TAX CREDIT: Home Tax Credit Called Successful, but Costly

Realtors, home buyers and sellers are rushing to complete sales agreements before the tax credit for home purchases expires this week.


Home buyers must have a deal by April 30 and close by June 30 to qualify for the federal tax break, up to $8,000 for first-timers and $6,500 for those merely moving to a different residence.


Though the Treasury Department and the real estate industry have termed the program a success, helping 1.8 million people buy homes, many tax policy experts say it has been singularly cost-ineffective: most of the $12.6 billion in credits through end of February was collected by people who would have bought homes anyway or who in some cases were not even eligible.


The credit has caused a surge in sales and has been widely lauded for helping to stabilize prices. In places like Lafayette, Ind., where the number of homes sold in March was up 48 percent over last year, real estate agents say they have been inundated with buyers like James and Aubrey Green, students at Purdue University, who said the credit had persuaded them to jump into the market.


“We were happy in our apartment, but $8,000 was just too much to pass up,” said Mr. Green, 29, who shopped furiously with his wife for two months before signing a contract in March to buy a three-bedroom ranch.


“We bid on a couple places that didn’t work out,” he said, “but we always made sure we had a backup plan because we didn’t want to miss the deadline for the credit. And when we finally agreed to a contract, it was this huge relief.”


For every home buyer like the Greens, real estate agents say there are at least three others who collected the credit even though they would have bought without it. That means for each new buyer who was truly lured into the market by the credit, the federal government paid more than $30,000.

HOME MAINTENANCE: 8 Tips for Adding Curb Appeal and Value to Your Home

Appraisers and real estate agents offer advice for curb appeal that preserves value and attracts potential buyers.

Curb appeal has always been important for homesellers. With the vast majority of today’s homebuyers starting their search on the Internet, the appearance of your property is more critical than ever. You only have a few seconds to catch their attention as they scroll through listings online to get them to stop and take a closer look.


But the role of curb appeal goes beyond just making a good first impression. The way your house looks from the street can impact its value. It can also shorten the time it takes to sell your house.




We asked real estate agents, appraisers, home stagers, landscape designers, and home inspectors which curb appeal projects offer the most value when your house is on the market, both in terms of its marketability and dollars. Here is what they told us:


1. Paint the house.
Hands down, the most commonly offered curb appeal advice from our real estate pros and appraisers is to give the exterior of your home a good paint job. Buyers will instantly notice it and appraisers will note it on the valuation.


“Paint is probably the number one thing inside and out,” says Frank Lucco, managing partner of Houston-based IRR-Residential Appraisers and Consultants. “I’d give additional value for that. If you’re under two years remaining life (on the paint job), paint the exterior because it tends to show wear badly.”


Just make sure you stay within the range of accepted colors for your market. A house that’s painted a wildly different color from its competition will be marked down in value by appraisers.


2. Have the house washed.
Before you make the investment in a paint job, though, take a good look at the house. If it’s got mildew or general grunge, just washing the house could make a world of difference, says Valerie Torelli, a California real estate agent with a background in accounting.


Before she puts a house on the market, Torelli often does exterior makeovers on her clients’ homes, a service she pays for herself to get higher selling prices. Overall, she says her goal is to spend less than $5,000, with a goal of generating an extra $10,000 to $15,000 on the sale price.


Torelli specifies pressure-washing—a job that should be left to professionals. Pressure washing makes the house look “bright and clean in addition to getting rid of unsightly things like cobwebs, which may not be seen from the yard but will detract from the home’s cleanliness when seen up close,” she says.

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GREEN BUILDING: Remodel to green up your bathroom

If you want to make sure your bathroom remodeling project is as green as possible, here’s how to save energy, conserve resources, and protect your budget.


You care about the environment. You also happen to have a bathroom badly in need of remodeling. How do you get the job done with minimal impact on both our fragile planet and your precious budget? Thankfully, the growth of the green building movement has given rise to many eco-responsible products and resources that allow you to create the water-conserving, healthy, energy-wise bath you’ve always wanted—all without busting your bottom line. Here’s what you need to know.



It’s all about the water
Thinking about greening your bathroom means considering how you use water in terms of consumption and energy. According to the American Water Works Association, your humble toilets are the thirstiest water users in the house, accounting for 27% of consumption. This fact inspired conservation schemes like placing something hefty in the toilet tank to reduce flushing capacity, and those low-flow toilets that too often didn’t flush what needed flushing.

A more successful approach is the dual-flush toilet. It has two flush buttons, one for light work, one for heavy. Long a mainstay in Europe, dual-flush toilets are available in the U.S. for $250–$400, a price in line with top-quality conventional toilets. A dual flush toilet can save 17,000 gallons of water a year—about $50 off your water bill. If you wish to keep your old toilet (a very green decision), you can retrofit it with a dual flush mechanism costing only $70.


The shower is another squanderer of water. Showers use 16% to 20% of a home’s water, most of it heated. The flow rate of a typical shower head is 2.5 gallons per minute. Switching it out with a low-flow head of 1.5 to 2 gallons per minute still offers adequate cleansing power with a substantial savings in water usage. (If you cherish a really forceful blast of hot water, consider a full-flow shower head with a lever that lets you shut it off while you lather.)


In addition to conserving water, you’ll want to take a close look at the way your water is heated. Second only to the kitchen, the bathroom is your home’s most intensive energy user, with most of that energy going towards those nice hot showers and baths. Curbing wasted energy can be as simple as adding an insulating blanket to your tank-type heater (reducing energy use by 4% to 9%) and insulating all accessible hot water pipes. In addition, most water heaters are set to 140 degrees; you can turn down the water heater temperature setting to a still-toasty 120 degrees and save up to $60 per year on energy costs.

BUYING & SELLING: 65% of Americans Still Want to Own a Home, Survey Says

A new national survey gauging attitudes toward housing finds that two-thirds of Americans (65%) still prefer owning a home, despite the challenging economic environment and the housing downturn.

The Fannie Mae National Housing Survey polled homeowners and renters to assess their confidence in homeownership as an investment, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy.

