Green News

Builders Fight for Value Recognition for Energy-Efficient Homes

Last week, HUD Secretary Shaun Donovan and U.S. Department of Energy Secretary Steven Chu met at an energy auditing company on Long Island to announce the launch of the FHA’s new PowerSaver pilot program.

Working with 18 lenders across the country, the program will allow homeowners to borrow up to $25,000 to finance energy improvements in an existing home, including improvements to insulation, duct sealing, replacement doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems. Terms can go up to 20 years, and rates will be lower than standard. The FHA will guarantee up to 90% of the loan.

The idea is to generate interest in the private sector, which Donovan is hoping will get on board by providing these types of loans more readily.

Fannie Mae recently came out with a similar offering, a new Energy Improvement feature for mortgage loans. Fannie had already stopped offering its Energy Efficient Mortgage feature, which could have been used to finance the purchase of a new energy-efficient home. The replacement program can only be used to make energy improvements to an existing home.

The financing will cover energy improvements deemed cost-effective by a RESNET home energy rating, and amounts can go up to 10% of the post-improvement appraisal.

Unlike Fannie, the FHA still has a program for buyers of energy-efficient new homes intact. Its Energy Efficient Mortgage program can be used to help home buyers finance energy-efficient features in a new home as part of an FHA insured mortgage.

However, the increasing shift in emphasis toward improving the energy efficiency of existing homes rather than new homes is symptomatic of the disconnect between what government entities see as the market reality and what builders are seeing in the field.

According to a Fannie Mae spokesperson, the company feels that private lenders are meeting the needs of buyers of energy-efficient homes, suggesting that lenders will value energy-efficient features appropriately.

Shaun Donovan agrees. When Builder questioned Donovan after the PowerSaver announcement about why the government seemed to be moving its focus to existing homes, Donovan emphasized that the benefits of energy-efficient building are being recognized by private sector lenders and appraisers.

“We’ve seen greater progress in the new-home market through local building codes,” Donovan told Builder. “What we’ve seen more and more are appraisers and Realtors who see the value in [energy-efficient construction], and lenders are recognizing that.”

But that’s not what builders are saying.

About two years ago, Meritage Homes decided to go all-in with energy efficiency. “We took the approach that we were going to start over and change the way we build,” C.R. Herro, vice president of environmental affairs at Meritage, told Builder. “We frame different. We build different. We use different appliances and features.”

As a result, Herro reports that Meritage can build a home that uses half the energy and half the water of a traditional home with only a 10% increase in the cost of construction. The energy-saving upgrades Meritage includes can save the homeowner between $1,200 and $3,600 a year in utility bills, depending on the home (some of Meritage’s homes achieve net-zero energy efficiency).  

But when asked if appraisers and banks recognize the value of the energy-efficiency benefits Meritage includes, Herro replied emphatically, “Absolutely not! We’re building a lot of significant improvements into our homes. We’re doing net zero. We’re doing solar. And we’re struggling to get a penny out of it.”

“Conventional construction is leaky,” Herro said. “A traditional home will have to recondition all of the air in the entire house 70 times a day. When you rebuild [to high energy-efficiency standards], you can cut that down to five.” According to Herro, such a reduction would cut heating and air-conditioning costs down by 60%.

The trouble, Herro said, is that the people consumers look to when trying to gauge the value of a home—appraisers and lenders—are failing to recognize the value in the energy-efficiency upgrades the homes include, and as a result, the builder is forced to absorb that additional cost.

Despite these challenges, Meritage has been able to make energy-efficient building work as a business model, largely because of customer awareness that sees the value in it. Also, as one of the largest builders in the country, Meritage is able to achieve economies of scale by building all of its homes to energy-efficient standards. “But the average builder is incentivized to build a less energy-efficient home,” Herro said. “It’s ridiculous that you can build to [a high] level of efficiency, but it has a negative effect on your income statement.”

In an effort to remedy the problem, Herro is promoting the Sensible Accounting to Value Energy (SAVE) Act, a proposal supported by Sen. Michael Bennet (D-Colo.) that would require federal loan agencies to take into account the expected energy costs of a home when assessing a mortgage loan application.

“Homeowners who spend less on energy will have more money to make mortgage payments and to maintain and repair their homes,” SAVE Act press materials say. “A person will be less likely to have to choose between paying the utility company or his or her lender.”

