make Homeownership More Affordable

Employer-assisted housing benefits, in the form of forgivable loans, grants, matched savings plans, financial counseling or home buyer education, have proven to be effective at helping working individuals purchase and keep their homes.

That was one of the messages delivered at the Bring Workers Home forum held today in Boise, Idaho. During the daylong event, sponsored by the National Association of Realtors® and the National Housing Conference, Realtors® joined local and state housing leaders to discuss employer-assisted housing strategies and how to help more working families find affordable, decent housing near their workplaces.

“Realtors® build communities and know that homeownership is still out of reach for many working individuals,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “Bringing together housing experts to discuss solutions to this critical issue is a crucial first step to helping more working families purchase and keep their homes.”

At a morning panel discussion experts talked about the region’s growing need for affordable workforce housing and how employer-assisted housing benefits can help communities meet those needs. Finding affordable housing is especially difficult for many low- to moderate-income workers such as emergency personnel, teachers, retail clerks, hospitality staff and office employees, who live in high-cost areas and whose salaries have not kept pace with home prices.

During lunch, forum keynote speaker Craig Nolte of the Federal Reserve Bank of San Francisco, told attendees about the benefits of affordable workforce housing and its impact on communities. Research has shown that these benefits can help improve employer recruitment and retention and reduce training costs as well as improve employee morale and productivity and make communities stronger.

An afternoon panel shared case studies of successful employer-assisted housing programs in California, Idaho, Washington and Wyoming that are helping working families reach their goals of homeownership.

Other speakers at the forum were Mayor David Bieter, city of Boise; Linda Davis, Copper Basin Construction Inc.; Samantha DeKoven, Metropolitan Planning Council; Mark Ellerbrook, city of Seattle, Wendy Furth, National Association of Realtors® Liaison for Housing and Diversity; David Haney, Wyoming Community Development Authority; Jim Johnston, National Association of Realtors® Regional Vice President for Region 12 (Pacific Northwest); Craig Nolte, Federal Reserve Bank of San Francisco; Julie Spezia, Housing California; and Chris Venne, Community Frameworks.

Forum attendees included Realtor® associations and their Realtor® members, business leaders, housing and community development professionals, city council members and other elected and appointed officials, as well as human resource and employee benefit professionals.

A similar forum was held several weeks ago in Philadelphia, where attendees shared successful employer-assisted housing strategies in New York, Delaware, Maryland, New Jersey, Pennsylvania and Washington, D.C. For more than 75 years, the nonprofit National Housing Conference has been the nation’s premier public policy and housing advocacy organization. To learn more about the National Housing Conference and its nonprofit research affiliate, the Center for Housing Policy, please go to

By Sara Weis for National Association of Realtors, December 3, 2009

Saturday, December 12, 2009

FINANCES & TAXES: New Improved Homebuyer Tax Credit

This video has all the information you need to understand how the new Homebuyer Tax Credit works for both new and "trading-up" buyers.

Friday, December 11, 2009

Thursday, December 10, 2009

HOME ENERGY: Shedding Light on Bulbs: New Label Helps Consumers Determine if Brightest is Best

Selecting the right bulb for your lighting needs soon may be a lot like picking the frozen dinner with the least calories. Federal trade regulators are proposing new labeling that would allow consumers to easily compare light bulbs’ energy costs, life span, and brightness. The grids, which will be printed on the back of packaging, deliberately were designed to resemble those on food packages that list calories and nutritional values.

“Several [organizations] suggested we go with something consumers are familiar with,” said Hampton Newsome, an attorney with the Federal Trade Commission. “It helps people make trade-offs between cost and brightness, and to understand what they are getting.”

Newsome said an explosion in new lighting technologies accelerated the need for updated labeling, as some consumers are bewildered by unfamiliar choices. The move also comes as the federal government is encouraging manufacturers and the buying public to move away from traditional incandescent bulbs to more energy-efficient models, like the spiral-shaped compact fluorescent lights.

Incandescent lights already have been banned in Australia and parts of Europe. A federal law requires the United States to begin phasing out these bulbs in 2012. About 20 percent of the average residential household’s electrical bill goes to lighting.

A comparison between three prototype labels for a standard residential bulb shows switching from traditional lighting can save money as well as electricity. FTC calculations estimated a 60 watt incandescent bulb would cost $7.49 a year to operate, as compared to $1.62 for a 13-watt compact fluorescent and 87 cents for a seven-watt light-emitting diode (LED) bulb.

Other facts on the proposed label: Color appearance, on a scale from warm to cool, and if the product contains mercury, as fluorescents do. The least expensive bulb may not necessarily be the best. Gus Fabian, president of Light Bulbs Unlimited in South Florida, said some newer model products have drawbacks that make them poor choices for certain situations. 