“Despite the recent downturn in the housing sector, Americans continue to value homeownership and think about their homes in ways that go much deeper than the financial investment,” said Mike Williams, President and CEO, Fannie Mae. “The public also strongly believes in the importance of upholding the financial commitment involved in buying and owning a home, even during these challenging times when home values have fallen.”

Consumers cautious
The survey revealed that homeowners and renters alike are taking a more cautious approach to homeownership. Nearly a quarter of renters polled (23%) say they will buy a home later than once planned.

In addition, Americans with traditional, fixed-rate mortgages with predictable payments are significantly more satisfied than those with other types of mortgages.

Respondents cited non-financial reasons such as safety (43%) and quality of local schools (33%) as driving factors in wanting to own a home, ahead of financial considerations.

NEWS: Obama Neighbors’ Home is Sold

Apr. 7—The next time the Obamas come back home to Chicago, they’ll have to stop next door with a plate of cookies and meet the new neighbors.


Seven months after it was put on the market, the home at 5040 S. Greenwood Ave., next door to the Obama’s home in Chicago’s Kenwood neighborhood, has sold for $1.4 million cash. The sale of the 17-room brick house closed Tuesday.


The sale has not yet been recorded and the buyers have chosen to remain anonymous, said listing agent Matt Garrison.


“They’re normal, organic Chicago buyers,” he said. “They probably would have preferred if the house was down the street instead of next door to the Obamas.”


Bill and Jacky Grimshaw, longtime owners of the home, listed it for sale last September for an unspecified price and in October affixed a $1.85 million price tag to it. The home will undergo a gut rehab, Garrison said.


–—
Mary Ellen Podmolik, Chicago Tribune April 7, 2010

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BUYING & SELLING: Luxury for less

Thanks to a slow market, finding bargains on high-end homes is easy What does it take to buy a million-dollar home these days? Six figures.


Where it once seemed to defy the laws of gravity, the high-end home market in Massachusetts is enduring dizzying declines, whether in downtown Boston luxury condo towers or tony suburbs such as Sudbury, Manchester-by-the-Sea, and Lincoln.


“We are seeing houses that were on the market for much higher prices go off the market and come down several hundreds of thousands of dollars,’’ said Doug Carson, a real estate agent for Coldwell Banker Residential Brokerage in Lincoln. “Sellers who are motivated to take a large jump down could see multiple offers.’’


While the market for properties below $600,000 is increasingly active, the luxury market is still struggling. Sales are slow and sellers more open to negotiation or pricing their homes much lower from the outset. And foreclosures and short sales are on the upswing in upmarket communities, offering buyers another avenue for good deals.


“There are people looking to sell, there are people in over their heads with mortgages,’’ said Lois Krasilovsky, a real estate agent in Sudbury who owns homesbylois.com. “You are getting a good value from sellers who are pricing houses realistically in today’s market.’’


In Lincoln, Krasilovsky recently sold a house for $603,000 that was originally priced at more than $1 million in 2008. Krasilovsky said the owners of the 3,461-square-foot ranch had difficulty paying their mortgages and needed to sell. And in Sudbury, Krasilovsky had sellers who agreed to reduced their asking price by $1 million to an asking price of $2 million.


Whatever the reason, buyers looking in the upper end of the market can increasingly find nice homes at good prices.

LOCAL NEWS: No respite on rent

Despite housing downturn, Hub apartment hunters finding few deals It may still be a buyer’s market for Boston-area residents looking to purchase a home. But for renters in the Hub, it’s a different story.

Rents on the rebound: Featured unitsWhile Boston housing values have dropped in the double digits over the last five years, rents have only dipped and now appear to be rebounding. As a result, prospective tenants looking to sign leases on apartments before the city’s traditional Sept. 1 rush will find high prices and few incentives, real estate brokers and property managers say.


“I don’t think there any deals out there unless it is’’ a last-minute special, said Leslie Morgan-Dwinell, an agent for apartmenthub.com, a rental company that specializes in Cambridge and Somerville apartments.


Boston-area home values fell about 16 percent since their peak in 2005, motivating bargain hunters to scurry in search for affordable homes. But rents in larger Boston-area buildings have fallen only about 3.7 percent since their peak in late 2008, according to new data by REIS.com a New York-based company that tracks apartment buildings with 40 or more units.


And rent decreases have slowed this year, real estate brokers say, as some landlords have resisted slashing rent or offering prospective tenants incentives, despite the economic downturn. Rent dropped only 0.2 percent in the first quarter of 2010, according to REIS, which tracks about 200,000 units locally.


As a result, the Boston area remains one of the most expensive places to rent in the country, despite the fact that vacancy rates in the area have steadily increased over the last few years — from 5.1 percent in the first quarter of 2006 to 6.5 percent in the first quarter of this year, according to REIS data. Tenants here pay an average rent of $1,598, the fourth largest average rent behind New York, San Francisco, and Fairfield County, Conn., the real estate tracker said.


Despite the numbers, many local property managers say that demand is increasing as more people decide to rent rather than buy and college students and others begin their apartment search earlier this year.


Boston resident Julie Farrer is one of those people. Farrer, 27, and her husband, Matt Bingham, 25, want to move from their Dorchester apartment, where rent is going up to $1,400, by Aug. 1 to a place closer to her work in Cambridge and his law school classes in Andover. The couple, who are hoping to find a place for $50 less, are limiting their search to private landlords who don’t charge broker’s fees. “I feel I’m still a little early, but there’s stuff out there,’’ said Farrer who advertised her housing needs on Craigslist.

MORTGAGE & FINANCE: Mortgage aid plan labeled a fraud risk

WASHINGTON — Recent changes to the Obama administration’s mortgage assistance program may make it more vulnerable to fraud, a government watchdog says.


The changes, disclosed last month, are intended to make it easier for struggling homeowners to avoid foreclosure. But the administration hasn’t done enough to warn the public about fraud and hasn’t included sufficient safeguards to prevent abuse, the special inspector general for the Troubled Asset Relief Program, or TARP, said.


“Criminals feed on borrower confusion, and frequent changes to the programs provide opportunities for experienced criminal elements to prey on desperate homeowners,’’ inspector general Neil Barofsky wrote in a quarterly report to be issued today.