The materials also point out that the average U.S. household will spend more than $2,300 in energy costs over the course of a year, “more than the average cost of property taxes or homeowners insurance, two expenses that are routinely underwritten in a mortgage loan. Energy costs are not accounted for in this process.”

“If you take all the things out of a home that waste resources and money, that innovation costs a little bit more,” Herro said. “The problem is that building better, until the average consumer recognizes the benefits, is disincentivized by the establishment.”

This article was written by Claire  Easley

To visit the full article, click on the link: http://www.ecohomemagazine.com/news/2011/04-april/builders-fight-for-value-recognition-for-energy-efficient-homes.aspx

CFL Bulbs, Why and How to Recycle

In my profession, one of the most common questions that I get is do CFL bulbs really make that much of a difference and why should I switch? This can be looked at in many different ways but here are some points that I feel are key.

• Saves 40.00 in electricity costs over its lifetime
• Uses 75% less energy than incandescent bulbs and lasts ten times longer
• Produces 75% less heat

The important thing is to recognize where to install them to get these benefits. It’s recommended to install them in heavy traffic areas such as the kitchen, living room and recreational rooms. Also, to make them the most effective they should be left on for a minimum of 10 minutes as frequent turning off and on will shorten their life span. Typically a CFL bulb costs 5.00 and lasts 10,000 hours whereas, the cost of a regular incandescent bulb is in the area of 0.75 and lasts 1,000 hours. Over time, you will save some money on buying the bulbs but also the energy savings as well. If you aren’t convinced yet, then maybe our friends at Energy Star can help because this is staggering, “If every American home replaced just one light with a light that’s earned the ENERGY STAR, we would save enough energy to light 3 million homes for a year, save about $600 million in annual energy costs, and prevent 9 billion pounds of greenhouse gas emissions per year, equivalent to those from about 800,000 cars.”

Finally, one of the most important things to remember is how to recycle them because they do contain a little bit of mercury. First and foremost, don’t put them in your regular trash can instead take them to Home Depot of you can use this friendly website to locate a place near you. www.earth911.org  Another fantastic site that can help with safe containers for recycling in the home, office or commercial sites is personal friends of mine at www.buschsystems.com

Phantom Loads

A phantom load is simply described as the unintentional use of electricity by electronics, even when they are shut off. Examples include cell phone chargers, laptops and entertainment components.

Combating this problem is simple if you are willing to take the extra time. All you have to do is turn off your computer, monitors, printers and other devices when they’re not in use. Whereas, if your charging units are not being used, be sure to unplug them from your outlets. Power strips are definitely a better solution.

Eliminating wasteful draws on electricity can have a big impact:

• Devices that draw around 20 watts in stand-by mode may add up to a couple of dollars a month to your utility bill.
• A typical U.S. home has thirty to forty products constantly drawing power.
• Phantom loads equate to approximately10% of residential electricity use.

Be especially conscious of these wasteful culprits:

• Digital picture frames
• Large screen televisions
• DVD players, video game systems and other home theater components
• Microwaves and toasters

It might not seem like a large amount of money at first but remember these are the simple steps that you can do on a daily basis that help reduce energy usage and put a few extra bucks back into your wallet.

The Importance of Insulation

What is insulation?

 Insulation is defined as a material or combination of materials which impede the flow of heat. The materials can be adapted to any size, shape or surface. The term ‘insulation’ refers to materials which provide substantial resistance to heat flow. When these materials are installed in the ceiling, walls, and floors of a building, heat flow into and out of the building is reduced, and the need for heating and cooling is minimized.

 Insulation is the most effective way to improve the energy efficiency of a home and building. Insulation of the building envelope helps keep heat in during the winter, but let’s heat out during summer to improve comfort and save energy. Insulating a home can save 45–55% of heating and cooling energy.

 Benefits of Insulation 

• Comfort is improved year around
• There is less need for heating and cooling
• Can help reduce noise

Scams with insulation

As a homeowner the only way you can truly have your insulation tested for effectiveness is having an audit performed or by having someone climb into your attic to visually access your insulation. First, you must identify the failures before determining what to install and second, it might be best just to fix the failures.  Plus adding more insulation on top of the current insulation which is not performing will only help you little. Another recommendation would be to ask the company to take pictures of their findings so you can see where improvements can be made.  Be careful as a lot of companies will sell you more than you need.  Most homes have plenty of insulation, but it’s poorly installed or has been knocked out of place. Reattaching it to the floors, ceilings and walls it’s meant to protect could save you a bundle of money – both on replacement product and on energy bills.

