10 Inexpensive Ways to Wow Buyers

Buff your hardwoods. Great wood floors are hot in historic and vintage homes.

Now is the time for home owners contemplating a spring sale to spruce up their properties in anticipation of what Mike Larson of Weiss Research calls a potentially vibrant home-selling season.  

“If you have been beating your head against a wall, this is going to feel a lot better,” he says.

“I am amazed again and again.  People decide in the first 60 seconds that they are in a home if they are going to buy it,” according to Geoffrey Gyrisco.  “First impressions really count.” 

Here are 10 cheap ways to make a property more attractive to shoppers:

1. Improve first impressions. Touch up the paint on the front door and other areas that buyers see first.

2. Clean up the landscaping. Trim the hedges and trees and plant some annuals in the flowerbeds.

3. Paint the interior. A coat of light yellow or cream with contrasting white woodwork looks fresh and clean.

4. Refurbish the floors. Buff the hardwoods. Hardwoods are hot in vintage and historic homes. Otherwise install new carpets – or at least get them professionally cleaned.

5. Take care of the big problems. If the house needs a roof or the front stoop is crumbling, get them fixed.

6. Buy warranties. Putting appliances under warranty gives homebuyers a secure feeling.

7. Improve energy efficiency. New efficient furnace or improved insulation tells a potential buyer the seller is on top of things plus they come with tax benefits.

8. Replace light fixtures. Updated fixtures, especially at the entrance way and in the foyer, create a good first impression.

9. Buy a stove. Home owners whose kitchen isn’t top of the line can jazz it up for a few hundred dollars by buying a new stove, which gives the room a fresh feel.

10. Tidy up the bathrooms. Get rid of mildew, replace caulking, and clean or replace stained sinks.

Revised based on an article in U.S. News & World Report, Luke Mullins (01/21/2010)

FHA Announces Yet More Changes to Mortgage Requirments

Today most mortgages are US government backed loans, and the FHA is constantly revising its requirements.  Thus it is critical to have a lender like Waterstone Mortgage who monitors and implements the daily changes or a home purchase or sale is likely not to close.  Here are the latest requirements as summarized by Waterstone.

1. Mortgage insurance premium (MIP) increase and adjustments to upfront/annual MIP relationship
• Raise upfront MIP by 50bps to 2.25%
Policy change through Mortgagee Letter – effective in Spring
• Pursue legislative authority to increase the statutory cap on the annual MIP. Upon receiving legislative approval, the upfront/annual premium structure will be adjusted, with some of the upfront premium being shifted to the annual premium. This shift will allow for an increase to the capital reserve with less impact to the consumer.
2. New downpayment / credit score requirements
• Loans to borrowers with a FICO of 579 or lower will require a minimum 10% downpayment
• Loans to borrowers with a FICO of 580 or above will require current minimum 3.5% downpayment
• Policy change through Federal Register Notice with comment period
3. Reduce allowable seller concessions from 6% to 3%
• Conform with industry standards and reduce potential value inflation
• Policy change through Federal Register Notice with comment period
4. Increase enforcement on FHA lenders
• Publicly report lender performance rankings to complement
currently available Neighborhood Watch data
Operational change; does not require new regulatory action
• Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
Implement Credit Watch termination at lender underwriting ID in addition to originating ID
Mortgagee Letter – effective immediately
• Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lender’s using delegated insuring process
Policy specifications through regulation with comment period
• Pursue legislative authority to increase enforcement on FHA lenders. Specific authority includes:
Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches
Previously Announced Policy Changes
Effective January 1, 2010
HUD announced a series of initial policy changes on September 18, 2009 as a first round of risk management.
Changes implemented via mortgagee letter, with an implementation date of January 1, 2010:
1. Modifications to streamline refinance documentation requirements
2. New appraisal standards – implementation date has been extended to February 15, 2010 to enable system changes
3. Submission of audited financial statements required for supervised lenders
30-day notice and comment period ended on December 30, 2009 (Comments currently under review to develop final rule.)
4. Increase net worth requirements for approved mortgagees from $250,000 to $1 million within one year and $2.5 million within three years
5. Eliminate independent FHA approval of mortgage brokers who originate but do not fund loans
FHA Policy Changes Announced January 20, 2010
Joe Long
Loan Officer
office: 608-662-9585
jlong@waterstonemortgage.com
www.refinancemadison.com
waterstone mortgage is a wholly owned subsidiary of waterstone
bank ssb (nasdaq: wsbf)

