Wednesday, December 15, 2010

Ugly Christmas Sweaters Flying Off the Shelves this Holiday Season!



Ugly Christmas sweaters are suddenly all the rage

Andrea Simakis
The Plain Dealer, 12/15/10

The price tag says it all: "Butt-ugly patchwork Xmas sweater -- $18.50."

"We can't keep 'em in the store," says Rita Pahl, bustling around behind the counter at Flower Child, a vintage store on Cleveland's Clifton Boulevard.

"They're flyin' outta here like hot cakes!"

In an inexplicable twist of sartorial fate, the tasteless Christmas sweater, an item as reviled and ridiculed as the holiday fruitcake, is having something of a renaissance.

The tackier the better.

Local resale shops -- staffed with workers who remember the days when they couldn't give away the pilling, polyester nightmares festooned with applique snowmen and reindeer and candy canes -- are experiencing something of a drought.

"Last year, you could find 'em all over the place," Pahl says. "This year, for some crazy reason, they took off."

Pahl had to plumb her "untapped resources" to outfit Fox 8's Kenny Crumpton for his emcee duties at an ugly-Christmas-sweater happy-hour party held at the Garage Bar last week. In addition to drink specials -- $5 martinis! -- the event boasted prizes for "the most obnoxiously ugly Christmas sweater!"

Pahl's secret stash paid off: Crumpton played host in a tomato-red, eye-stinging wonder covered with Dalmatian puppies.

"Fit him like a glove," she says with pride.

Fashion trends come and go, and come again, but the modern-day origins of the godawful sweater can be traced to Bill Cosby. As Dr. "Cliff" Huxtable on his 1980s hit sitcom "The Cosby Show," the avuncular comedian favored knitted pullovers with clashing colors and Rorschach test patterns. "Cosby sweater" entered the country's vernacular and came to mean a garment so loud and nauseating that those encountering it would be tempted to reach for earplugs and Dramamine.

The Cosby sweater -- and the holiday version of the look -- eventually went into donation bags along with the electric-blue leg warmers, acid-washed jeans and Huey Lewis cassettes.

"In the mid-to-late '80s, they were really, really big," remembers Flower Child's Pahl. "And then they kinda died off a little," she says, especially after landing on countless "what not to wear" segments on the "Today" show" and similar arbiters of middle-class style.

Once the province of dowager aunts, clueless dads and craft-fair-loving grannies, the festive, "made in China" monstrosities are chic again, thanks to high school and college students with a taste for the ironic. And now, as they did with the Honda Element and Facebook, adults have co-opted the trend, throwing their own kitschy sweater soirees for grown-ups.

At the Salvation Army store in Strongsville, three 18-year-olds peruse the offerings in the "seasonal" rack with a concentration usually reserved for sussing out winter formals, rejecting finds deemed not hideous enough. Two weeks before Christmas, the pickings are slim.

Jackie Dileno, a freshman at Ohio State University, liberates a long, black knit vest and holds it aloft, inspecting it in all its gruesome glory: It is ornamented with applique hats and gloves topped off with long tassels made of yarn. If you wore the sweater near a cat, the animal would climb your leg and bat at the ornamental trim.

Her friends, Allison Barwacz and Kelley Burch, gasp and nod in approval, while a nearby shopper, clearly in the market for such a treasure, looks on with naked envy.

They're expert at finding the worst of the worst, as they've been going to ugly-sweater parties "probably since junior year [of high school]," Dileno says, meaning about three years ago.

Another customer unearths a brown cardigan dotted with every iconic Christmas image imaginable -- snowflakes, Santas, stockings, snowmen, reindeer, gloves and ice skates. It was made, according to its label, at "Studio Fa La La." Barwacz, at home in Parma from Ohio University, eyes it appreciatively. "It's great," she says.

While high-end vintage stores are reaping the benefits of the demand and charging as much as $25 per, bargain hunters will find the best deals at the Salvation Army and other charity shops, where sweaters won't run you more than five bucks.

Barwacz and her posse, purists all, pass on a maroon button-down featuring Winnie-the-Pooh and Tigger, the words "Let Your" stitched over the right breast pocket, "Light Shine" threaded into the left.

They also leave a fuchsia T-shirt, priced to move at $2.99, decorated with a baby Rudolph dressed in a hat and scarf and the line, "dashing through the snow" written in pink and green lettering. Better still, the "O" in the word "snow" is a plastic snowflake that lights up whenever the wearer moves.

A holiday fashion tip: Grab it before it's gone.

Friday, December 10, 2010

10 Things Your Landlord Won't Tell You



10 Things Your Landlord Won't Tell You
By Kelli B. Grant
Smart Money, Wall Street Journal

1) “This building is in foreclosure.”

In late 2009, Melody Thompson called her landlords to ask about the well-dressed picture-takers outside her four-bedroom Portland rental home. “Oh, we’re refinancing,” she remembers them telling her. Then in late April, a formal bank notification arrived in the mail, stating that the home was in foreclosure and would be put up for sale in late August. “I was immediately angry,” says Thompson, the executive director of Financial Beginnings, a financial literacy nonprofit. “They lied.” The sale has been postponed twice as the landlords apply for a mortgage adjustment, but Thompson is still hunting for a new place.

Renters accounted for 40% of families facing eviction from foreclosure in 2009, according to the National Low Income Housing Coalition. And unfortunately, they often hear about it as Thompson did -- from the bank, just weeks before the sale, says Janet Portman, an attorney and the managing editor of legal book publisher Nolo. “The landlord wants the tenant in there, paying rent,” she says. The lack of notice was so pervasive that last year Congress passed the Protecting Tenants at Foreclosure Act, which gives tenants at least 90 days from the foreclosure sale to move out. (Previously, they had as few as 30 days, Portman says.) Provided the new owner doesn’t want to live there, the law also lets legitimate tenants -- those who signed a lease before the sale and pay a market value rent, among other qualifications -- stay through the end of their lease.

2) “You should complain more.”

When a steady drip, drip, drip of water from the ceiling led a third-floor tenant to complain, Adam Jernow, a principal at property management firm OGI Management in New York City, assumed they were dealing with a leaky pipe. It wasn’t until a week later, when the tenants on the top floor two flights above that apartment finally called, that he realized they were dealing with a big roof leak from heavy summer rains. Had upper-floor tenants complained sooner, Jernow says, they could have limited the damage, and that third-floor tenant might not have had a problem at all. So while renters often assume quirks like hot-then-not showers or moisture on the walls is just part of big-city living – or that complaining to the landlord will just open up a can of worms – keeping a property owner informed can actually help a problem get fixed faster. Besides, most states require landlords to keep the property in good repair, with home systems and appliances in working order.

3) “There’s more to negotiate than the rent.”

Rental markets in many cities around the country have improved this year, which means landlords have less incentive to cut you a break. Just 31% of landlords lowered rent in 2010, versus 69% in 2009, according to property marketplace Rent.com. All the major real estate investment groups are asking for higher rent on new leases, and about half are doing so on renewals, says Peggy Abkemeier, the president of Rent.com.

But the market hasn’t improved so much that landlords don’t have incentive to keep good tenants, she says. The survey found that 44% of landlords are willing to lower security deposits, and 22% will offer an upgrade to a fancier unit (think better views, quieter neighbors, newer kitchen) without raising rent. And there’s still that 31% of landlords who will offer a price break. “It never hurts to ask,” Abkemeier says. In markets where vacancy rates are still high, such as Atlanta, Las Vegas, Orlando and Phoenix, tenants have a better chance.

4) “Your neighbor is not my problem.”

Loud music. Late-night parties. More foot traffic than a mall on Sunday mornings. Kevin Amolsch, the owner of real estate investment company Advantage Homes in Denver, Colo., has heard all of these complaints and more from the tenants in the buildings he manages. Trouble is, there’s not much he can do. States’ tenant rights laws make it tough for landlords to intervene when there isn’t a clear violation of the lease. Even when a “right of quiet enjoyment” is in the lease, those noisy neighbors usually have time to mend their ways. “Two weeks later [when they are free and clear], it’s going to start up all over again,” Amolsch says. And so does the clock on their grace period to pipe down.