Tips to Avoid Energy-Efficiency Scams

We’re all trying to save money on energy bills these days. Plenty of people who sell energy-saving products are willing to take unfair advantage of you in your quest to save a buck. You won’t save any money or energy if you buy products from people who make false claims. When it comes to purchasing air-conditioners, insulation, roofing and even AC services, we homeowners have to do our homework before we start writing checks. Don’t let a salesperson mislead you into spending too much or buying an ineffective product because you don’t have the facts.

 Here are a few ways homeowners get scammed when it comes to energy efficiency because of actions by sales reps.

 1. They sell you more than you need. As we gear up for another scorching Arizona summer, there are a lot of ads for companies that want to over-insulate your attic to a level of R-60, which won’t save you any more money on air-conditioning bills than the recommended R-38. In fact, there’s a good chance you don’t even need new insulation at all. Most homes have plenty of insulation, but it’s poorly installed or has been knocked out of place. Reattaching it to the floors, ceilings and walls it’s meant to protect could save you a bundle of money – both on replacement product and on energy bills.

 2. They convince you that high-tech is better than common sense. The least-expensive way to slash your energy bills is to reach for the “low-hanging fruit” in your house – small, low-cost improvements. Instead of getting hooked into buying an expensive package of multiple new systems, start your energy campaign by sealing your air-conditioner’s ducts, caulking windows and doors and checking weather stripping. Have an energy audit to determine if your attic is properly and passively ventilated and that your insulation is well-installed. That will help you more than investing thousands of dollars in optional equipment.

 3. They can’t prove the claims. It’s illegal to say a product will slash energy bills, insulate your attic or reduce heat gain without tests to back up the claim. Ask for the research….if the product has passed these tests, you can be sure the manufacturer will have that information all over its website. Bottom line, if you can’t find it? Don’t buy it.

 4. They insist bigger is better. This is a common claim when it comes to buying an air-conditioner. It used to be that bigger homes needed larger AC units. Newer homes are so tight, however, that they need far less powerful systems than older homes with lots of air leaks. Find an AC rep that will get a lot of information about your house, the weather and your family’s lifestyle – and use a computer to calculate the size of your new air-conditioner. If that’s not happening, find a different contractor.

Energy Audits

Are you spending too much on your energy bills, do you deal with rooms that are warmer than others, or do you feel like you have to dust all the time? If so, then we can help and here is a recent comment from a customer of ours.

Last week I had a home energy audit conducted by REEis on the recommendation of a colleague in the sustainability/”green” field here in Phoenix. I had some idea of what to expect but the care and detail in the explanation of the process that they went into to ensure that I knew exactly what was happening was extraordinary.

The process involved diagnosing the home using a blower door test and thermal imaging to find areas where there are:

• Leaks in the A/C duct system
• Penetrations which allow air exchange and connection between the attic and exterior of the home with the conditioned space
• Insulation failures
• Room pressure imbalance and heat island which cause uneven air temperature and comfort issues
• Unsealed windows and doors  

After the blower test they go up into the attic where the real proof for issues are found.  In the case of my home, penetrations, room pressure imbalances and a return air-handler that was completely disconnected were causing some serious issues. Our major complaints have been comfort — one side of the house barely cools — and high utility bills. 

This entire process costs $99.00 and since we are regulated by APS/SRP and the energy star program there are multiple rebates available for what we do. Our goal is to save you up to 35% a year on your energy bills and show you how rebates can reimburse you up to 75% of the total costs.

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Mortgage Industry Update: Rates, News & More

*** Smart Financial Weekly Mortgage Update December 18, 2009***

Reminder: If you or anyone you know is interested in getting FREE assistance with a loan modification please let me know or have them contact me.

 

Interest Rates

Retail mortgage rates maintained their sub 5% position for the week. In a statement after its meeting this week the Federal Reserve made it a point to reiterate that its MBS program (to support keeping mortgage rates low) will end as scheduled on March 31, 2010. There had been some chatter in the market that the Fed would extend the program and that does not seem to be the case. This came after Moody’s comments on Monday saying the sovereign debt risk is rising globally and especially in the U.S. They predicted long term rates will increase globally in 2010 and may increase more rapidly than expected. Moody’s added that the U.S. will have to put in place a “credible plan to address the problems of large debt”. Absent a strong policy response the U.S. triple A credit rating will be under threat in two to three years. So, gentle reader, as we have said for many weeks now the specter of increasing rates looms large on the horizon.