Mortgage Rates Continue to Fall; Raise Hopes for Spring Housing Market

As reported in the Washington Post, rates for 30-year home loans fell below 5 percent this week. The average rate on a 30-year, fixed-rate mortgage was 4.99 percent, down from 5.06 percent a week earlier .  The average rate on 15-year, fixed-rate mortgages fell to 4.4 percent, down from 4.45 percent last week.

The drop comes after interest rates fell in the bond market this week as concerns about the economy increased demand for the safety of government bonds, which is closely tied to mortgage rates.

The average rate on 15-year, fixed-rate mortgages fell to 4.4 percent, down from 4.45 percent last week. according to Freddie Mac.

Falling mortgage rates might help bolster the nation’s housing market as borrowing becomes less expensive for consumers. The decline in home-loan rates boosted the number of mortgage applications by more than 9 percent last week, according to data from the Mortgage Bankers Association.

Morgan Greenseth on the Future of Shopping Malls

As retail vacancies grow ever more conspicious, even around Madison, Wisconsin, a provocative essay by Morgan Greenseth, “The Future of  Shopping Malls: An Image Essay” is worth visiting.  She begins:

“Mall culture in the United States — at least as we know it — is coming to an end. This trend is likely to continue, as the U.S. economic downturn causes people to reduce their trips to stores and to shop less, forcing more shops to close and leaving malls deserted.

According to an article that ran in The Economist at the end of 2007:

In the past half century … [malls] have transformed shopping habits, urban economies and teenage speech. America now has some 1,100 enclosed shopping malls, according to the International Council of Shopping Centres. Clones have appeared from Chennai to Martinique. Yet the mall’s story is far from triumphal. Invented by a European socialist who hated cars and came to deride his own creation, it has a murky future. While malls continue to multiply outside America, they are gradually dying in the country that pioneered them.”

For the complete article with numerous illustrations click here.

Donovan Rypkema Questions Thoughtless LEED Certification and Density

The nation’s leading historic preservation economist, Donovan Rypkema, has questioned the unthinking drive for LEED certification and density in down-towns at the expense of historic buildings.  Too often architects are advocating LEED certified buildings as better for the environment than an existing historic building when a rational analysis of the energy embodied in an existing historic structure would lead to its preservation.  Similarly planners and developers are pushing downtown density at the expense of historic properties, livability and sustainability.  Here is a great 3 minute hard hitting video clip. To those of us living in Madison, the situation described by Rypkema sounds all too familiar.

FHA, Nation’s Largest Mortgage Lender Provides Details on Major Changes

Now we have the details on the major changes being made by the FHA in its lending practices.  These can have a huge impact, as the FHA by default has become the nation’s number one mortgage lender.