The best bet is to reach out to the other tenant and try to smooth things over directly, Amolsch says. If that doesn’t work, report problems to the police as well as the landlord, so the situation is well-documented. That makes it easier to initiate eviction proceedings, he says.

5) “You may have more rights than I do.”

Brianne Vorse, a longtime renter, knows the number to her local tenant rights group by heart. Vorse first sought help four years ago to force her landlord to fix windows that wouldn’t shut all the way, letting in cold air and the San Francisco fog. She called again after a sub-letter offered a higher rent if the landlord would break Vorse’s lease and let him take over. “I found that [the landlord] couldn’t legally do this,” says Vorse, who sent the landlord an official tenant petition she found on the web site of the San Francisco Rent Board. “In the end, I got the apartment and kept the original lease.”

Tenant rights vary widely by state, says attorney Portman. Arkansas doesn’t even require landlords to provide “fit and habitable housing,” but that’s extreme. In the most renter-friendly states, including California, New York, Illinois and New Jersey, renters without say, hot water, can withhold rent until it is fixed (or pay to fix it and deduct that from the rent). “If the landlord tried to evict you for that, you would win that lawsuit,” she says. Landlords aren’t necessarily any better informed about what they can and cannot do, so it’s up to the tenant to figure it out. The U.S. Department of Housing and Urban Development maintains a database of tenants’ rights by state, including groups that offer assistance with disputes.

6) “I don’t know about your problems – and I like it that way.”

Tenants who think they have a beef with the property owner may actually find their true discontent with the management company hired by the landlord. The Better Business Bureau logged 5,297 complaints about property managers last year, a 13% increase from 2008. They’re among the most-complained about industries, ranking 37th of the 3,024 the BBB tracks. “You would hope that the person who owns the property has done their due diligence, but that just may not be the case,” says Kimberly Smith, the co-founder of short-term furnished rental site CorporateHousingbyOwner.com. Inexperienced or incompetent property managers may not have a good system in place to handle repairs -- especially emergencies – or neglect to keep your security deposit in a safe place, she says.

While a landlord is ultimately responsible for providing habitable housing, they hire management companies precisely so they don’t have to deal with the day-to-day decision making and every tenant request. This is a case where the squeaky wheel definitely gets the grease (see No. 2, above). If there’s a pervasive issue, try to reach the landlord directly, Smith says. Public records will list the property owner. You might also consider paying by credit card if that’s an option, she says, which can make it easier to file a dispute if requested repairs or other complaints aren’t resolved.

7) “I never wanted to do this.”

The recession has generated plenty of “accidental” landlords -- property owners who wanted to sell, but can’t find a buyer. At first glance, the surge seems like a boon for renters. Inexperienced landlords’ biggest and most common mistake is not asking for enough rent, says Steve Dexter, who operates more than a dozen properties throughout Southern California and teaches real estate investment seminars. But that poor financial management can also mean a substantial rent increase upon renewal, or worse, living in a poorly-maintained home at greater risk of foreclosure.

A tenant’s best defense is to ask questions about the landlord and the property’s history, Dexter says. Among the important ones: how long has the property been a rental? Why is the landlord renting it out? If the answers involve anything that reflects on the recession or the landlord’s need to increase his cash flow, be cautious. Look for foreclosure and sale notifications on sites such as RealtyTrac, StreetEasy and Zillow.com.

8) “If you smoke, you can’t rent.”

The Fair Housing Act prohibits landlords from discriminating against a number of groups -- but smokers aren’t one of them. So discriminate they do. Although smokers account for 20% of U.S. adults in most cities, according to the Centers for Disease Control and Prevention, a search of New York City apartment listings on Craigslist turned up just six explicitly allowing smoking. Nearly 700 explicitly prohibited it. Their reasoning: once a rental property is occupied by a smoker, it’s tough to rent to non-smokers without a thorough, expensive cleaning that includes repainting the walls and professionally cleaning the carpets, says Matt Kuhlhorst, who rents out four single-family homes in Allen, Texas. “Even if the tenant doesn’t get their deposit back, that’s still not enough to cover the cost,” which can easily top $2,000, he says.

Laws in several states require landlords to disclose smoking policies upfront, so if it’s important for you to be able to light up indoors check the details before signing a lease. Policy violators could find themselves facing loss of their security deposit or eviction, if their smoke wafts into a non-smoker’s domain. And if a chain-smoking neighbor is in violation, your landlord will be glad to take your complaints—it’s one thing that will allow him to evict a tenant.

9) “What you see is what you get.”

The rusty, cracked stove was nearly a deal-breaker for an otherwise great apartment in Boston’s North End. But the landlord promised to replace the clunker and make other repairs, so Joanna DiTrapano and her roommate signed a one year lease in March. Suddenly, the landlord’s tune changed -- although the gas company documented the dangerous stove leaking gas, he insisted it wasn’t damaged enough to warrant replacing. It took six months, numerous phone calls and finally, a formal letter citing city tenants’ rights laws to get a new stove, DiTrapano says. The smaller repairs the landlord promised? She’s simply given up.

Some landlords were never good about making necessary repairs, but the recession has forced many to postpone anything that isn’t absolutely vital, says Dave Zundel, a co-founder of Arizona property management firm HomeLovers. The firm has seen a 70% drop in maintenance projects, and just 13% of landlords are still spending on regular upkeep and cosmetic improvements such as replacing worn carpets or repainting. Your safest bet is to assume the condition of the apartment you’re viewing is about what it will be when you move in, Zundel says. If the landlord promises to make repairs, get it in writing.

10) “You’ll pay for my rebellion.”

The building or community homeowners’ association may have it in for you. Some renters -- and owners – learn this the hard way, Abkemeier says. During the downturn, many associations have taken steps to limit owners’ ability to rent out property, or require extensive screening before a lease can be signed. And owners who try to avoid or ignore the rule-changes end up making it difficult on tenants who suddenly find themselves faced with lengthy rental applications or fines for a litany of association rules they never knew they had to uphold. The extra layer of administration can also make it tough for tenants to get damage repaired, because they’re dealing with the building and not just the landlord.

Check the association rules (aka covenants, conditions and restrictions, or CCRs) before signing a lease, she suggests. Also check whether the association will fine the property owner or reach out to you directly, to better head off problems.

Friday, December 3, 2010

Flats Project Inches Closer to Becoming a Reality


Cleveland's Flats East Bank project gets $32 million loan guarantee from HUD

Wednesday, December 1st, 2010

Michelle Jarboe, The Plain Dealer

CLEVELAND, Ohio -- The U.S. Department of Housing and Urban Development will provide $32 million in long-anticipated loan guarantees to support development on the east bank of the Flats.

The federal agency has agreed to provide a $30 million loan to the city of Cleveland and a $2 million loan to Cuyahoga County, as part of a complex financing package for the Flats East Bank project.

The low-interest loans, known as HUD 108 loans, will help the Wolstein Group and Fairmount Properties build the $275 million first phase of their long-delayed development.

HUD's role in the project is not new. In fact, the developers have factored these loans into their elaborate funding scheme for more than a year. But the deal was not certain until Wednesday, when U.S. Sen. Sherrod Brown's office announced the formal approval - a necessary step to move the Flats financing toward closing.

"We are getting there, and this is a very important piece to have in place so that we can close,"said Steve Strnisha, a financial consultant working on the Flats East Bank project.

The HUD 108 loans will pass from the federal government to the city and county, and through to the developer. The loans will be repaid using parking revenues from the project, which includes a parking garage, and a tax-increment financing agreement, which taps increased property-tax revenues from development.

"We appreciate HUD's approval and the assistance of our Congressional delegation," Mayor Frank Jackson said in an e-mailed statement. "This will be an unprecedented project that will help revitalize our river and lakefront and will keep two major employers in the city of Cleveland."