LED lights, for example, tend to be very directional and not good for illuminating large areas, Fabian said. Some compact fluorescent styles can’t be dimmed, and those that can cost up to five times as much. His advice: Think of what the bulb will be lighting and about the fixture it will be installed in. A bright fluorescent light that might be perfect in a large conference room could make your bedroom look like a hospital corridor.

Fabian said his customers increasingly are interested in smart energy options and thinks the label will give them valuable information. He particularly likes the FTC’s emphasis on lumens, or light output, versus the traditional watts, or power.

Wednesday, December 9, 2009

MORTGAGE: FHA finally facing reality: Borrowers will need to put up more cash

The Federal Housing Administration has been focusing its efforts to shore up its finances on stricter rules for lenders, but in testimony before the House Financial Services Committee on Wednesday, Housing and Urban Development Secretary Shaun Donovan is expected to announce changes to rules for borrowers, requiring more skin in the game.

The change is needed because FHA reserves have dropped to $3.6 billion, or about 0.5% of the $685 billion in loans the FHA has insured. The law requires that the FHA hold 2% of its outstanding loans in reserve, but the agency can borrow from the U.S. Treasury without limit and without Congressional approval. So it can essentially become a black hole for taxpayers.

Changes expected to be announced at the hearings include:
  • Borrowers will need to put more money up front. Right now borrowers can put down as little as 3.5 percent. One bill in Congress calls for that to be raised to 5%. Private lenders today require between 10% and 20%. Most want 20% unless your credit score is above 750.
  • Borrowers may have to pay more in insurance premiums. Right now that premium is 1.75% of the loan value plus 0.5% or 0.55% per year.
  • Sellers will be restricted by how much they can help the borrower. Right now a seller can pay as much as 6% of the home's value in closing costs. The maximum level is expected to be lowered to 3%.
  • Borrowers may need better credit scores. Right now the score can be as low as 500. While that's the law, lenders don't usually accept scores that low. The FHA is expected to raise that minimum score. This may not be as noticeable as the other changes because most lenders do expect a higher score, but this change will prevent abusive lenders from lending to unqualified borrowers.

Requiring more cash up front could dampen FHA lending considerably, but with more skin the game borrowers are less likely to walk away from a property. Right now the agency backs about 30% of all loans for home purchases and 20% of all refinancings. Since private mortgage money is hard to get in the current market, borrowers have become very dependent on the FHA.

While these stricter rules will discourage borrowers and likely slow down what is already a struggling housing market, it's critical that the FHA shore up its reserves and stop the bleeding; otherwise, taxpayers will foot the bill.

By Lita Epstein December 2, 2009

Tuesday, December 8, 2009

FINANCE: Tax Deductions When You Work From home

Working out of an office in your home offers many advantages including tax breaks, just take care what you deduct on your return. If you operate a business from home, even on a part-time basis, you can probably save a few dollars come tax time. That’s because if you itemize your deductions on your federal tax return, you can write off as a business expense part of the cost of owning and operating your home. Everything from electric bills to property taxes may be fair game.

Those deductions can add up, thereby lowering your taxable income and reducing the amount you owe Uncle Sam on April 15. Before you start spending that refund, however, there are a few rules you need to understand and heed. It’s a good idea to consult a tax advisor to be sure that you’re filing the right schedules and maximizing your deductions.

Passing the IRS litmus test
To meet IRS guidelines, your home office must be your principal place of business, or the place you see clients in the normal course of business. Parts of your home you use to store products or equipment for your business also count. That doesn’t mean that all your work has to be done from home. If you’re an outside salesperson, you probably spend most of your work time elsewhere. But if you do you billing and return customer calls primarily from your home, your home office should qualify.

You can also qualify for the deduction if your employer requires you to work from home, as long as you don’t charge your employer rent. One big catch is that you can’t deduct expenses for your home office if you choose to work at home even though your employer provides you with an office. IRS Form 8829 can be used by self-employed workers to calculate the home office deduction, which should be reported on Schedule C.

Measuring your home office
The amount you can deduct for your home office depends on the percentage of your home used for business. Your work space doesn’t need to be a separate room—a table in a corner qualifies. But it has to be an area that’s used solely for business. The tax break also covers separate structures on your property, like a detached garage you’ve converted to an office. Unlike an office inside your home, a separate structure doesn’t have to be your main place of business to qualify for a deduction. That’s because the IRS believes your family is less likely to use a separate structure as a part-time play area or den, says Mark Luscombe, principal analyst for tax and consulting at CCH.

