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

• 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

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.

 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.

 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.

• Is there a waiting period? NO
• Is the profit capped at 20%? NO
• Must receipts be shown to document improvements? NO
• Are two appraisals required?  YES, in cases where the new sales price is 120% or more of the acquisition price

602-445-6415, Option 8 for t he Licensed Loan Officer on call

Find out why we ranked #1 in Maricopa County for closed loans in 2010 Scotsman Guide Rankings

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.

Let’s take a look at the steps involved.

Step 1: Driving Traffic-

You’ll need to create compelling, multimedia marketing campaigns and get them out to your target market. Through customized Social Engine Optimization, Email Marketing, Pay-Per-Click Advertising, Videos, QR codes as well as other offline efforts, you’ll maximize the number of people exposed to your message so they can see why your services are so amazing!

Step 2: Presentation-

Once the traffic is generated you’ll then communicate the key features and benefits you have to offer. You’ll want to develop a unique selling proposition, then create an engaging multimedia website. One that has video with animation, narration, and music. The entire site should engage the prospect and encourage them to take the next step in your sales process.

Step 3: Capture & Track Results-

Once you captivate your prospect, encourage them to complete an online survey, request a newsletter, or request information to gather data and email addresses for future marketing. Website traffic can be tracked in real time giving you immediate notice of activity for follow up and feedback in order to make adjustments to the site or strategy.

Step 4: Conversion-

Having captured your now, qualified – prospect’s name and email address, it’s time to engage them on a personal basis, using branded sales materials, webinar creation, and on-going communication tools. It’s not only about marketing… it’s about generating closings.

Whether you have a rental in 85255 and your tenants want to extent their lease or you need information on the HOA for DC Ranch you should check this forum out. But do not forget that this blog has top Real Estate professionals that live and work in AZ. It would make sense to contact one of us as well.

Post your own comments to the Fed:  http://bit.ly/fJ3lkW

Just because someone has an appraiser’s license does not mean they are knowledgeable, ethical or moral nor good at what they do.  Therefore, the “judgments” of these people are not infallible and Appraisal Management Companies (AMC) seem to just be another revenue stream for the Big Banks and provide no benefit to the consumer whatsoever.

Since the implementation of the Home Valuation Code of Conduct (HVCC) and the “forced” use of AMCs, I have seen more errors in appraisal reports than ever before.

Some examples include:  Omitting an entire bedroom (making a 3 bedroom SFR into a 2 bedroom) from the report and their sketches even though county records and the home itself clearly showed 3 bedrooms.  On several occasions I have seen appraisers using comparable home sales from bisecting neighborhoods that should not be used to determine a home’s value, in most cases, deflating the subject home’s value AND consequently deflating that property’s adjacent home values for all of its neighbors.

I have seen AMCs send an appraiser who lives in Sedona, AZ to do an appraisal in Mesa, AZ (about 150 miles apart).  They might as well have sent him from another state like Oklahoma to Arizona; it would provide the same poor results.  And in about 80% of all reports that I have seen there are poor comps in the report, incomplete reporting and even multiple spelling errors that forces underwriters to condition for clarification or additional comments on their loan approvals which have led to unnecessary increases in closing times, lost revenue and increased stress for the consumer.

But even in those examples listed above, appraisers still got paid for their shoddy work which in some cases derailed the hard work that was provided in good faith by the real estate agent and the loan originator.  All this does is ultimately hurt the consumer with artificially lower home values (in many cases), increased stress and anxiety, in addition to forcing the consumer to pay (30% more than in 2009) for poor service.  (Appraisals went immediately from $350 to $450, $650 with a rent schedule, in 2009 when HVCC was implemented.)  The appraiser MUST be held accountable to the consumer who is paying for the report!

Local business people and residents know who the good businesses and bad businesses are in their local area and that includes appraisers.  The Federal Reserve, Fannie & Freddie, Big Banks located thousands of miles away have no realistic expectation as to what is a good or a bad appraisal or who is giving good or poor service.  It is those people on the ground (real estate agents, loan originators and local, reputable appraisers) and in the field who know what the expectations should be and it has always been that way.

Homeowners must be allowed to say, “I do not want that person to appraise my home.”  You must see the unfairness of forcing a homeowner to pay a vendor that they have had problems with in the past.  HVCC gives appraisers too much power once an appraisal has been assigned to them and with no accountability.  They are paid regardless of the accuracy or competency of the report and that is just wrong.

The only people who truly know that the appraisals might be flawed (the mortgage originator who interviewed the homeowner, the real estate agents and the homeowners themselves) are the very people who are prohibited from talking to the appraiser.  Does that make any sense?

You must understand that for low to moderate income homeowners, an appraisal fee of $450-750 (the standard fee range since HVCC was adopted) can easily represent 25 percent or more of their monthly income.  That is a lot of money to spend on a gamble with no accountability.

Prior to HVCC, my conversations with appraisers about value prior to completion of the report were not intended to coerce a higher than fair value but they were to determine if we should proceed from the standpoint of consumer protection.

For example, let’s say I have a consumer with low to moderate income (that’s 90% of my book of business) wanted to refinance their primary residence.  If they owe $100k, in order to successfully refinance, they would need an appraisal that shows that they have a certain amount of equity right?  Prior to HVCC, if my appraiser advised me that the homes in that consumer’s neighborhood were selling in the $90k range, then I could advise my client not to waste their $450 on an appraisal.