The initial phase of the Flats project includes an office building, an Aloft hotel, parking, retail and restaurant space. Accounting firm Ernst & Young, law firm Tucker Ellis & West and the CB Richard Ellis brokerage - all tenants in downtown Cleveland buildings - plan to move to the office tower.

The Flats project stalled when the economy collapsed, but it appears close to re-emerging, thanks to a web of public and private support. The developers hope to close on their financing this year and start construction soon, with an anticipated opening date in spring 2013.

"This news will keep over a thousand good-paying jobs in Cleveland and create hundreds more construction jobs," Brown said in a written announcement about the HUD guarantees. "The Flats East Bank development is just the latest sign that our state is ripe for business development, and this project signals a major turning point for the revitalization of downtown Cleveland."

Friday, November 19, 2010

What Should a Sustainable House Look Like - an Old House?


What should a 'green' house look like?

By Philip Langdon, 11/12/10
Source: USA Today

On 24 acres overlooking the San Juan Islands in Puget Sound, an enclave of Nantucket-style cottages shows just how charming and traditional a green home can be built.

The quaint seaside homes have steeply pitched roofs, deep covered porches, gracious columns, second-floor balconies and, in some cases, a white picket fence. They are far from the minimalist modern aesthetic often associated with eco-friendly living.

'Sustainability doesn't need to look sustainable,' says Donald Powers, founder of the Rhode-Island based firm -- Donald Powers Architects -- that designed the 100-home community in Anacortes, Wash., about 90 miles north of Seattle. 'You can build a traditional home with very progressive features.'

The first cottage -- chosen as 'This Week's Green House' -- earned the basic level of certification (there are four levels) from the private U.S. Green Building Council's LEED (Leadership in Energy and Environmental Design) program.

Powers says it wasn't that hard to do. His firm's partner, Douglas Kallfelz, who was the project architect, focused on cost-effective measures --what many in the building industry call the "low-hanging fruit" -- such as high-performance windows and mechanical systems, native landscaping as well as Energy Star lighting and appliances.

Each home is landscaped to provide an active wildlife habitat, earning a 'Backyard Wildlife Habitat' distinction from the National Wildlife Federation. The enclave has tree-lined sidewalks and four neighborhood parks with trails that wind to the sea.

Kallfelz, who has been principal in charge on the project for the past two years for Powers, credited the master plan and landscape design to GCH of Seattle, under Jerry Coburn, that firm's principal in charge. Builder was Gilbane Development Company, based, like the Powers firm, in Providence, Rhode Island.

Wednesday, November 10, 2010


Giving the Man Cave a Makeover

Once Relegated to the Garage, Rooms Get So Nice, Wives Muscle In; Pool Table or Quilting Table?

By GWENDOLYN BOUNDS

Craig Schuelke's Forest Hill, Md., basement is a testament to manliness. There's the Arnold Schwarzenegger pinball machine and about $30,000 of signed Michigan and Maryland sports memorabilia the construction superintendent has enshrined on the walls. An air-hockey table commands one corner, flanked by a pool table, shot-glass collection and dart board.

It's a quintessential "man cave," except for one feature: Mr. Schuelke's wife, Melanie.

"He doesn't know what we're doing when he's not home," says Mrs. Schuelke. "My female friends, we shoot pool, drink beer and throw darts down there."

The man cave has a secret: Women use them, too. Their new interest comes as these spaces have morphed from cold garage outposts into tricked-out comfy spreads, complete with flat screens TVs, fully stocked bars, arcade games and plush (clean!) furniture.

As a result, men are learning to share with the family while combating the inevitable intrusion of scented candles, flowers and kiddie toys. While couples often cozy up together or party in caves with friends, a growing number of women say they retreat there—even holding the occasional quilting party—without the guys.

The struggling housing market is partly behind the evolution of the man cave into a multipurpose space. Rather than trade up or build on, more homeowners are squeezing the most out of their existing living quarters—but splurging on the decor. As a result, today's man caves are desirable and even luxurious pads that the whole family wants to enjoy.

An entire marketplace has emerged in recent years to outfit these spaces. There's Man Cave LLC, modeled after Mary Kay cosmetics, where guys hold barbecue parties dubbed "meatings" to sell steak and cave accoutrements, such as bacon-scented candles and beer pagers to locate lost brew. Online retailers mancavemarket.com and themancaveoutletstore.com hawk essentials, such as beer kegerators, pool tables and Skee-Ball games.

Higher-ticket items make women feel more proprietary over caves, originally intended as spots where guys could be alone or hang with pals, says Mike Yost, who runs cave community site mancavesite.org. "If the guys spend on the big-screen TV and chairs, the wife typically is going to have to sign off on it, too."

Further stoking female cave envy is cable TV's "Man Caves" show on the DIY Network. Episodes feature bling such as a pool table that rises out of the floor. "These are really, really nice spaces, and when the guys want to spend time there, the family wants to spend time there," says Andy Singer, DIY Network's general manager.

That's the case in Robert Butterfield's Sierra Vista, Ariz., home. His retreat is a 400-square-foot homage to Nascar racers Dale Earnhardt and his son. It also sports a 50-inch TV, couch, hundreds of Diecast model cars, even a Christmas tree decked in Earnhardt ornaments—about a $50,000 investment. Mr. Butterfield, 43, calls it "my space," but it's often where his wife Maria and sons also congregate when he's home from his overseas government-contracting job.

Says Mrs. Butterfield, 45: "I enjoy being in there because it's kind of like a little getaway from the rest of the house. When I'm in there, I'm not reminded about dishes or laundry." That's cool with her husband: "Sure, I like time to chill alone, but I started a family because I wanted to be with them."

Still, the gender cohabitation raises a nettlesome question: When does a man cave stop being a man cave and become just a family room? "There's a real blurring of the line between man cave and family room," warns Minnesota decorator Sue Hunter, who runs mancaveinteriors.com. "I think guys are going to start taking charge back in that area."

And certainly purists remain, such as Tommy "Buck Buck" Sattler of Islip, N.Y., who rigged his 325-square-foot getaway with New York Giants football paraphernalia, seven TVs, a red-oak bar top, and urinal in the bathroom.

Mr. Sattler flips on an outdoor blue light to let the neighbors know when his "underground lounge" is open, but jokes that women, including his wife, typically stop by only if "they are dropping off food or bringing cleaning products."

Most guys, however, seem game for co-ed caves—so long as there are ground rules, such as no potpourri or decorative pillows. Ms. Hunter, the man-cave decorator, steers clear of big glass vases and baskets in favor of art, she says, that means something to a man, such as "I want to go kill the buck in that picture."

Then there's the "no touch" rule that's reigned in Mr. Butterfield's Nascar sanctuary since he found his 4-year-old son's fingerprints on the display cases with his model cars. "It's a little bit of an ownership thing," he says. "I'm really detail oriented, and this is the way I want the room."

Other regulations are trickier to enforce. Karen Dixon gladly turned over her Friendswood, Texas, garage to husband Shawn, even though parking outside means unloading groceries in the rain. "I'm not controlling, and it makes him happy," she says. Inside, he's stationed his Harley Davidson motorcycle, a 1967 Cavalier Coca-Cola machine, pay phone painted Harley orange, and heavy-weight punching bag.

The Dixons, both 38, often play cards together in the cave, but she balks at his suggestion that usage is by "invitation" only. "Really? I think that he doesn't own it," says Mrs. Dixon, who believes her husband would be secretly "flattered if I brought my friends in there to have crafts and a book club." Mr. Dixon's concern: "I'd be afraid something would be moved and I'd never find it."

The stickiest time can be during cave construction. Mrs. Dixon advises other women to negotiate time limits. "When Shawn is focused on something, it consumes him. Looking back, what I should have done is said, 'Spend as much time with your family as with the man cave. If you work out there for an hour, then come inside for an hour.' "

Indeed, compromise is critical in any man cave negotiation. Married 36 years, Steve and Pam Flaten, both 56, share space in AutoMotorPlex Minneapolis, a compound of high-end garages ranging from 1,000- to 6,500-square feet for fixing up and storing specialty vehicles.