To calculate what percentage of your house the home office occupies, divide your home office’s square footage by the total square footage of your home. If your home is 3,000 square feet and your office is 150 square feet, for example, you’d use 5% to calculate your deductions. Not sure how big your house is? Check the documents you received when you bought your home—there’s probably a detailed rendering—or measure the outside of your home and multiply length times width.

What can you deduct?
Once you’ve figured out what percentage of your home you use for business, you can apply that percentage to different home expenses. These include:
  • Mortgage interest
  • Real estate taxes
  • Utilities (heating, cooling, lights)
  • Home repairs and maintenance (painting, cleaning service)
  • Homeowners insurance premiums

Monday, December 7, 2009

COMMUNITY ORGANIZING: Starting A Neighborhood Watch

Organizing a neighborhood watch can bring you closer to your neighbors, improve community safety, and potentially boost home values.

When your neighbors tell you a bike was stolen from their garage or an elderly woman had her purse snatched, you just shake your head. After all, crime can happen anywhere. But you can help reduce those incidents and better get to know your neighbors by organizing a neighborhood watch. In the process, you could help raise property values and lower insurance premiums for the entire neighborhood.

Be ready to spend some time recruiting people to join and encouraging them stay active. So before jumping in, consider the particulars.

Recruit your crime fighters
Property crimes—burglary, vandalism, and auto theft—make up more than 75% of criminal behavior in the U.S., according to the U.S. Department of Justice. To help combat these incidents, law enforcement supports neighborhood or block watches, which the National Sheriffs’ Association defines as an organized group of residents united against crime in their area.

As the group’s president or “captain,” you’ll be responsible for organizing meetings at least twice a year, ensuring that members are participating, and enlisting local law enforcement support. If your neighbors are already chummy, forming a group could simply take a few calls and setting up a meeting with law enforcement.

Otherwise expect to canvas residents, schools, churches, and businesses. Anticipate logging at least 10 hours a week for a month or more to get your group off the ground and keep it running, according to, run by the NSA, which promotes watch groups.

There’s no formal training required to join. Simply ask your neighbors to keep an eye on the neighborhood. Before you recruit, arm yourself with current crime statistics, such as from (Many local law enforcement agencies also maintain online crime maps that citizens can monitor.) That way, if your neighborhood has experienced incidents while others nearby are relatively crime free, you can ask prospective watchers where they think buyers will want to live.

Insurance rates, property values may benefit.
Although there are no statistics correlating neighborhood watch groups and property values, “we hear from law enforcement that when they help neighborhood watches get organized and active, they see a drop-off in criminal activity in that area,” says Robbie Woodson, a spokesperson for And many police and neighborhood watch veterans believe that when a watch group is active, it can make a neighborhood more desirable, which in turn could raise property values. A variety of economics studies over the years have shown a negative relationship between crime and property values, according to a 2007 report in Entrepreneur magazine.

Property insurance premiums are based in part on crime rates in a given area. “Insurance companies base their premiums on risk. If an active neighborhood watch group has an impact on lowering crimes and, therefore, claims, insurers will often adjust their premiums,” says Mike Barry, vice president of media relations for the Insurance Information Institute.

Recruits might also be interested to know that neighborhood watches aren’t just about stopping crime. A network of watchers can help find lost pets and children and call in potential hazards like leaking water mains and overgrown trees.

Sunday, December 6, 2009

MARKET TRENDS: Nine Consecutive Gains for Pending Home Sales

Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.

The PHSI in the Northeast surged 19.9 percent to 100.2 in October and is 44.2 percent above a year ago. In the Midwest the index rose 11.6 percent to 109.6 and is 36.6 percent higher than October 2008. Pending home sales in the South increased 5.4 percent to an index of 115.4, which is 31.6 percent above a year ago. In the West the index fell 11.2 percent to 127.7 but is 21.9 percent above October 2008.

Yun cautioned that home sales could dip in the months ahead. “The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.

“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,” Yun said.

National Association of Realtors, Decembr 1, 2009

Friday, December 4, 2009

COMMUNITY IMPROVEMENT: 5 Ways to Green Up Your Neighborhood

Once you’ve made your home more environmentally friendly, it’s time to extend your mission of sustainable development to the rest of your community.

You’ve swapped out your home’s light bulbs, strung a laundry line, and installed a programmable thermostat. Maybe you’ve even replaced your drafty windows. Now you’re ready for more. You’re thinking about reaching out to like-minded souls to see what you can do together to make your community more sustainable. You aren’t alone.

Around the country, loosely organized alliances of green-leaning friends and neighbors are comparing notes and sharing resources. Nobody knows just how many of these eco-coalitions are out there, but they all have something in common: Committed, enthusiastic people who want to make a difference.