Ethical appraisers and originators liked this because ethical appraisers and originators don’t want to see a consumer pay for a product that does not benefit them.  Now, HVCC forces the consumer to lose $450 to find out that they cannot refinance.

The large majorities of mortgage brokers doing business in their communities have been and still are ethical, honest and upfront people.  Like any business, if consumers receive poor or unethical service, word gets out and that business eventually goes away.  It’s called a “free market”.  It has worked great for centuries…

“Concentrated power is not rendered harmless by the good intentions of those who create it.” - Milton Friedman

A free enterprise system is the fastest way to put a bad company out of business, NOT government interaction.  All that government interaction has done is made things worse for the consumer.  It has not protected them and has directly increased costs in the form of over-priced appraisals, extended closing times with daily late fees and lock extension fees in some cases.  HVCC was unnecessary for those of us who never used our positions to coerce, bribe or threaten an appraiser.  More importantly, those actions are illegal and immoral already and were committed by a very small number of originators and we didn’t need HVCC to tell us that.  As a matter of fact, if the current laws that we had on the books prior to 2005 were simply enforced, then there would not be this need for legislators to create more new and complicated legislation that ultimately hurts those people they intend to protect!

“One of the great mistakes is to judge [government] policies and programs by their intentions rather than their results.” – Milton Friedman

But what HVCC has done is severely increased costs to the consumer (the average increase is about 30%) while simultaneously very much lowered the bar for appraisal reporting.  How is this benefiting the consumer? I have no idea.  Mostly, it seems to be benefiting the bottom lines of those investors (many of them Big Banks) who now wholly or partially own the AMCs that are supposed to be helping the consumer but instead continue to hurt the consumer at every turn.

With the recent discussions about eliminating the mortgage interest tax deduction and compile that with declining home values, in part due to shoddy appraisals derived from the inception of HVCC, our government is taking away the last two financial incentives to own a home in this country, appreciation and tax deduction.

This then begs the question, “Is it truly the government and the Federal Reserve’s intention to really protect the consumer?”

Here are some points for the Federal Reserve to consider before ruling:

Ø  Reasonable and customary fees should be based on appraisal fees PRIOR to the implementation of HVCC.  AMCs add about $175-200 per file leaving the appraiser a reduced income.  If the appraiser should normally get $350 per appraisal then the AMC adds a markup it should increase the burden to the consumer and NOT reduce the appraiser’s income.  This is how competition is reduced to just the appraisers willing to work for less but not give a better report.

Ø  Total fee for the appraisal report should be separated on the final HUD-1 as a fee paid to the appraiser and a separate fee paid to the AMC.  Since the AMC did not create the appraisal report, they should not be listed on the HUD as “appraisal fee”.  It should be clear to the consumer that the AMC fee is a pure markup fee.

Ø  AMCs should not be allowed to “review” an appraisal unless that “reviewer” is a certified licensed appraiser with a minimum of 2 years experience.

Ø  AMCs MUST be whole and separate entities.  The AMC should not be allowed to be owned wholly, partially or in any manner (subsidiary, affiliated business partner, etc) by any financial institution, bank, credit union, etc.

Ø  Appraisers need a contact and a secure site for reporting violations of appraisal independence against AMCs, banks, mortgage bankers, mortgage brokers, credit unions, real estate agents, lawyers, etc.

Ø  Appraisal reports ordered in compliance with Uniform Standards of Professional Appraisal Practice (USPAP) guidelines should be portable and accepted by ALL lenders, banks and secondary markets including Freddie and Fannie.  If the USPAP guidelines are followed and a second lending institution requests another appraisal report, the cost of that appraisal should be at that lender’s expense.  That expense should NOT be taken from the loan originator’s income NOR charged to the consumer.

Ø  Appraisers are currently not “graded” or “tracked” by revision requests from an AMC.  Most revision requests should be tracked and graded to those appraisers that seem to be providing inferior reports.  This “grading” system needs to be publically accessible by the consumer and vendors alike.  Typical revision requests have been for using poor comps from bisecting neighborhoods that are not representative of the subject property’s value, misspelled words, fields with more than 50 characters (if more than 50 then the rest is cut off from the report), UW requesting clarification or comment, no aerial photos of the property or a change in contract price after the report has been completed.

Ø  There is absolutely NO NEED for a geographical market area for each AMC.  Fair competition is always better for the consumer.

Ø  Stop blaming the Mortgage Broker for the financial meltdown. We did not create the risky loans you keep pinning on us.

Ø  Why is the Mortgage Broker the only industry that has to disclose our income?  Banks, mortgage bankers and credit unions should have to disclose their Service Release Premium and their total income as well.  Why the double standard?  All that does is provide less transparency which is always bad for the consumer.

Ø  ALL Mortgage Loan Originators MUST undergo the same testing and compliance measures as loan originators that work for Mortgage Brokers.  Each individual loan originator at a mortgage broker’s office has to pass a state and national licensing test, complete an FBI background check, national fingerprint recording, 24 hours of pre-licensing education and 8 hours of continuing education annually.  Not to mention all of the new fees and classes to pay for (I spent over $1400 this year to get my license).  If I have to do it, why shouldn’t bank and credit union employees who originate mortgages have to do it?  Isn’t that what’s best for the consumer?

Please feel free to contact me directly for conversation regarding these issues.

Post your own comments to the Fed:  http://bit.ly/fJ3lkW

Spencer Anglin – Licensed Mortgage Loan Originator
Velocity Financial, LLC | NMLS# 226533
O: 480.287.5719 | C: 602.705.6293 | F: 1.866.589.5742