In the loft living area the Flatens constructed inside their garage, Mrs. Flaten typically quilts while her husband tinkers with his race cars below. Recently she held a quilting party.

Despite the domestic influence, Mr. Flaten has stood his ground on certain points. The racing flames on the toilet seat, those get to stay. The flowers she wanted for an end table, those got moved outside.

Women's interest in the man cave phenomenon is sparking a logical next step: woman caves. The DIY Network is exploring development of a new show around the concept. Retailer HomeGoods just launched a campaign to outfit what it dubs "Mom Caves."

To some, that's redundant. "A chick cave?" sniffs Dan Cunningham, owner of the Monroe, Mich.-based mancavemarket.com, "That's what the rest of the house is."

Thursday, November 4, 2010

Living Cities to Invest $80 for Poor in 5 Cities - Including Cleveland


By Haya El Nasser, USA TODAY

Imagine investing in cities but only if public, private and philanthropic groups work together on long-term strategies to help low-income residents.

Living Cities, a philanthropic collaborative of 22 of the world's largest foundations and financial institutions, will do that Thursday when it announces $80 million in grants, loans and investments.

Nineteen urban centers competed for the money, but five won for programs that challenge conventional wisdom: Baltimore, Cleveland, Detroit, Newark and Minneapolis-St. Paul.

"The underlying principle of our initiative is that to do this work, you have to have the public sector, the private sector, local philanthropies and the non-profit community all at the same table talking about solving the problem," says Ben Hecht, CEO of Living Cities. "None of those, on their own, will make a long-term change."

It's a bold initiative that requires disparate groups to work under one umbrella on many missions. Until now, grants focused on one goal, such as affordable housing or jobs or transportation.

Leaders of the effort hope that the funding — about $16 million per city — will generate more funding to keep the programs alive long after the grant money dries up.

"It's not about funding projects but about funding systems," Hecht says. "We hope it's going to be a model for other cities."

The winning cities' projects, to be unveiled at the Museum of African American History in Detroit:

•Baltimore. Coordinate a series of unrelated projects to create jobs and affordable housing and use the construction of a subway line to galvanize the efforts.

•Cleveland. Create a biotech corridor between the city and Youngstown, Ohio, by building laboratory space and continue the work of the Cleveland Foundation, which has been creating work cooperatives that give workers a piece of the business.

Hospitals and schools buy lettuce for patients and students and "they found out they buy lettuce that goes 2,500 miles to get to Cleveland," Hecht says. "If you grow this lettuce locally, they said we'll buy it locally."

•Detroit. The shrinking city has twice as much land as it uses. The aim is to concentrate population to revitalize neighborhoods. The focus is on the Woodward Corridor, home of Wayne State University, Detroit Medical Center and the Detroit Institute of Arts.

"How do you use those assets to connect to neighborhoods where there have been so few opportunities?" says Rip Rapson, president of the Kresge Foundation near Detroit and a Living Cities board member.

The goal is to link institutions and local workers and suppliers and attract people to live along the corridor.

•Newark. The New Jersey city that has battled corruption and crime wants to change its image to that of a healthy and safe place to live.

The Center for Collaborative Change, created two years ago, is working with corporations and medical centers to create housing and increase access to fresh foods in supermarkets and neighborhood corner stores.

•Twin Cities. Civic leaders in Minneapolis and St. Paul want to build a new economy along a transit line that will connect the two by 2014.

They're pushing for transit stops in poor areas it will run through to create jobs "so that they benefit from the line rather than having a transit line cutting through their neighborhoods," says John Couchman, vice president of grants and programs at the Saint Paul Foundation.

Wednesday, October 27, 2010


Back to Fundamentals: How do I know how much mortgage payment I qualify for?

By: Evan Vanderwey
Michigan Mortgage

The answer to this question defines the “simple but not easy” category of mortgage education if ever there was such a category.

Simply put – you take your gross monthly income, multiply by around 40% (0.40), subtract from that number the amount of the minimum payments on all of your other debts, and the resulting number is the amount of your maximum house payment. Lastly, the house payment must include the principle and interest amount, property taxes, home owners insurance, and association dues if you are buying in a condominium complex.

Simple.

Except for one thing: What does the lender consider to be your gross monthly income?

Here’s a little help if you’re trying to calculate your gross monthly income. But if you are serious about putting in an offer on a home, there is no way a seller or your REALTOR® will trust your own calculations. In this market, if you’re using a mortgage, you will be required to talk with a lender who will sign off on your math ahead of time.

If you are employed and are paid a salary then you take your gross annual salary and divide by twelve. This is your monthly income.

If you are paid a bonus annually – you take the last two years’ amounts, add them together and divide by 24. Unless your most recent year’s bonus is less than the one you got two years ago – in that case, you take the last year’s amount and divide by 12.

If you earn overtime, consider ignoring it when it comes to setting your personal budget. But if you need to include it to qualify for the mortgage, then it must be increasing from year to year and then you take a 24-month average of the amount of overtime you earned.

Commission-type income must be taken as a 24-month average as well and can be used only if the income is increasing over the past two years. Under certain circumstances, declining income may be used, but only the lower of the two years is used in the calculation. Tax deductible expenses that are deducted on the person’s tax return (form 2106) must be removed before calculating the “gross taxable income.”

Self-employed borrowers must be able to show two years of income as well. We must see an increasing income pattern in most cases. Depreciation can be added back into this number. I cannot stress enough the importance of working with a knowledgeable loan originator if you are self employed. Your income must be calculated accurately up front or even the most well-qualified borrowers can find themselves with a difficult situation during the loan process.

For bonuses, overtime, commissions, and self-employment income, the borrower must have been in the same exact job for the past two years. You can’t move from GM to Fiat for example and average the last two years’ overtime over two separate employers.

Rental income from a tenant can be added in at 75% of the amount of the rent once there is 12 months of history of the tenant paying on time. We can also use the schedule E of a borrower’s tax return to verify rent – this takes the income from tenants and subtracts the expenses from that investment property. The net income on schedule E can be used after one year of having received the rent. Depreciation again is a non-cash expense and can be added back to net income.

Fixed income from settlements or awards, like child support and disability, pension or social security income, is all usable income. We use the full amount as gross monthly income so long as it can be proven that there are three years left for child or spousal support payments. There must be at least 12 months of proof that the payments have been received.

The above list is not meant to be exhaustive but instructive. Calculating income correctly for a lender is no easy task. Take this seriously and work with a qualified lender ahead of time.

Wednesday, October 20, 2010

Affordable Housing That's Green, Too



Green Building Goes on a Budget

Thanks to tax credits and cost cutting, more affordable housing projects are turning eco-friendly

By ROBBIE WHELAN
Wall Street Journal, 10/18/10

Casa Feliz, an apartment building that opened last year in San Jose, Calif., was built with modern finishes and the latest in trendy, environmentally friendly materials: bamboo floors; organic, linseed oil-based linoleum tiles; and ergonomic chairs in the lobby made from sustainably farmed wood.

But in what might come as a surprise to some, no Prius-driving, Dwell magazine-reading, upper-middle-class professionals reside there. The project was built for people who earn less than 35% of San Jose's median income of $103,500 for a family of four, or suffer from developmental disabilities.

Casa Feliz is one of a growing number of affordable-housing projects nationwide that have been built "green"—that is, with nontoxic materials, highly energy-efficient appliances, and features such as green roofs and solar panels. Thanks to tax credits designed to attract private capital and aggressive cost-cutting on other construction features, affordable-housing developers are embracing eco-friendly building features that were once the purview of high-minded designers and wealthy developers with money to spare.

A Better Deal

Dana Bourland, a vice president with Enterprise Community Partners Inc., a Columbia, Md.-based nonprofit that helps finance affordable-housing projects, predicts that the affordable-housing industry will be 100% green by 2020. Not only are green buildings better for the environment, but they make better financial sense, too, she says, because they come with lower water and energy bills and lower tenant-turnover rates.