Last month, the Treasury Department revised the $75 billion mortgage assistance program it first rolled out last year. It is intended to prevent 3 million to 4 million home foreclosures by encouraging mortgage lenders to lower monthly payments.


Mortgage lenders will receive incentive payments if they reduce the amount borrowers owe. Unemployed homeowners can get their mortgage payments cut to 31 percent of their income for three to six months.


Under the changes announced last month, Treasury isn’t requiring appraisals to determine a home’s value in cases where mortgage principal is reduced, the report said. That could make it easier for mortgage lenders to fraudulently qualify for incentive payments.


Treasury should instead follow the Federal Housing Administration’s guidelines, which require the use of an FHA-approved appraiser, the report recommended.


Treasury officials said they will initiate a public service campaign warning against fraud.


Christopher S. Rugaber Associated Press April 20, 2010

MORTGAGE & FINANCE: FICO helps lenders tweak credit scoring decisions

FICO announces a new wrinkle in credit scoring today. It's called the FICO Economic Impact Index, and the goal is to allow lenders to take economic trends into account when they look at your credit score.


"What we're trying to do is give lenders the ability to augment the credit decisions that they're making for borrowers and consumers, based on external macroeconomic risk," says Careen Foster, FICO's director of global scoring product management. "We're going beyond the traditional credit bureau risk and marrying up economic risk with that credit bureau risk to give lenders a more comprehensive view of what consumers' risk is going to be."


That sounds complicated but it's pretty simple. In a normally functioning economy, someone with a 620 FICO score will probably behave like the typical consumer with a 620 FICO score. But in a recession with a high unemployment rate, someone with a 620 FICO score might act more like a typical consumer with a 615 credit score. In a booming economy, a 620 might behave more like a 624.


With the Economic Impact Index, FICO will estimate the effect of various economic scenarios on consumers. For example, Moody's Analytics might come up with five scenarios, ranging from "Complete collapse, depression" to "Confidence rebounds, quicker recovery" and shades in between. Then FICO will estimate how those scenarios would affect consumers with credit scores of 600 or 640 or 720 or whatever.

MORTGAGE & FINANCE: Will higher rates halt housing recovery?

Real estate agent Thalia Tringo was not stashing eggs over Easter. She spent the weekend showing homes in the Cambridge area. Yes, she has been busy lately, and a couple of factors may help explain why.


The federal home buyer tax credit, worth up to $8,000, expires at the end of this month. And at the end of March, the Federal Reserve ended its program of buying mortgage securities to keep interest rates low and pump money into the housing market.


The prospect of an increase in rates, Tringo said, seems to serve as a trigger for buyers. “What usually happens is buyers talk and talk, but they’ll jump when they see interest rates going up,’’ said Tringo. “I think it’s a valid concern. Rates can’t stay this low forever.’’


And sure enough, right after the Fed stopped buying on March 31, mortgage rates did go up. In just a few days, average rates for a 30-year fixed mortgage rose close to 5.25 percent, after spending the better part of March at or below the 5 percent mark.


This comes as the state’s housing market is finally showing signs of a sustained recovery. But will interest rates keep climbing and will that, in combination with the end of the tax credit, be enough to push buyers back to the sidelines?


Unlikely, brokers and housing specialists said. Rates will probably remain low because investment companies are already picking up the slack from the Fed’s gradual exit. Mortgage-backed securities, of all things, have become attractive to investors again.


“There’s no indication we’re going to see a dramatic change in interest rates, and we’ve know about the end of the tax credit since it was extended in the fall,’’ said Kevin Sears, president of the Massachusetts Association of Realtors and owner of Sears Real Estate in Springfield. “From what we’re seeing so far this year, we expect a really solid spring market.’’


For example, Fannie Mae and Freddie Mac the national mortgage companies now controlled by the US government, estimate mortgage rates won’t rise more than an eighth of a percent over the next three months.


Still, the departure of the Fed removes a powerful bulwark that protected mortgage rates from economic variables that can send them up suddenly. Now, the stability and direction of rates will be less predictable.

LOCAL NEWS: Travel swells cost of housing

Transportation found to offset savings on price People who move to an outlying Boston suburb to find affordable housing or to get more house for their money often sacrifice the savings to higher transportation costs, according to a study to be released today by a national planning and land-use organization.


The report, by the Urban Land Institute, is the first to quantify by community not only commuting costs, but the price of daily transportation around often-sprawling suburbs.


When driving costs are added to housing costs, the institute found that, for example, the average household spends more each year in Dracut ($35,643) than in Cambridge ($28,671), and more in Stoughton ($37,513) than in Brookline ($36,846).


“What we have too frequently thought is that you can get an affordable house if you drive until you qualify, but if you then overlay the costs of transportation, they get very high,’’ said Henry Cisneros, secretary of Housing and Urban Development in the Clinton administration and a board member at the institute, a research group based in Washington, D.C.


Many people are familiar with federal guidelines that suggest households spend 30 percent or less on housing, but fewer people consider the transportation costs associated with a home or community because of an absence of data, Cisneros said.


“When transportation is figured in there — because that’s what it takes to get home — it becomes untenable,’’ he said.


The study found that across Greater Boston, the average household spends $22,373 on traditional housing costs and $11,927 on transportation, from car payments and gasoline to T passes and bike tires. That $34,300 represents 54 percent of median household income in the region.


One of every four communities in the study area has a combined housing and transportation cost that exceeds 58 percent of median household income, which the report defines as an extreme burden.


The report bolsters those who have championed ride-sharing programs in areas that lack public transportation and encouraged people to consider what they could save by carpooling. One such advocate is Andrea Leary, a transportation consultant who oversees a network of transportation management associations across the state, working with businesses and local governments to identify potential carpoolers and reward them with gift certificates and other incentives.

TAXES: Nearly half of US homes escape taxes

WASHINGTON — About 47 percent of US households will pay no federal income taxes for 2009. Either their incomes were too low, or they qualified for enough credits, deductions, and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center.


In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by Deloitte Tax.


Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Obama and Democrats in Congress.


Associated Press April 8, 2010

WASHINGTON — The era of record-low mortgage rates is over.