FHA Policy Changes Announced January 20, 2010
1. Mortgage insurance premium (MIP) increase and adjustments to upfront/annual MIP relationship
o Raise upfront MIP by 50bps to 2.25%
 Policy change through Mortgagee Letter – effective in spring
o Pursue legislative authority to increase the statutory cap on the annual MIP. Upon receiving legislative approval, the upfront/annual premium structure will be adjusted, with some of the upfront premium being shifted to the annual premium. This shift will allow for an increase to the capital reserve with less impact to the consumer.
2. New downpayment / credit score requirements
o Loans to borrowers with a FICO of 579 or lower will require a minimum 10% downpayment
o Loans to borrowers with a FICO of 580 or above will require current minimum 3.5% downpayment
o Policy change through Federal Register Notice with comment period
3. Reduce allowable seller concessions from 6% to 3%
o Conform with industry standards and reduce potential value inflation
o Policy change through Federal Register Notice with comment period
4. Increase enforcement on FHA lenders
o Publicly report lender performance rankings to complement currently available Neighborhood Watch data
 Operational change; does not require new regulatory action
o Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
 Implement Credit Watch termination at lender underwriting ID in addition to originating ID
 Mortgagee Letter – effective immediately
o Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lender’s using delegated insuring process
 Policy specifications through regulation with comment period
o Pursue legislative authority to increase enforcement on FHA lenders. Specific authority includes:
 Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
 Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches
Previously Announced Policy Changes Effective January 1, 2010
HUD announced a series of initial policy changes on September 18, 2009 as a first round of risk management.
Changes implemented via mortgagee letter, with an implementation date of January 1, 2010:
1. Modifications to streamline refinance documentation requirements
2. New appraisal standards – implementation date has been extended to February 15, 2010 to enable system changes
3. Submission of audited financial statements required for supervised lenders
30-day notice and comment period ended on December 30, 2009 (Comments currently under review to develop final rule.)
4. Increase net worth requirements for approved mortgagees from $250,000 to $1 million within one year and $2.5 million within three years
5. Eliminate independent FHA approval of mortgage brokers who originate but do not fund loans

Rush to Take Advantage of Low Mortgage Rates &

Looking at the national real estate market, Chris McLaughlin reported today that “borrowers are rushing to take advantage of low borrowing costs and other incentives while they last. The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending January 15, 2010.  The Market Composite Index increased 9.1 percent on a seasonally adjusted basis from one week earlier, and decreased 52.3 percent compared with the same week one year earlier.  The Refinance Index increased 10.7 percent from the previous week and the seasonally adjusted Purchase Index increased 4.4 percent from one week earlier.  The unadjusted Purchase Index increased 9.8 compared with the previous week and was 19.1 percent lower than the same week one year ago.”

“The refinance share of mortgage activity increased to 71.7 percent of total applications from 71.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.1 percent from 4.0 percent of total applications from the previous week. Average 30-year mortgage rates dropped to 5 percent last week, and it’s still before the deadline to take advantage of the government’s extended and expanded federal tax credit.  Despite these lures to buyers, the fallout from unemployment, underemployment and the ongoing sale of foreclosure properties continue to keep many potential buyers out of the market, and [nationally] housing is unlikely to gain much traction until these barriers start to fall.”

The US Number One Lender Raises Loan Requirements

In a dramatic  announcement–an announcement that was impossible to locate on the FHA official website, but was widely reported in major media outlets– the nation’s leading mortgage lender significantly tightened lending standards.

The measures were necessary as members of Congress and others grow increasingly concerned about the long-term solvency of the agency, given the current mortgage default rate.

For a more complete explanation of these changes, please consult with a professional mortgage specialist.

On Tuesday, January 19, Reuters reported in part, below:

WASHINGTON, Jan 19 (Reuters) – The U.S. Federal Housing Administration said on Tuesday it will raise the minimum down payment required to secure an FHA-backed mortgage for less creditworthy borrowers as part of a series of steps to shore up the agency’s finances.

The FHA said borrowers with credit rating scores below 580 would be required to make a down payment of at least 10 percent, while the rate for higher-ranked borrowers would stay at 3.5 percent.

It also said it would increase the up-front mortgage insurance premium, which is paid by the borrower when the loan is made, to 2.25 percent from 1.75 percent.

The FHA also said it was cutting the amount of aid sellers could provide buyers to 3 percent of the purchase price from 6 percent, a move it said could help lessen incentives to inflate appraised home values.