As such, investors view them as safer investments than buildings without such features, she says.

"The underwriting is changing," she says. "I think there's a growing recognition that these are better deals."

Most affordable-housing projects, including green ones, rely on the federal Low Income Housing Tax Credit, a Reagan-era program that provides incentives for corporations to invest in housing for the poor. Corporations purchase the credits—which are administered through a state-by-state allocation—and use them to take a credit against corporate taxes on their profits. Big investors over the past decade have included banks, insurance companies and the government-supported mortgage giants Fannie Mae and Freddie Mac.

After the housing crash and the collapse of Fannie and Freddie, the market for these tax credits softened considerably, and affordable-housing developers were forced to offer investors higher yields. Some corporations paid as little as 60 cents on the dollar for the credits, which meant developers had less money to put toward energy-saving features that earn buildings green plaudits.

But builders and investors say the market is coming back. Jeff Oberdorfer, executive director of First Community Housing, the San Jose-based nonprofit developer that built Casa Feliz, says investors are paying about 75 cents for each dollar of tax shelter now, and they are eager to underwrite green buildings because of the energy cost savings.

Investors are "starting to become more sensitive to the lower costs, the higher cash flows from energy savings," Mr. Oberdorfer says.

MetLife Inc., the big New York-based insurance company, is one of those investors. Matt Sheedy, who invests funds from MetLife's $325 billiongeneral account, says MetLife and other large institutional investors are eager to invest in green affordable-housing projects because they have a safer risk profile than more traditional housing projects.

"Investors commonly accept moderately lower returns for lower risk profiles, and green features are more in demand," he says. "I don't think we're back to peak prices, [but] this year, investor demand has picked up."

MetLife bought $14.3 million in credits on First Community Housing's Fourth Street Apartments project, a 100-unit affordable-housing building going up in downtown San Jose, and has also invested in Bay Avenue, a 109-unit senior-housing project in Capitola, Calif. Both projects are green. All told, MetLife has invested more than $1billion in affordable tax-credit projects since 1995, many of them green, Mr. Sheedy says.

Freeing Up Funds

Developers are going full speed ahead on green affordable-housing projects elsewhere across the U.S.

Enterprise Community Partners, for example, has invested more than $500 million in green tax-credit projects and recently launched a $50 million investment fund geared toward renovating low-income projects with eco-friendly features. In Utah, Enterprise is close to a multimillion dollar deal with American Express Co. to invest in green affordable tax-credit deals, according to Ms. Bourland, the vice president. American Express didn't respond to requests for comment.

New York builder Jonathan Rose Cos., meanwhile, is building $750 million of green affordable-housing projects and manages about $1.3 billion in completed green projects. It opened its latest apartment building in September.

Castle Gardens, an energy-efficient rental-apartment complex for former inmates and other low-income tenants in New York's Harlem neighborhood, was financed in large part by $16 million in tax-credit equity from Capital One Bank N.A. and other investors. Still, Jonathan F.P. Rose, the builder's founder and director, says his company had to work hard to free up money to make the complex green.

Up on the Roof

Rose saved almost $100,000 by putting gas-fired hot-water boilers on the roof rather than in the basement of the building, as is typical. That allowed it to avoid building a pricey flue that would have had to run from the ground to the top of the structure to pump out exhaust fumes. In addition, the windows in each room have "trickle vents" that encourage airflow and cool the apartments in summer, but are cheaper than a central venting system. The money saved allowed the builder to add features that made Castle Gardens 30% more energy-efficient than other buildings of comparable size in Harlem.

"In the early to mid-1990s, as a few voices were beginning to emerge and push for the greening of affordable housing, the affordable housing community's response was, the need for affordable housing [is] so great that we cannot defer any money from the quantity of the units to the quality of the project," Mr. Rose says.

That was excellent discipline, he adds, because "the green affordable housing had to grow up with no money to spare."

Wednesday, October 13, 2010

Mortgage Rates Would Lose at Limbo - They're About as Low as They Can Go

Wall Street Journal, Oct. 12 2010
By PRABHA NATARAJAN

Mortgage rates have hit another record low—4.27% on average for 30-year fixed-rate loans, according to Freddie Mac—but analysts and others say home-loan rates are much higher than they should be.

Don't bet the house, however, that they will drop too much lower. Rates haven't fallen further, analysts and bankers said, because banks are unwilling to lower rates and lose profit margins, and because of uncertainty in the market that makes it difficult for them to predict the number of home buyers.

Instead of moving the rate lower to 4%, which banks might have done at "normal times" when bond yields are as low as they are, "illiquidity and unusual situations are causing originators to hold rates at this level rather than risk losing money on new loans they have difficulty hedging," said Paul Jacob, director of research at Banc of Manhattan Capital, in Manhattan Beach, Calif.

Based on the yields of mortgage-backed securities traded on secondary markets, David Cannon, head of mortgage trading at Royal Bank of Scotland Group PLC, says that the mortgages in Freddie Mac's weekly survey should come with interest rates between 3.75% to 4%.

At those lower rates, a homeowner could lower his monthly payments on a $200,000 loan by $30 to $60—saving nearly $22,000 over the full life of a 30-year mortgage.

Moving toward the theoretically lower rate isn't a simple matter, however. There is a convoluted scenario at work that goes at the heart of how mortgages are bundled together and packaged into securities that are sold to investors.

Typically, local and regional banks lend to homeowners, then sell those loans to larger banks or aggregators, such as Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co. These firms pool loans from across the U.S. into mortgage securities.

Normally, small banks would push rates as low as they could go in order to make more loans and thus make more money. But they have found that while lower rates may bring in more home buyers, there is little guarantee that many of these consumers will qualify for a loan under today's austere borrowing standards.

Further, these originators make money from the rates at which they can sell these loans to aggregators. Lower rates mean narrower margins for them, while the aggregators who buy these loans at lower rates stand to gain from selling them at higher rates in the secondary market.

Because there are so few new mortgages and so many investors eager to buy them, "the system now allows large aggregators to control the price on a loan and an interest rate the borrower gets," said Mike Delehanty, president of Apex Analytics in Wildomar, Calif., which advises banks on selling their loans to larger mortgage-finance companies.

Mortgage rates usually are based on the yield investors are paid for the risk of purchasing securities backed by home loans, and the premium that the lender charges to service the loan.

Currently, the yield on government-guaranteed mortgage security is 3.206%, and the primary mortgage rate is 1.064 percentage points higher. Historically, the difference is in the range of 0.50 to 0.70 percentage point, according to Amherst Securities Group.

That unusually wide gap indicates that banks continue to make it tough for consumers to get really low rates on loans, as they fiercely protect their gains.Representatives of the country's largest mortgage lenders, including Citigroup, Bank of America, Wells Fargo and J.P. Morgan Chase, declined to comment or didn't return phone calls seeking their views.

Mortgage rates aren't likely to drop significantly even if the interest rate on the 10-year Treasury bond and corresponding yield on mortgage securities drop further.

"Even if interest rate drops to 2%, mortgage rates are going to stay right here," said Paul Norris, a portfolio manager at Dwight Asset Management in Burlington, Vt. "Originators don't expect mortgage supply to be robust and will want to keep rates in the 4.25% to 4.625% range for the next few months."

Thursday, October 7, 2010

Should You Pay Off Your Mortgage? The Answer May Surprise You

The following article from the WSJ reveals that it may make sense for you to pay off your mortgage. Here's one reason why: With today's volatile stock market, you can't necessarily guarantee that any funds you have invested will outperform the interest rate you're paying on your mortgage.

* *

Should I Pay off the Mortgage?

By June Fletcher
WSJ, Oct. 5th 2010

Q: We have a mortgage worth $177,000 on a house that we've owned for 21 years. We've refinanced our loan twice, and now have a 30-year mortgage at 6.48% that we took out in 2002.