 30-year loan has jumped from about 5 percent to more than 5.3 percent in the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market — a threat to the fragile recovery in the housing market.


And if you wanted to refinance at a super-low rate, you may have missed your chance. Mortgages under 4 percent are still available, but only for loans that reset in five or seven years, probably to higher rates.


Rates are going up because of the improving economy and the end of a government push to make mortgages cheaper.


For people putting their homes on the market this spring, rising rates may be a good thing. Buyers are racing to complete their purchases and lock in something decent before rates go even higher.


“We are seeing some panic among potential buyers who have not found houses yet,’’ said Craig Strent, cofounder of Apex Home Loans in Bethesda, Md. “They’re saying, ‘Man, I should have found a house three weeks ago or last month, when rates are lower.’ ’’


It’s all about affordability. For every 1 percentage point rise in rates, 300,000 to 400,000 would-be buyers are priced out of the market in a given year, according to the National Association of Realtors.


The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer’s purchasing power by about 10 percent.

BUYING & SELLING: US incentives help home sales figures exceed forecasts

WASHINGTON — The housing market is coming back from the winter doldrums. The number of buyers who agreed to purchase previously occupied homes rose sharply in February, far exceeding expectations, a report said yesterday.


That’s a sign that a second round of government incentives is pushing buyers to make offers before a deadline at the end of this month. Buyers may also be motivated by worries that mortgage rates will climb later this year.


The National Association of Realtors said yesterday that its seasonally adjusted index of sales agreements rose 8.2 percent from January to a February reading of 97.6. January’s reading was revised slightly downward to 90.2.


The report “may signal the early stages of a second surge of home sales this spring,’’ said Lawrence Yun, the trade group’s chief economist.


A reading of 100 is equal to the level of sales activity in 2001, when the index started.


Economists surveyed by Thomson Reuters had expected the index would fall slightly to 90.3. The index is considered a barometer for future sales activity because there is typically a one- to two-month lag between a signed sales contract and a completed deal.


Home sales had been sluggish during the winter, partly because shoppers felt less rushed after lawmakers extended the deadline to qualify for a tax credit. First-time buyers can get a tax break of up to $8,000 if they sign a contract by April 30.


“The tax credit is causing them to move quicker,’’ said Kevin Cottrell, cofounder of Kelsey Cottrell Realty Group in St. Louis. “They’re not going to turn down an $8,000 credit from Uncle Sam.’’


Lawmakers also added a credit of $6,500 for existing homeowners who move. But that has had little impact, Cottrell said.


The biggest month-to-month increase was in the Midwest, where pending sales jumped nearly 22 percent. Sales climbed 9 percent in the South and Northeast, but fell about 5 percent in the West.


However, the housing market will be tested in the second half of the year as government support fades away.


Unless the tax incentive is extended again, the jump in home sales “will prove temporary, and another setback will occur before too long,’’ wrote Joshua Shapiro, chief US economist at MFR Inc.

By Alan Zibel Associated Press April 6, 2010

FINANCE: Gov't aims to help more "underwater" homeowners

WASHINGTON—The government launched a new effort on Monday to speed up the time-consuming, often-frustrating process of selling your home if you owe more than it's worth.


The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale -- known as a short sale -- or agree to turn over the deed of the property to the lender. It's designed for homeowners who are in financial trouble but don't qualify for the administration's $75 billion mortgage modification program.


Owners will still lose their homes, but a short sale or deed in lieu of foreclosure doesn't hurt a borrower's credit score for as much time as a foreclosure. For lenders, a home usually fetches more money in a short sale than a foreclosure. And the bank avoids expensive legal bills, cleanup fees and maintenance costs that follow a foreclosure.


"It's very traumatic and embarrassing and frustrating to go through a foreclosure," said Laurie Maggiano, policy director of the Treasury Department's homeownership preservation office. With a short sale, she said, "your financial issues are your own problem and not neighborhood conversation."


Falling home prices and lost jobs have forced many sellers into this position. For example, in Orange County, Calif., short sales made up about 26 percent of the market in March, compared with 17 percent a year earlier, according to data complied by Altera Real Estate, a local brokerage. In the Minneapolis-St. Paul metro area, about 12 percent of all deals since October were short sales, up from about 8 percent a year earlier, according to the Minneapolis Area Association of Realtors.


The expanded incentives will help accelerate short sales, said Mark Zandi, chief economist at Moody's Analytics. He expects 350,000 homeowners nationwide to use the program through the end of 2012, more than double his earlier forecast.


A short sale appears to be the only way out for Brandee Chambers, 36, of Las Vegas. She got into trouble during the housing boom by taking out a risky loan against her home and using the money to buy two investment properties in Phoenix.


She later lost those two properties to foreclosure, and now she is trying to sell the home she lives in for $209,000, but the mortgage balance is $350,000.


Chambers, who owns two hair salons, says she would rather stay in her home, where she lives with her 14-year old son. But she had no luck getting help with her loan. She said she's resigned to scaling back her lifestyle and renting out an apartment.


"I've had to accept a lot in the last year," she says.


For buyers, though, short sales can be a great opportunity.


Marco Cappelli, 49, a winemaker from Northern California, is planning to buy a short sale this month in the Sierra Nevada foothills. He and his wife are paying $214,000 for a property that had been listed at $270,000. They pair plan to fix it up, install a hot tub and rent it out to vacationers.


Along with the financial incentives, the new government program makes another key change. Mortgage companies will have to set their minimum bid before the house is listed for sale. If the offer is above that, the lender must accept it.


That's a big change from current practice. Lenders generally don't calculate how much money they are willing to accept on a short sale until they have an offer in hand, causing long delays before the sale is approved.


The new program "will give us a degree of efficiency that we have not had in the past," said Matt Vernon, Bank of America's executive in charge of short sales and foreclosed properties.


Under the new process, buyers who submit an offer to purchase a home in a short sale should get a response within two weeks, as opposed to months. If that happens as planned, it would be a big improvement. Real estate agents across the country have complained that lenders are often difficult to reach, sometimes only communicating by e-mail and infrequently at that.


"You're one of 400 properties on a screen," said Dave Bauer, a real estate agent in Danville, Calif.