Start by finding allies. Consider organizing a block party. Ask your local government if you can close off the street for an afternoon. Share food, drink, and music. Pass around a clipboard and collect emails from attendees who might be interested in working together. Then consider putting one of these ideas into action.

Share your soil
Satisfy your conscience as well as your green thumb by tending a patch of neglected earth. Condo or townhome owners might elect to join a community garden, but wait lists for these plots can easily stretch on for years. Enter groups like Urban Garden Share, which match up property owners with would-be sharecroppers. “It is kind of like online dating for gardeners,” says Amy Pennington, head of the program that currently boasts 240 active members in Seattle.

Property owners list offers of space and water on the website, and interested gardeners typically supply seeds, tools, and labor. Gardener and garden owner can share the bounty. Pennington says that costs and labor usually come out about even for both parties. Depending on plot size, gardeners can expect to spend two to five hours a week weeding, watering, and harvesting during the growing season.

(Un)Forbidden Fruits
Groups are popping up that promote the gleaning of fruit from neglected or overlooked urban fruit trees. One such group is Fallen Fruit in Los Angeles, which offers online maps showing the locations of publicly accessible fruit trees. Fallen Fruit urges others to post maps of their neighborhoods to the website.

Thursday, December 3, 2009

NEWS: Administration Plans New Efforts on Foreclosures

With the foreclosure crisis showing no signs of relenting, the Obama administration plans to expand a program aimed at helping people remain in their homes.

The goal of the announcement, expected Monday, is to increase the rate at which troubled home loans are converted into new loans with lower monthly payments, Treasury spokeswoman Meg Reilly said over the weekend.

Industry officials said the new effort would include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area.

The Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.

Under a $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years.

The government support, which is provided from the $700 billion financial bailout program, is aimed at providing cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.

The program has come under heavy criticism for failing to do enough to attack a tidal wave of foreclosures. Analysts said the foreclosure crisis is likely to persist well into next year as high unemployment pushes more people out of their homes.

Wednesday, December 2, 2009

VIDEO: Evaluating The Market

Bill Raveis shares important information for buyers and sellers on how to evaluate facts and figures to assist with the home buying and selling process. He summarizes key data points for both buyers and sellers.

Tuesday, December 1, 2009

HOME MAINTENANCE: Fall & Winter Seasonal Maintenance Guide For Living In The Northeast

Certain home maintenance tasks should be completed each season to prevent structural damage, save energy, and keep all your home’s systems running properly. These maintenance tasks are most important for the Northeast in fall and winter. For a comprehensive list of tasks, refer to the to-do list at the end of this article.

As cold weather approaches in the Northeast, it’s important to prepare your home for freezing temperatures, ice, and snow, says Steve Gladstone of Stonehollow Home Inspections in Stamford, Conn.

Key maintenance tasks to perform
• Clean your gutters. Leaving debris in your gutters is an invitation for trouble. Not only can it freeze and damage the gutters themselves, but it also can force freezing water up under your shingles and damage the roof. Gladstone says that many homes in the Northeast now have covered gutter systems, which fools many homeowners into thinking gutter cleaning is unnecessary. “Gutter covers keep leaves out,” he says, “but not fine organic material or grit from the roof.” It’s important to remove the covers and clean just as you would regular gutters.

• Clean and put away lawn and garden equipment. Do a visual inspection of the yard to identify anything lying around — garden tools, hoses and nozzles, patio furniture and accessories — that might be damaged by snow and ice and should be brought in for the winter.

Run your lawn mower until the gas tank is empty; if you leave gas in the tank over the winter, it can degrade and lose some of its combustion ability. Worse, gas can react with the air in the tank and oxidize, forming deposits that affect the machine’s performance; worse still, moisture can condense inside the tank and cause rust that blocks the fuel lines.

If you know you’re going to leave gas in the tank over the winter, add a stabilizer to the last gallon you put in (mix it in the gas can, not the mower tank, so that you get the mixing ratio correct).

• Disconnect hoses and winterize lawn irrigation systems. Leaving water in any exterior hoses or pipes can cause them to freeze and burst. If your exterior faucets aren’t self-draining, be sure to turn off the water manually at the shutoff valve inside the house so water doesn’t stand in the wall pipes.

If you have a lawn irrigation system, it’s important to make sure all the water has drained from the system before the first freeze. Depending on the type of system you’ve installed, this may require the assistance of a professional. A pro charges $50 to $150 to winterize an irrigation system.

• Schedule a furnace tune-up. Follow your HVAC professional as he works and ask questions about what he’s doing, says Gladstone. The technician should be working his way through a checklist of items such as inspecting filters, checking the chimney exhaust, and examining the blower and fuel connections. Expect to pay $50 to $100 for a furnace tune-up.