My husband and I are now six years from retirement, and we are trying to figure out the best use of our money. We have enough to pay off the mortgage without dipping into our IRAs, and we'd sleep better if we didn't have a mortgage hanging over our heads. Is this a good idea?

—Washington, D.C.

Given the economy's continuing weakness, the fact that you have cash that's not tied up in IRAs and how close you both are to retirement, I think it's a fine idea to pay off your mortgage.

Here's why: You should always try to get the best return possible on your money. So you shouldn't keep the loan unless you can find another investment that, before taxes, can reliably earn more than the 6.48% that you're currently paying on it. With the stock market still volatile and certificates of deposit and other relatively safe investments paying less than the rate of inflation, I wouldn't count on that.

What's more, paying off a mortgage loan is risk-free—no matter what happens to the general economy, you'll be left with an asset that you can live in or rent out.

A downside is that you'll lose the mortgage interest tax deduction if you pay off your loan. But as a new report from the National Association of Home Builders points out, those benefits largely go to those buyers who are younger than 45, who typically have the largest mortgages and the most itemized expenses.

Meanwhile, if you pay off the loan, you'll have plenty of company. According to the latest American Community Survey released by the U.S. Census, there are approximately 50.7 million owner-occupied homes with a mortgage in 2009, compared to about 51.6 million in 2008. Folks are paying off second mortgages and home equity lines of credit, too. Those have dropped to about 12.1 million in 2009 from roughly 13.3 million the year before.

Of course, you do have other options. You can refinance your relatively expensive current loan to today's lower interest rates—but doing so will incur thousands of dollars in closing costs. Or, while you are both still working, you could simply add extra principal payments to your current mortgage and pay it off more quickly.

But if you pay off your mortgage completely, you'll not only sleep soundly, you'll be in a position to get a reverse mortgage should you need to tap into your home's equity at a later date. The way reverse mortgages are structured, the older you are when you take out a reverse mortgage, the more you'll be able to withdraw while still remaining in your home, since your life expectancy declines with each passing year. That's a good fallback should you outlive the funds you manage to put away before retirement.

Monday, September 27, 2010

What to Know About Home-Sale Tax Rules

By TOM HERMAN
Wall Street Journal, Sept. 19th 2010

Q: What are the chances that Congress will ease the rules on how long you have to own your home and live in it in order to qualify for the most favorable capital-gains tax treatment when you sell it?

—K.M., Prior Lake, Minn.
A: Slim to none. Naturally, anything is possible if Congress ever decides to overhaul the entire tax system. But don't count on that happening any time soon.

Even if lawmakers do consider major tax-law changes after the November elections or next year, don't expect them to ease the home-sale rules. I haven't heard any significant discussion of this issue among congressional leaders in many years.

Here is how the basic rules work: In the late 1990s, then-President Bill Clinton signed legislation that officials said at the time would eliminate capital-gains taxes for most people who sell their primary home for a profit. That legislation generally allowed most sellers to exclude a gain of as much as $500,000 (if married and filing jointly) or as much as $250,000 (if single).

To qualify for the full exclusion, you typically must have owned the home -- and used it as your primary residence -- for at least two of the five years prior to the sale. For more details, see IRS Publication 523 ("Selling Your Home") on the Internal Revenue Service website (www.irs.gov).

But don't assume you're out of luck if you can't meet the ownership and use tests I mention above. You still might be eligible for a partial exclusion that could greatly reduce -- or even eliminate -- capital-gains taxes on the sale of your primary home.

For example, you may qualify for a partial exclusion if you had to sell your home because of "a change in place of employment" or if you moved for "health" reasons. IRS Publication 523 has other examples.

Here is what the IRS says it means on the health issue: "The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide or facilitate the diagnosis, cure, mitigation or treatment of disease, illness or injury of a qualified individual," or to "obtain or provide medical or personal care for a qualified individual suffering from a disease, illness or injury."

Conversely, the IRS says the sale of your home isn't because of health if the sale "merely benefits a qualified individual's general health or well being."

You also might qualify for a partial exclusion if you had to sell for certain "unforeseen circumstances," such as "natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible."

Credit Scores May Hamper Housing Comeback


By Phil Izzo

Homeownership is potentially out of reach for nearly a third of Americans, according to a new report that highlights the difficulties in the housing market in the wake of the Great Recession.

Potential home buyers may be among the hardest hit by the recession. People with a credit score below 620 who went searching for a loan were unlikely to receive even one quote, according to real-estate web site Zillow.com, even if they offered a down payment of 15%-25%. Zillow notes that 29% of Americans has a credit score this low, according to data provided by myFICO.com.

“Today’s tighter credit is a predictable response by banks after the foreclosure crisis, but also keeps a cap on housing demand, which is important for the greater housing market recovery,” said Zillow chief economist Stan Humphries.

While banks may be right to try to avoid repeating mistakes made during the housing bubble, an over-reliance on credit scores could create problems for the real-estate market. Banks shouldn’t be giving mortgages to borrowers who can’t afford to pay them back, but if people with sizeable down payments and solid sources of income are being turned down because of credit scores, that’s not healthy, either.

Many factors influence credit scores. A temporary spell of unemployment and the resultant hardship can easily push them down. According to a new report from the Pew Research Center, the majority of Americans may find themselves in this situation. Pew separates its respondents into two groups, one that “held its own” — 45%, a number similar to myFico’s estimated 47% of Americans who have the best credit scores (over 720) — during the recession and another that “lost ground” — 55%.

The Pew report’s demographic breakdown may be even more troubling for housing. Those who “held their own” tended to be older people who already owned homes. Real Time Economics recently noted a potential “shadow demand” for housing from people who postponed plans to form new households in the wake of the recession, but that pool of potential homeowners was also more likely to have lost ground during the recession. According to Pew, 69% of people age 18-49 and 60% of those 30-49 lost ground.

It’s likely that those groups, who are the most likely first-time and move-up home buyers, took a hit to their credit scores during the recession. Zillow’s data indicate that even if they’ve recovered from the worst, the may not be able to get a mortgage, and if they do, they also are more likely to face higher interest rates.

Wednesday, September 22, 2010

Refinancing: Here's What You Need to Know


Refinancing: Whom Can You Trust?

From Conflicts of Interest to Simplistic Formulas, the Web Is Awash With Dubious Mortgage Information. Here's What You Need to Know

By M.P. MCQUEEN

Sept. 18th, 2010

With mortgage rates falling to record lows this summer and the housing market showing signs of a pulse, refinancing activity is perking up.

It's too bad that so many people are relying on oversimplified advice and bad numbers to decide when to pull the trigger.

The refinancing equation has never been more complicated. While some borrowers are desperate to reduce their monthly payments, others are looking to build equity. Some are even treating their mortgage as an investment vehicle, sinking excess cash into their homes in order to secure a lower rate and cut future payments.

Yet most personal-finance resources these days don't account for situations like these. Even essential factors like tax rates and inflation expectations are often ignored in favor of simplistic calculations.

Many popular Web resources, in fact, are financed by lenders, mortgage brokers or "lead generators" that connect borrowers with banks. At times, their advice can be downright harmful.

That's because of the risk involved. Refinancing generally costs 3% to as much as 6% of the outstanding principal of the loan, with banks levying fees on everything from application fees and title searches to appraisal costs and legal expenses.(Mortgage "points" can add to the total, though they typically help reduce the interest rate and lower overall costs.)

Fees are often murky, too, making comparison shopping difficult. The best way to compare deals, says Melinda Opperman of Riverside, Calif.-based Springboard Nonprofit Consumer Credit Management Inc., is to consult with a housing-counseling agency approved by the U.S. Department of Housing and Urban Development.

Given such costs, you don't want to refinance often. Yet the advice coming from the mortgage world suggests you should be doing it regularly.

One particularly dubious idea gaining prominence is the "1% rule," which used to be the 2% rule when rates were higher. The gist: Refinance when you can knock a full percentage point off your rate.