Some real estate agents who specialize in short sales are optimistic. "It could be the first government program that actually helps Las Vegas," said Steve Hawks, a real estate agent there who specializes in short sales. Most borrowers in Las Vegas, he said, owe so much more on their mortgages than their properties are worth they can't qualify for a loan modification.


The Treasury Department outlined the plan last November, but doubled the original $1,500 in relocation money after realizing that many homeowners need more cash to move out. That's because landlords usually want large deposits from people whose credit records have gone sour after missing mortgage payments.


However, there are plenty of restrictions. To qualify, the home needs to be a borrower's primary residence. Homeowners either have to be behind on their mortgages or on the verge of becoming delinquent.


Currently, the program is not available for mortgages owned or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac, though the two government-controlled companies will soon follow suit, said the Treasury's Maggiano.


By Alan Zibel Boston Globe April 5, 2010

HOME HEALTH: Health Dangers Lurk in New England Floodwaters

PROVIDENCE, R.I.—The sun is out. The water level is falling. Traffic is starting to flow again. While things appear to be looking up in Rhode Island, the state hit hardest this week by three days of rain and record flooding, health and environmental officials warn there’s still danger below the surface.

Raw sewage, garbage, and oil are swirling around in the muddy floodwaters, creating a threat to people as the contaminants make their way toward and then down New England’s rivers and streams. In Rhode Island, the flooding stands to introduce pollutants into Narragansett Bay, the ocean inlet whose nooks and crannies give the tiny state more than 400 miles of coastline, and disrupt the important shellfishing industry there.


“The impact on this infrastructure is unprecedented,” said Curt Spalding, administrator of the New England region of the Environmental Protection Agency. “It’s a very rare occurrence when wastewater plants are completely disabled by flood, literally taken out and become inoperable. This is a very serious matter.”


The flooding has forced hundreds of people from their homes and businesses, and Gov. Don Carcieri said Thursday that damage could reach into the hundreds of millions of dollars. But there are bright spots: A stretch of Interstate 95, a major East Coast link, that had closed for days reopened to traffic. State offices reopened, and public colleges and universities were set to do the same Friday.


U.S. Homeland Security Secretary Janet Napolitano plans to tour the flood damage Friday. Members of the state’s congressional delegation are calling on the federal government to step up aid to help the economically battered state cope with the flooding.


President Barack Obama issued an emergency declaration for the state earlier in the week and made an unscheduled visit Thursday to Massachusetts, where nearly 3,500 residents have already applied for federal emergency flood assistance. He also called Carcieri on Thursday night and offered as much federal help as necessary to deal with Rhode Island’s massive flooding.


And in some good news from Connecticut, emergency management officials said the Connecticut River is expected to crest about 1 1/2 feet below major flood levels.


Even before the flooding began in earnest, the Rhode Island Department of Environmental Management, anticipating the danger, closed most of the bay and southern coastal ponds to shellfishing until further notice. Fishing was restricted in parts of Massachusetts, as well.


People who eat contaminated seafood or expose themselves to or swallow the bacteria-contaminated water can become sick with diarrhea and other gastrointestinal problems and E. coli poisoning.


“When they say sewage is in it, it worries you,” said Chris Palazzi, 43, who was still surveying damage to his Warwick home, where rushing water took out his driveway gravel and seeped into his basement.


Still, while serious in the short term, the problems are expected to dissipate within weeks as the flood water continues to recede—and they pale next to the similar but more sweeping contamination that plagued New Orleans after Hurricane Katrina, when millions of gallons of oil spilled into neighborhoods and canals.


“This was atypical, but the fish, the birds, the creatures of the bay will weather this just fine,” said John Torgan, a member of the environmental advocacy group Save the Bay.


Narragansett Bay is an estuary, a place where salt and freshwater mix and create an important incubator for sea and avian life. Though no one expects a mass fish kill, it’s possible that species such as starfish and mussels could die if exposed to a sudden, heavy burst of fresh water, Torgan said.


And the bay is bracing for a potential influx of contaminants like garbage or oil from industrial trucking facilities, already visible in the storm water floating across low-lying areas and down rivers.


“There will be a big load of sediment that hits Narragansett Bay. There’ll be a lot of polluted runoff, oils and things that are on our streets normally, on our lawns, on the watershed,” Spalding said. “It will come all at once.”


But so far, he added, he has not seen any major release of hazardous chemicals.


No public water supplies are known to have been contaminated, but people supplied by four small water systems are urged to boil it as a precaution. The state health department has asked restaurants to close if they were flooded in any area and environmental officials are urging caution for anyone cleaning up indoor fuel spills. And anyone who walks through the filthy floodwaters is potentially at risk.


Rhode Island health director David Gifford said he was unaware of anyone who had reported becoming sick but was monitoring the situation because of the extent of the flooding.


“This is happening in a lot of places; it’s pretty widespread,” Gifford said. “So it’s affecting a lot of people.”


Wastewater treatment plants ordinarily treat and purify waste and then discharge it back into the water.


But this week, as the region experienced the end of its rainiest month on record and the Pawtuxet River, normally 9 feet deep, crested at a record 20.79 feet, treatment plants in Warwick and West Warwick had to be shut down and a pump station in nearby Cranston gave out.


The two plants each process about 5 million gallons of raw sewage a day, and the station pumps about 8 million gallons daily, but that sewage is being discharged into the Pawtuxet, said William Patenaude, an engineer with the state Department of Environmental Management.


Robin Schutt, Cranston’s director of administration, said concerns have shifted now that the water has receded in some areas and many people have moved into a cleanup phase.


“We’ve been blessed with no fatalities,” she said, “but now with cleanup and people going back in, it’s one of the most critical times for safety.”


Eric Tucker Houselogic April 2, 2010

HOME MAINTENANCE: Sump pump trumps water intrusion

Stay safe with proper setup, power source

If you have problems with a wet basement or crawl space, you need to take care of all that water before it has a chance to cause structural damage, mold or any number of other nasty problems. For most situations, the best solution is the installation of a sump pump.

A sump pump is a special type of automatic, float-activated submersible pump, designed for this specific purpose. They are relatively inexpensive and fairly easy for the do-it-yourselfer to install.