The FHA said in November that its capital reserves had dwindled to just 0.53 percent of the value of the thousands of home mortgages it insures, well below the 2 percent required by law and down sharply from 3 percent in 2008.

To help rebuild reserves, the agency said it would seek congressional approval to allow it to raise annual mortgage insurance premiums — which are paid out by the borrower over the life of the loan — above the 0.55 percent maximum.  If approved, this would allow it to shift some of the increase in the up-front premium to the annual premium.

Applications for FHA-guaranteed mortgages exceeded an annual rate of 3 million in October, nearly triple the level in 2007. In 2006, when subprime and other Wall Street programs were at full speed, the annual rate for applications was less than 600,000.

Donovan Rypkema & Economic Impacts of Historic Preservation

The following is taken from the Connecticut Trust for Historic Preservation.  Other state such, as Missouri, are facing up-hill battles to defend their state tax credits for historic property rehabilitation in the face of massive state budget deficits.

What Is Preservation Worth? The Need for Studying Economic Impacts

When the Connecticut General Assembly held hearings in December on Governor Rell’s deficit mitigation plan, Helen Higgins, the Connecticut Trust’s executive director, and John Simone, President of the Connecticut Main Street Center, both got legislators’ attention by testifying about the effectiveness of preservation programs as job creators. While figures from Rhode Island and other nearby states helped them make their point, information specifically about Connecticut would have been much more persuasive.

As the economic crisis continues and Connecticut, like many other states, faces the prospect of drastic budget cuts to remain solvent, historic preservation is receiving extra scrutiny. Quoting Santayana (“Those who cannot remember the past are condemned to repeat it.”) isn’t enough. Talking about character and quality of life isn’t enough. The challenge, increasingly, is to demonstrate that preservation offers measurable economic benefits.

What preservationists need to remember, and all too often don’t, says economist Donovan Rypkema, is that historic buildings are real estate. They cost money to acquire, maintain, and operate, and the people who provide that money expect some return on that money. In a few cases the return may be related to mission or the satisfaction of doing good, but for most buildings the return must be financial. Owners and developers want to be sure that investing in historic buildings will make money for them, and legislators looking at funding for preservation want to be sure that doing so will create jobs or increase tax revenues or provide a catalyst for additional development.

Rypkema, a Washington D.C.-based real estate and economic development consultant, is the nation’s leading expert on the economics of historic preservation. Since 1983 he has provided ongoing consulting services to the National Trust for Historic Preservation and the National Main Street Center and he has conducted statewide studies of the economic impact of historic preservation in Virginia, Kentucky, North Carolina, Indiana, New York, and Maryland, as well as a citywide study in Philadelphia. Rypkema’s book, The Economics of Historic Preservation: A Community Leader’s Guide (2^nd edition 2005), is the basic work on the subject.

Fortunately, the Connecticut Main Street Center and the Connecticut Commission on Culture & Tourism (CCT) brought Rypkema to Hartford just two days after the legislative hearing to present a workshop called “Measuring Economic (and other) Impacts.”

The workshop was planned to lay the ground for a major study of the economic impact of historic preservation in Connecticut, which the CCT hopes to commission within the next year. Preservationists have long called for such a study to help them make the case for preservation activities in Connecticut and to support efforts to increase funding for preservation programs. Similar studies from other places have been helpful, but none have carried the weight of a Connecticut-specific study.

At the workshop, Rypkema primarily discussed the various factors that go into undertaking an economic impact study. He outlined the “measurables” as well as non-market approaches and innovative international approaches. For an audience made up largely of historians and old-building fans, the material was difficult but exciting. Rypkema showed that in many states and cities, preservation does indeed provide a return on investment, that rehabbing old buildings not only makes sense culturally, it also makes sense economically.