A lead-generation site called Supermortgages.com says the following in a piece called "When to Refinance a Mortgage": "Are the current mortgage interest rates at least 1 point less than your existing mortgage interest? If so, refinancing your home mortgage might make sense."

Wells Fargo & Co.'s website goes further. In an advice article titled "Deciding to Refinance," it writes: "If interest rates are 1/2% to 5/8% lower than your current interest rate, it may be a good time to consider a refinance."

Yet people who followed the one-point rule could have refinanced five or six times in the last 15 years, paying so much in fees that the savings would likely be wiped out.

Supermortgage.com's content largely comes from mortgage brokers, lenders and other industry sources, says Andy Shane, a spokesman for parent company SuperMedia Inc. In this case, he says, the author is a freelance writer with a law degree and a background in real estate who used a mortgage calculator and determined that a one- to two-point cut in rates "made a pretty significant difference in monthly payments" compared with closing costs.

Wells Fargo spokesman Jason Menke says the bank's website has a wide range of information available to help borrowers. "The rate difference cited is just a point where a borrower may want to consider looking into a refinance," he says.

The 1% rule could translate into big business if it catches on. About 71% of outstanding fixed-rate mortgages guaranteed by Fannie Mae or other government-sponsored entities are at least a point above current rates, according to Walter Schmidt, senior vice president at FTN Financial Capital Markets in Chicago.

Bills.com is another lead-generation site that offers personal-finance advice. Its new refinance calculator is among the most basic around: It asks users for some data and their reason for wanting to refinance and then spits out a yes/no answer.

The answer, however, is usually "yes." And sometimes it comes with a suggestion for a risky interest-only loan. It also provides a way for users to sign up for a quote.

Ethan Ewing, president of Bills.com, says the calculator's simplicity and ease are virtues. Most users say they are looking for a fixed-rate loan or a lower monthly payment, he says. "If [users] can save more than $100 a month on the payment with a new mortgage, the calculator says 'yes.' "

Another flawed concept is the standard break-even test. Many mortgage sites suggest that borrowers should calculate how many months it would take to save enough on mortgage interest charges to break even on the closing costs, and then to pull the trigger when the payoff goes below three to five years.

But such analyses often ignore important factors, such as how long the borrower plans to stay in the house or the borrower's tax rate, which determines a loan's after-tax cost.

Consider LendingTree.com, a lead generator, broker and lender. In an article called "When Does It Pay to Refinance a Mortgage?" it warns: "There are other things to consider when you refinance, too, including taxes and private mortgage insurance. For a break-even estimate that takes many of these factors into account, use the LendingTree refinancing calculator."

The problem: The refinance calculator doesn't take taxes into account. It merely calculates your break-even point based on your current payment, the hypothetical new-loan payment, and the closing costs. Right below the results is a button to "start request"—meaning it will start to hook you up with a lender.

"This is a simple calculator that gives you a straightforward break-even equation," says Nicole Hall, a spokeswoman for LendingTree. "You should speak to a loan officer to thoroughly evaluate your options.... Generally, if you can lower your interest rate by 1%, you are saving enough to justify the refinance if you are staying in the home a certain number of years."

Versions of the same calculator appear on the sites of mortgage brokers or lead generators such as Domania.com and Calculators4Mortgages.com.

There are, to be sure, plenty of websites whose advice is unbiased and sound. The Federal Reserve, for example, offers a refinance resource page on its website that includes a better break-even calculator with tax-rate considerations.

A more-sophisticated calculation of the merits of refinancing would include other factors: the borrower's tax rate, inflation expectations, how long the borrower plans to live in the house, the opportunity cost of paying closing costs rather than investing in stocks or bonds, and so on.

One obscure calculator comes close. Instead of plugging in today's mortgage rates and determining how long it would take to pay back the closing costs, it uses "optimization theory" to conjure up a person's ideal refinance rate regardless of where rates are now. If you can find a rate that is equal to that rate or lower, it's time to refinance.

The bad news: Its results tend to flash the green light much less often than other calculators.

The calculator, posted on the National Bureau of Economic Research's website at http://zwicke.nber.org/refinance/index.py, is based on a 2008 paper by two economists at the Federal Reserve and one from Harvard University. Using stochastic calculus, they devised a formula based on the loan size, the homeowner's marginal tax rate, the expected inflation rate over the life of a loan, how long the borrower plans to remain in the house and other factors.

"These ideas are really old hat among economists; our contribution is deriving a simple formula that anyone can plug into their calculator or computer," says Harvard professor David Laibson, one of the authors.

The Optimal Refinance Calculator spits out tougher numbers than many other calculators in part because it factors in the benefit of waiting beyond the break-even for the chance that rates could fall further. Refinance now and you reduce your ability to refinance later.

According to the calculator, a borrower in the 35% tax bracket who has 20 years left on a $400,000 mortgage at 5.88% isn't advised to refinance until rates hit 3.92% (assuming low closing costs of 3%). By contrast, a three-year break-even analysis of those parameters would suggest that today's 4.5% rate is the time to make a deal.

"Some people mistakenly think [the break-even] is a recommendation to refinance," Prof. Laibson says. "You want to wait until things get better than the break-even point. Refinancing is irreversible and really costly."

Another way to benefit from falling rates in the future is via an adjustable-rate mortgage, the norm in places such as the United Kingdom and Australia. People with a strong conviction that deflation will unfold over the next several years can take out an ARM now and refinance later if rates start to head upward, though the transaction costs could add up.

Be warned: The Optimal Refinance Calculator doesn't account for refinancing into shorter-term loans, such as 15- or 20-year mortgages. It also doesn't work for "cash in" refinance deals, which investors increasingly are viewing as investments unto themselves. The bet: With stocks in a 10-year slump and bonds looking bubbly, the best investment they can make is to cut their future mortgage payments.

A new cash-in mortgage refinance tool, launched on Aug. 25 at www.mtgprofessor.com, calculates the "internal rate of return" on the cash a borrower puts into an underwater home loan to pay off the balance and cover closing costs. The money saved each month and the balance reduction is treated as a return on the cash invested. Compare that with your expected returns on stocks or bonds to see if a refinance makes sense.

Jon Krieger, 34 years old, and wife April, 32, of Blairsville, Ga., didn't need to invest extra cash—they simply wanted to cut their mortgage payment. Mr. Krieger says he tried several times last year to refinance but couldn't because bank lending standards were too tight.

It's a good thing they didn't refinance last year. Rates have since fallen even lower—precisely the possibility the Optimal Refinance Calculator considers.

In August the couple refinanced their $416,000, 6.75% loan they took out in May 2007 with a new loan at 4.75%. It lowered their monthly payment by more than $500. The total closing costs were about $5,500, says Mr. Krieger.

The deal easily satisfies the 1% rule and the three-year break-even. It also survives the Optimal Refinance Calculator, which put the Kriegers' ideal rate at 5.63% or below.

"We just kept plugging away and finally this came along, and it worked out real well," says Mr. Krieger. "I was very pleased."

Write to M.P. McQueen at mp.mcqueen@wsj.com

Wednesday, September 15, 2010

Government launches plan to help 'underwater' borrowers


Tues. Sept. 7th 2010
AP Staff

WASHINGTON -- The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth.

Starting Tuesday, the Federal Housing Administration will permit lenders to give these borrowers refinanced loans backed by the government. The lenders will be required to forgive at least 10 percent of the original mortgage amount. Investors who have control over the mortgages as part of their large portfolios will select which borrowers are invited to participate.

The plan was first announced in March. Its rollout represents the latest of numerous efforts by the administration to address the housing bust. So far, the government has only nibbled around the edges of the crisis, as its programs have run into numerous problems.

The lending industry was ill-prepared for a crush of distressed homeowners, the economy worsened and millions of homeowners had taken on so much debt that their financial woes have been nearly impossible to resolve.

Nearly half of the 1.3 million homeowners who have enrolled in the Obama administration's main mortgage-relief program -- overseen by the Treasury Department -- have already fallen out over the past year.