Pick the right location

The first consideration for the successful operation of a sump pump is selecting and preparing the right location. Since the purpose of the pump is to remove accumulated water, it makes sense that it should be located at the lowest level of the basement or crawlspace.


This is usually easy to determine, as it's the area where the water naturally accumulates. You can look for either puddles of water or water stains on the dirt, concrete floor or stem walls, or on wood framing members. If none are visible, you may need to lay a level on a long board to check for natural slope, or, in the case of a large basement, even use a tripod-mounted transit or laser level. Either of these instruments can be rented from local rental yards.


Once the low spot has been determined, you need to create a hole for the water to accumulate. This hole -- called, not surprisingly, a sump -- is where the pump will sit. It needs to be large enough and deep enough to accommodate the pump, usually at least 2 feet in diameter and 1 to 2 feet deep. A concrete block or a couple of bricks are typically positioned at the bottom of the hole, which will give the pump a stable surface to rest on.


Provide a power source

The sump pump comes with an attached, grounded cord, and you need to provide an electrical outlet nearby for power. The outlet should be as close to the pump's location as possible, but high enough that it will not be affected by the ground water. All components, including the outlet and any metal electrical boxes or covers, must be properly grounded.


If you intend to use an existing outlet that is farther away from the pump than can be accommodated by the cord, only use an extension cord that is grounded and rated for outdoor use, and make sure it's the proper wire size to handle the amperage of the pump.


Specific extension cord gauges and maximum lengths will be provided in the instructions that accompany the specific pump. Do not use any cord that is not approved by the pump's manufacturer.


If you have any questions or doubts about the how to wire a new outlet or whether an existing outlet is safe for this use, be sure to consult with a qualified electrician.


Discharge and automatic operation

Next, you will need to run a pipe from the pump to a location that's suitable for disposing of the water. Somewhere on the pump will be a threaded outlet, designed for attaching the pipe. PVC is commonly used for this application, since it's inexpensive and easy to work with. However, copper or galvanized pipe is fine as well.


The size of the pipe is governed by the capacity of the pump, as well as the distance the water has to travel to its disposal point. Again, refer to the instructions for specific details.


There are a number of things to evaluate and consider when deciding where to route the discharge from the pump. The disposal site has to be outside of the basement or crawl space, or it obviously defeats the purpose of the pump. It also needs to be far enough away from the wall of the foundation to prevent it from seeping back under the house.


On the other hand, it cannot be located in such a way that the discharge water is directed onto any adjoining property.


For most situations, the best solution is a drywell -- a fairly deep, gravel-filled hole in the ground that will accept the discharge water and filter it safely down into the ground. In some areas, you may also be able to direct the water into a sewer or septic system for disposal. However, before setting up any disposal site for the water coming from your sump pump, you need to check with your city or county building or environmental health department for suggestions and restrictions.


Once the pump is installed in the sump hole and plumbed to the disposal location, it's simply a matter of plugging it in. The float on the side of the pump automatically controls the operation from there. As water accumulates in the sump, the float will rise. When it reaches a pre-set level, it activates the pump motor, which in turn pumps the water out through the discharge pipe. As the water level drops in the sump, the float lowers until it shuts the pump off again.


Very little maintenance is required, but on the other hand, don't forget that the pump is down there. You need to periodically clean debris out of the sump to keep the pump from being clogged, and it's a good idea to fill the sump with water every once in a while and watch that the float turns the pump on and off at the proper water levels. Also, inspect the discharge pipe periodically to be sure that the discharged water is not draining back toward the house or onto an adjacent property.


By Paul Bianchina, Inman News April 2, 2010

ARCHITECTURE: A Softer City Hall

Young architects offer visions for turning plaza into something a bit more welcoming

Imagine the brutish Boston City Hall with its three-story brick base replaced by glass walls, the lower levels seemingly part of one long open space stretching to Faneuil Hall. Or perhaps it could be paired with a new wing of glass-enclosed shops, or even a new building altogether, adding space and a rooftop garden to brighten its gray facade.

Re-imagining City HallThose were the visions created by finalists in the Boston Society of Architect’s annual Rotch design competition, a sort of “American Idol’’ for young architects. The challenge for the six contestants happened to be a subject very much on the minds of Boston officials: Transforming City Hall and the desert of brick around it, while adding a particular component — a museum focused on Massachusetts history — to its lower floors.


Though ultimately a hypothetical exercise, the Rotch contest showed the potential for remaking the much-reviled City Hall and its sprawling empty plaza at a time when its fate is in limbo. Mayor Thomas M. Menino has suspended his plan to build a new city hall on the South Boston waterfront, and in the interim, architects, urban planners, and civic activists have hotly debated what to do with a building that seems to have few friends.

Indeed, the young architects’ proposals were well-received within City Hall itself. Boston’s chief planner, Kairos Shen, who also served as a judge in the competition, said some of the changes could — for fairly short money — make the building much more inviting.


“Unlike previous efforts to remake City Hall and the plaza,’’ Shen said, “these kinds of interventions seem more doable. Some simple changes like this could be achievable in the near term.’’


The Rotch contest winner was Christopher Shusta, who sought to soften the building’s imposing presence while also adding attractions to bring more visitors to the site. He would build the museum in a horizontal stretch along Congress Street, adding above it an outdoor terrace that faces the area of the plaza where concerts and other public events are currently held.


Then Shusta would extend City Hall’s interior courtyard, a dark, disused space, out through the side of the building, connecting to the terraced area. The interior glass walls would look onto a newly brightened courtyard, which would be draped with geometrically shaped wooden shutters in natural finish.

JUST FOR FUN: Dark Divider

Stomacher - Untitled/Dark Divider from Sean Stiegemeier on Vimeo.

FINANCE: Overdue mortgage holders catch up

New York - Borrowers who caught up on overdue mortgages outnumbered people who became newly delinquent on insured home loans for the first time in almost four years. PMI Group led mortgage insurers higher in New York trading.

In February, 68,675 homeowners with privately insured mortgages fell into default, compared with 80,758 who got back on track, a report yesterday from the Washington-based Mortgage Insurance Companies of America said. In January, the trade group reported 98,685 new defaults and 61,195 cures. It last reported that recoveries exceeded defaults in March 2006.