The CCT study will look at investment generated in Connecticut by the federal rehabilitation tax credit and the three state rehabilitation tax credits (see CPN November/December 2008). It will measure such results as jobs created and number of housing units created; in addition, a new formula developed in Maryland will be used to calculate the “positive environmental impact” such as open space and farms not developed as a result of historic buildings’ being put back into use. Preservationists expect the results to provide useful arguments for supporting the tax credits as well as preservation programs supported by the Community Investment Act.

The CCT must submit its proposal for the study to the Office of Policy and Management for approval. Once it is approved and the contracts are signed, it should take between 90 and 120 days to complete the study.

Measurables for Historic Preservation

What would an economic impact study of preservation activity measure? Donovan Rypkema offered a long list of potential areas in which preservation can make a difference.

Major measurables

• Jobs and household income
• Heritage tourism
• Downtown revitalization
• Property values

Minor measurables

• Museums and historic sites
• Preservation organizations
• Arts and crafts
• Movie industry

Program measurables

• State tax credits
• State grant/loan programs
• ISTEA/TEA-21 (transportation enhancement funding)
• Other

Contributory measurables

• Small business incubation
• Affordable housing

Neighborhood measurables

• Economic integration
• Neighborhood growth
• Home ownership
• Historic district as community “mirror”

Environmental measurables

• Smart growth goals
• Compact development/density
• Landfill
• Embodied energy

Intangibles

• Quality of life
• Sense of community
• Other

Save Those Historic Windows & Save Energy

“Consider it this way: If you had a beautiful piece of art that was custom designed, crafted by hand, made from native old-growth wood, and imbued with clues to its age and crafting traditions, would you throw the authentic piece in the dumpster if a simulated plastic version suddenly became available?

Seems ridiculous, right? However, this is precisely what people all over the country are doing when they rip out their historic wood windows and replace them with new windows.”

For an extensive guide to historic windows and many aspects of energy efficiency in older buildings, visit www.Preservationnation.org/weatherization.

Another great resource, relevant to Wisconsin is the Michigan State Historic Preservation Office blog site.

Home Energy Efficiency Program for Middle Class?

Home energy efficiency program coming? According to Chris McLaughlin, in his daily web newsletter (source of most of this article), “the federal government is expected to unveil a new program in the next couple of months–that if approved– may reimburse homeowners for up to half the cost of making their homes more efficient. Homeowners will get the most return for the money in simple upgrades like caulking the windows, putting insulation in the attic, and changing the light bulbs – not new windows, refrigerators or dishwashers. A complete energy retrofit – which could include caulking and insulation as well as new windows, appliances and boiler, could slice a home’s energy consumption in half, according to Lane Burt, manager of building energy policy at Natural Resources Defense Council. But getting all that work done might run into the tens of thousands of dollars. And any new federal program–which is still being drafted and is not guaranteed to become law— would cap the government reimbursements at $12,000, said Burt. The original proposal, which called for $23 billion to be spent on energy retrofits, was estimated to create over half a million jobs, according to CleanEdison, an association of green building professionals. Those familiar with the proposal say the final bill may set aside $10 billion for energy retrofits. Still, it’s a lot more than is currently being done; while some states have reimbursement programs, there is no federal plan.”

“The original stimulus bill contained $5 billion for low income homeowners and money to retrofit federal buildings, but nothing for middle income Americans. The new proposal has no income restriction. But in addition to creating jobs and saving consumers money, it also lays the framework for an energy efficient economy and achieving the 80% reduction in greenhouse gases most scientists say is necessary to avoid the worst impacts of global warming.”

A letter to National Trust for Historic Preservation members from President Richard Moe, reported that the National Trust is working hard to assure that energy efficiency programs protect historic fabric, not destroy it. Thoughtfully reusing existing historic buildings are one of the most effective ways to save energy and reduce carbon dioxide emissions.  In particular, the National Trust is working to protect historic windows, often critical to the historic character of a building and which can be at least as energy efficient as new windows, if repaired and used with storm windows.