 

When	Rate
This Week	4.94
1 Month Ago	4.83
1 Year Ago	5.19
2 Years Ago	6.14

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

 

Mortgage Industry Update

·         Bloomberg reported this week that Fannie Mae and Freddie Mac are in discussions with the Treasury Department to increase their $400 billion lifeline before the end of the year. Between the two they represent the largest sources of mortgage financing in the country. They have used $111 billion of the $400 billion in less than a year.

 

Good News

·         Conference Board index of leading economic indicators was up .9% in November above forecast of .7%.

·         Industrial production rose .8% in November after being flat in October.

·         Housing starts rose 8.9% in November the biggest increase in six months according to the Commerce Department.

 

Statistics of Interest/Concern

·         FDIC head Shelia Baer said that in 2010 bank failures will peak.

·         The Consumer Price Index (CPI) rose .4% in November after a .3% increase in October the Labor Department said.

·         Producer Price Index (PPI) rose 1.8% in November up from an increase of .3% in October. Forecast was for increase of .8%. Note that the Labor Department said the year over year increase was 2.4%.

·         The New York Empire State index of business conditions fell 2.55 in November.

·         Capital One at 9.6% and Discovery at 8.98% reported charge off’s on credit cards rose in November. A charge off is debt that the creditor does not believe can be collected. Both reported 60 day plus delinquency near 6%.

·         The National Association of Home Builders sentiment index declined slightly in November. The decline was mostly due to concerns about the weak job market.

Foreclosure Headlines

·         In testimony before the House Financial Services Committee Laurie Goodman veteran MBS analyst and Senior Managing Director of Amherst Securities said that her analysis led her to conclude that negative equity was the biggest driver in foreclosures and that employment was a catalyst. Her research further caused her to conclude that reducing loan balances would be a more effective way to reduce foreclosures than reducing monthly payments.

 

Job Market Headlines

·         The House approved a $155 billion job creation bill this week that the Senate is expected to consider shortly after the New Year begins. Among its provisions is an extension of unemployment benefits for an additional six months. In a separate but related action the House attached an extension of two months unemployment benefits to a mandatory military spending bill.

·         Weekly initial jobless claims were 480,000 up 7.000 from the previous week and above forecast of 465,000.

·         The four week moving average came in at 467,500 down 5250 from previous week.

·         Continuing jobless claims were up slightly to 5,186 million.

·         The Labor Department reported that in November more states had a decline in the unemployment rate than had an increase. Compared to October’s data which showed 29 states had an increase the November data is an improvement.

 

Commentary/Observations

Moody’s Delinquency Tracker of commercial mortgages (CMBS) reports that in November delinquency was 4.47% up .46% from October and that the total of delinquent loans was about $30 billion. This is considerably higher than the December 2008 total of $6.7 billion. Four states had delinquency above 10% one was Michigan another was…………………..Arizona.

 

According to a USA Today analysis of federal salary data the number of employees making $100,000 per year increased from 14% to 19% in the recession’s first 18 months. Also in the period from December 2007 until June 2009 the number of Defense Department employees making $150,000 per year increased from 1868 to 10,100. But wait there is more. At the Department of Transportation only one person was making $170,000 or more in late 2007 but in mid 2009 that number had increased to 1690. Finally, the average federal employee salary BEFORE overtime is now $71,206.

 

Iranian forces entered Iraqi territory yesterday at dawn. They occupied a well about 280 miles south of Baghdad. This could be part of the ongoing border dispute between the two countries or something else. Iranian officials were unavailable as Friday is a weekend day in Iran.

 

The Washington Post reported late this week that Citigroup will not have to pay billions in taxes as part of their deal to repay the TAPR money we provided to keep them from being broken up or worse.

If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt @gosfm.com.

 

 

 

 

 

 

 

 

 

 

 

 

Why design an energy efficient home?

Look at your last electric bill, say July of 2008, you live in the metro Phoenix area and the it was $350 or more. Look at your March bill when you were not cooling your home, $85. So it cost you $270 to cool your home and most of that was peak time, at the really high rates. Now think 2012. Lets say a 25% per year increase puts your electric bill just under $800. Most of this $800 is cooling costs. This is only 4 years from now. Do the math for 8 years.  Design now for the most energy efficient home you can. Your future financial well being depends on being smart, Now!!