“The significance is substantial, it’s enormous,’’ said Matthew Howlett, an analyst with Macquarie Group. Recoveries outpacing new defaults “signals a turning point’’ for mortgage insurers, he said.


MGIC Investment Corp., the biggest US mortgage insurer, number two Radian Group, and number three PMI are facing fewer claims as the economy recovers and the Obama administration works with the nation’s biggest banks to prevent foreclosures. Philadelphia-based Radian, which has reported three straight annual losses, said in February that delinquencies were slowing and may fall this year.


PMI, based in Walnut Creek, Calif., rose 88 cents to $5.42 in New York Stock Exchange composite trading. MGIC rose 84 cents to $10.97 while Radian advanced $1.03 to $15.64.


The Treasury Department reported on March 12 that lenders in the Home Affordable Modification Program led by Bank of America Corp. and JPMorgan Chase & Co. successfully converted 168,708 trial plans into permanent loan revisions through February, up from 116,297 a month earlier.


Mortgage insurers, which pay lenders when foreclosure fails to recoup costs, have suffered from a surge in claims as borrowers struggle to meet payments or refinance debts.


About 2.82 million US homeowners lost their properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc. said in January.


Bloomberg News April 1, 2010

BUYING & SELLING: Real estate market hopeful but wary

Is the Massachusetts housing market officially in recovery?


The numbers alone seem to say yes. Median sale prices for single-family homes increased 8.4 percent in February, marking the third consecutive month of higher prices compared with the same three months last year, according to data released yesterday.


Sales volume also rose 13.5 percent compared with February 2009, the eighth straight month of improvement compared with the same stretch last year, according to Warren Group, a Boston company that tracks local real estate. Condominium sales and prices also were up last month.


And there was more upbeat real estate news in another housing report released earlier this week — Boston area home values swelled by 0.3 percent in January in seasonally adjusted data, according to the S&P/Case-Shiller Home Prices Indices.


But these are not normal times, and the accumulation of data does not tell the full story of the market, housing specialists and economists said. A looming question is whether the market will keep its momentum after federal efforts to boost home sales end this spring. The federal home buyer’s tax credit, which has spurred sales nationwide, is coming to an end. To qualify, buyers must enter into a binding contract on a home before May 1, and close the deal before July 1.


Also, the Federal Reserve yesterday halted its effort to keep interest rates at rock-bottom levels by purchasing mortgage-backed securities.


“There is a real concern about what will happen to home sales once the federal government withdraws its support of the housing sector,’’ said Timothy M. Warren Jr., chief executive of Warren Group.


Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, describes the situation as being like a tug of war. On one side, sales are boosted by more affordable housing prices and pent-up demand; on the other, sales will be slowed by the expiration of a tax credit and a likely rise in interest rates.

BUYING & SELLING: Range of Incentives Aren't Attracting Home Buyers

Greater price affordability, record-low interest rates and historic levels of government-backed home-buying assistance should mean boom-time-level home sales.


Unfortunately, too many consumers, who might otherwise consider buying a home, face adverse conditions that are undermining their confidence in the American Dream.


Employment uncertainty, tight mortgage underwriting standards, deep-pocket investors, the inability to sell a home and move up, even winter weather have conspired to cut into home buying hopes this year.


The latest U.S. Census Bureau data reveal that sales of new homes fell for the fourth consecutive month in February, to a seasonally adjusted annual level of 308,000 sales. That's a year-over-year decline of 13 percent and the lowest level ever for the bureau's monthly New Residential Sales report.


Footnotes included with the data underscore just how significant the home sales downturn has become: "Changes in seasonally adjusted statistics often show irregular movement. It takes four months to establish a trend for new houses sold."


The trend of existing home sales is only slightly better.


February sales of existing homes were up 7 percent from last year, and from January to February they declined only 0.6 percent -- less than economists expected. However, February marked the third consecutive month of falling home sales, according to the National Association of Realtors (NAR).


Falling home sales typically mean home prices are off, too.

The median price of all types of homes nationwide was $165,100 in February, almost 30 percent off the peak reached in July 2006, according to NAR. In some locations, home prices have rolled back to 2000 levels, slashed by up to 50 percent.


"Although sales have been higher than year-ago levels, for eight straight months, and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment," said NAR's chief economist, Lawrence Yun.


The New 'NINJA' Loan


Blame the economy. Today, you can't buy a home if you don't have a job.

According to the U.S. Bureau of Labor Statistics, the national unemployment rate ended 2009 at 10 percent and by February had improved only to 9.7 percent. In major housing areas it remains in double digits -- 11 percent in San Diego and San Francisco; about 12 percent in Chicago, Los Angeles, Washington, D.C., and the state of Florida; 12.4 percent in Silicon Valley; 13.8 in Las Vegas; and 15.6 percent in Detroit.


During boom times, unemployment simply wasn't enough to automatically generate a mortgage application rejection. So-called NINJA loans (No Income, No Job or Assets) were all the rage.


Now those NINJAs are No Income, No Job or Approval.

FINANCE: Homeowners Balk as Tax Bills Stay High

Javier Hyland was furious when he got his latest property tax bill from Miami-Dade County.


First, the county put the value of his ocean-view apartment at $417,000. He can’t see any way the place is worth more than $400,000 after a meltdown in the South Florida real estate market. Worse, the county assessed his neighbor’s bigger, nicer, newer flat at only $407,000: “Is that fair?” asks Hyland, a pricing manager for a shipping company.


The property taxes in dispute amount to just $360. But Hyland, 37, is appealing his assessment anyway, even though it will mean trudging into city offices to make his case.


He’ll probably have to stand in line: 143,000 Miami-Dade property owners appealed their property tax bills last year. And Harvey Ruvin, the county’s clerk of courts, expects a similar deluge in 2010. Property tax appeals in the county hit 104,000 in 2008 compared with an average 40,000 in normal years.


From Florida beachfronts to Nevada deserts, fed-up homeowners are challenging property tax bills that have stayed high despite the housing crisis. Retiree Carol Schneider, 63, of Ferguson, Mo., never saw herself as a tax rebel: “In the past, I just paid my taxes whether I agreed with them or not,” she says. “But the last tax bill increased so much … I decided to fight it.” She prevailed, persuading St. Louis County to cut her tax bill in half.


Angry homeowners like Schneider and Hyland say their tax assessments and tax bills haven’t come down as fast as real estate prices in the worst housing collapse since the 1930s.


They’re right: Despite a real estate implosion, property tax revenue collected by states and localities actually rose 2.7% last year to $421.8 billion, according to the U.S. Bureau of Economic Analysis.


Property taxes have been a lifeline for flailing local governments, which collect more than 96% of property taxes. Toss them out, and the remaining sources of state and local tax revenue—including sales and income tax receipts—sank more than 9% last year from 2008.


“If you lose your job, (income tax) withholding stops. You stop buying cars and going out to restaurants,” which erodes sales tax receipts, says Donald Boyd, senior fellow at the Rockefeller Institute of Government in Albany, N.Y. “It doesn’t work that way with property taxes.”


What makes property taxes so different? Property taxes are often based on outdated market prices.
A lot can happen to housing prices between the time properties are assessed and the time the homeowners get their property tax bills. Some governments reassess property only every three or four years. Others wait even longer: “Utah once went 20 years without conducting meaningful reappraisals,” Federal Reserve economist Byron Lutz noted in a 2008 paper.


Overall, Lutz found that it takes three years for changes in housing prices to have an impact on property tax revenue. “The 2009 numbers reflect what was happening in city housing markets in 2007, maybe even 2006,” says Christopher Hoene, director of the National League of Cities’ Center for Research & Innovation. “They were still picking up some of the growth at the end of the boom.”


Some local governments have raised property tax rates, offsetting falling home prices.
Some places automatically adjust tax rates to keep property tax revenue stable no matter what happens to real estate prices. Others have imposed tax increases to deal with budget shortfalls.


After years of rapid population growth, for instance, suburban Gwinnett County, Ga., raised its 2009 property tax rate by 21%. So, many Gwinnett County homeowners are seeing bigger tax bills, even though their home values have fallen.


Gwinnett County homeowner Scott Johnson, an executive at an Atlanta technology firm, says his home’s tax bill went up 15% last year, and its market value fell. “Is it any wonder that people are getting mad?” he asks. “I am going to try to appeal but don’t expect much luck.”


Gwinnett County is expecting 10,000 appeals this year, vs. 7,500 in 2009 and 5,000 in ordinary times, says county assessor Steve Pruitt.


Most states limit how much property taxes can rise in a booming market.
That keeps a house’s taxable value below its market value. In some cases, the gap remains even after housing prices have fallen. Which means some homeowners are seeing bigger tax bills for homes that are worth less than they were the last time their property taxes came due.


In 1995, for instance, Florida instituted a constitutional amendment limiting increases in the tax assessments on owner-occupied homes to no more than the consumer price inflation rate or 3% (whichever was lower).


After an exhilarating run-up and a gut-wrenching decline in housing prices, some homes’ taxable values are still below their market values, leaving room for higher tax bills. In Palm Beach County, for instance, 25% of properties will see an increase this year in their assessed values.

BUYING & SELLING: Home Prices Post Smallest Annual Decline in 3 Years

NEW YORK—Home prices showed the smallest annual decline in almost three years in January, indicating there are surprising areas of strength in the housing market.


The Standard & Poor’s/Case-Shiller 20-city home price index fell just 0.7 percent from last year on a seasonally adjusted basis. The index reading of 146.32 was almost in line with analysts expectations, according to a survey by Thomson Reuters.


Better still, prices rose 0.3 percent from December to January, the eighth consecutive monthly gain. Among the 20 cities in the index, 12 rose.


The index, released Tuesday, is up nearly 4 percent from its bottom in May 2009, but still almost 30 percent below its May 2006 peak.


Source: Associated Press/AP Online March 30, 2010

BUYING & SELLING: Modern Marvels

These homes depart from the traditional New England look

$595,000
16 Overlook Drive, Bedford (see this listing on Boston.com)
Square footage 2,337
Lot size 40,089 square feet
Bedrooms 3
Baths 2 full, 1 half
2010 taxes $6,682

Last sold for $40,000 in 1968 (estimated)


PROS Built in 1967, this house has clean lines and a huge deck overlooking the wooded lot. Enter into the living room, which is open to the family room and dining area. The family room has a gas fireplace with stone mantel and is also open to the kitchen, which features a large island, wet bar, and butler’s pantry. Two bedrooms share a hall bath, and the master has an en suite bath, while the lower level contains yet another family room and a half bath with laundry. CONS Many of the original finishes have been lost to renovations.

$720,000
87 Wolf Rock Road, Carlisle (see this listing on Boston.com)
Square footage 2,782
Lot size 2.2 acres
Bedrooms 4
Baths 2 full
2010 taxes $9,516
Last sold for $149,000 in 1982


PROS This 1964 Deck House has a great layout. Downstairs, in addition to two bedrooms and a bath, is a den with fireplace and access to a rhododendron-screened side deck with hot tub. Upstairs are two more bedrooms, both with cathedral ceilings, and a bath, as well as the open-plan main living space. The kitchen has newer cabinets and appliances, granite countertops, and an island; beside it is a large dining area that opens to a family room with wood stove and screened porch. Skylights abound. CONS The downstairs bathroom could use updating.



$1,048,888
10 Moon Hill Road, Lexington (see this listing on Boston.com)
Square footage 2,319
Lot size 25,954 square feet
Bedrooms 4
Baths 2 full, 1 half
2009 taxes $9,066

Last sold for $794,000 in 2002


PROS In the historic Six Moon Hill neighborhood, this 1948 house has many updates, including a new kitchen with stainless appliances and a quartz countertop. The kitchen is open to the dining area, which shares a double fireplace with the living room. Across the foyer from the main living area are three bedrooms and a shared bath as well as the master, which has an impressive dressing room and full bath. Down a spiral staircase are a family room and half bath. CONS The main living area is on the small side.

Elizabeth Gehrman Boston Globe March 28, 2010