Many borrowers say the government program is a bureaucratic nightmare, with banks often losing their documents and then claiming borrowers did not send back the necessary paperwork. Banks say borrowers often didn't return the required documents.

The new refinancing program takes a different approach. It allows investors in mortgage-backed securities to evaluate their holdings and select borrowers that will be offered refinanced mortgages guaranteed by the FHA.

The theory is that there are some loans that investors simply want to unload because they have a high risk of default.

However, when faced with the choice between slashing the amount borrowers owe on their home loans and foreclosing, lenders have generally chosen to foreclose on borrowers. Many experts doubt the new program will persuade investors to change their minds.

Government officials acknowledge that getting the plan going will be complicated. FHA Commissioner David Stevens said in a statement that it "requires significant coordination and operational execution by several parties to be successful."

The government estimates that between 500,000 and 1.5 million homeowners could be helped. But Stevens said the number of borrowers who actually benefit will likely be toward the low end of that range.

Even so, Keefe, Bruyette & Woods Inc. analyst Bose George called the government's estimates "extremely optimistic." George said investors are likely to only offer refinances to borrowers who have seen their home values plunge to the point where they owe 40 percent more than their home's current value. Those homeowners, he said, are in danger of walking away from their mortgages.

"We're assuming that the impact is minimal," he said.

To qualify, borrowers must be up-to-date on their mortgages, though many people who have already received loan modifications through other programs are still eligible. The plan is limited to loans in which homeowners owe at least 15 percent more than their home's current value.

Analysts at Barclays Capital estimated last month that the refinancing program would only aid between 200,000 and 300,000 homeowners. If it reaches that many, it would be a small share of the number of Americans with so-called underwater mortgages.

As of the end of June, about 11 million U.S. homes, or 23 percent of those with a mortgage, were in this position, according to real estate data provider CoreLogic.

Wednesday, September 8, 2010

No Money Down Programs Creep Back Into the Marketplace


NY Times, 9/4/10

When the housing bubble burst, one of the culprits, economists agreed, was exotic mortgages, including those that required little or no money down.

But on a recent evening, Matthew and Hannah Middlebrooke stood in their new $115,000 three-bedroom ranch house here, which Mr. Middlebrooke bought in June with just $1,000 down.

Because he also received a grant to cover closing costs and insurance, the check he wrote at the closing was for 67 cents.

“I thought I’d be stuck renting for years,” said Mr. Middlebrooke, 26, who earns $32,000 a year as a producer for a Christian television ministry.

Although home foreclosures are again expected to top two million this year, Fannie Mae, the lending giant that required a government takeover, is creeping back into the market for mortgages with no down payment.

Mr. Middlebrooke’s mortgage came from a new program called Affordable Advantage, available to first-time home buyers in four states and created in conjunction with the states’ housing finance agencies. The program is expected to stay small, said Janis Smith, a spokeswoman for Fannie Mae.

Some experts are concerned about the revival of such mortgages.

“Loans that have zero down payment perform worse than loans with down payments,” said Mathew Scire, a director of the Government Accountability Office’s financial markets and community investment team. “And loans with down payment assistance” — like Mr. Middlebrooke’s — “perform worse than those that do not.”

But the surprise is the support these loans have received, even from critics of exotic mortgages, who say low down payments themselves were not the problem, except when combined with other risk factors like adjustable rates or lax underwriting.

Moreover, they say, the housing market needs such nontraditional lending, as long as it is done prudently.

“This is subprime lending done right,” said John Taylor, president of the National Community Reinvestment Coalition, an umbrella group for 600 community organizations, and a staunch critic of the lending industry. “If they had done subprime this way in the first place, we wouldn’t have these problems.”

At Harvard’s Joint Center for Housing Studies, Eric Belsky, the director, said the loans might be the type of step necessary to restart the housing market, because down payment requirements are keeping first-time home buyers out.

“If you look at where the market may get strength from, it may very well be from first-time buyers,” he said. “And a very significant constraint to first-time buyers is the wealth constraint.”

The loans are the idea of state housing finance agencies, or H.F.A.’s, quasi-government entities created to help moderate-income people buy their first homes.

Throughout the foreclosure crisis, the state agencies continued to make loans with low down payments, often to borrowers with tarnished credit, with much lower default rates than comparable mortgages from commercial lenders or the Federal Housing Administration. The reason: the agencies did not offer adjustable rates, and they continued to document buyers’ income and assets, which many commercial lenders did not do. In 2009, the agencies’ sources of revenue dried up, and they had to curtail most lending.

Then they created Affordable Advantage. The loans are 30-year fixed mortgages, with mandatory homeownership counseling, available to people with credit scores of 680 and above (720 in Massachusetts). The buyers have to put in $1,000 and must live in the homes.

All of these requirements ease the risk, said William Fitzpatrick, vice president and senior credit officer of Moody’s Investors Service. “These aren’t the loans that led us into the mortgage crisis,” he said.

So far Idaho, Massachusetts, Minnesota and Wisconsin are offering the loans. The Wisconsin Housing and Economic Development Authority has issued 500 loans since March, making it the first state to act. After six months, there are no delinquencies so far, said Kate Venne, a spokeswoman for the agency.

The agencies buy the loans from lenders, then sell them as securities to Fannie Mae. Because the government now owns 80 percent of Fannie Mae, taxpayers are on the hook if the loans go bad.

The state agencies oversee the servicing of the loans and work with buyers if they fall behind — a mitigating factor, said Mr. Fitzpatrick of Moody’s.

“They have a mission to put people in homes and keep them in homes,” not to foreclose unless other options are exhausted, he said. The loans have interest rates about one-half of a percentage point above comparable loans that require down payments.

Ms. Smith, the spokeswoman for Fannie Mae, distinguished the program from loans of the boom years that “layered risk on top of risk.”

With the new loans, she said, “income is fully documented, monthly payments are fixed, credit score requirements are generally higher, and borrowers must be thoroughly counseled on the home-buying process and managing their mortgage debt.”

For Porfiria Gonzalez and her son, Eric, the loan allowed them to move out of a rental house in a neighborhood with a high crime rate to a quiet street where her neighbors are retirees and police officers.

Ms. Gonzalez, 30, processes claims in the foreclosure unit at Wells Fargo Home Mortgage; she has seen the many ways a mortgage holder can fail.

On a recent afternoon in her three-bedroom ranch house here, Ms. Gonzalez said she did not see herself as repeating the risks of the homeowners whose claims she processed.

“I learned to stay away from ARM loans,” or adjustable rate mortgages, she said. “That’s the No. 1 thing. And always have some emergency money.”

When she first started shopping, she looked at houses priced around $140,000. But the homeownership counselor said she should keep the purchase price closer to $100,000.

“They explained to me that I don’t need a $1,200-a-month payment,” she said.

The counselor worked with her real estate agent and attended her closing. On May 28, Ms. Gonzalez bought her home for $90,500, with monthly payments of $834. After moving expenses, she has kept her savings close to $5,000 to shield her from emergencies.

“If I had to make a down payment, it would have wiped out my savings,” she said. “I would have started with nothing.”

Now, she said, she is in a home she can afford in a neighborhood where her son can play in the yard. A neighbor brought her a metal pink flamingo with a welcome sign to place by her side door.

“My favorite part is the big backyard,” said Eric, 10. “And that’s pretty much it.”

“You don’t like it that it’s a quiet, safe neighborhood?” his mother asked.

“Yeah, I do.”

“He didn’t go out much with kids in the old neighborhood,” she said.

“Because they were bad kids,” he said.

Ms. Gonzalez said that owning a house was much more work than renting, and that when the basement flooded during a heavy rain, her heart sank.

“But I look at it as an investment,” she said, adding that a similar house in the neighborhood was on the market for $120,000.

Prentiss Cox, a professor at the University of Minnesota Law School who has been deeply critical of the mortgage industry, said the program met an important need and highlighted the track record of state housing agencies, which never engaged in exotic loans.

“It’s not a story people want to hear, because it won’t bring back the big profits,” Mr. Cox said. “The H.F.A.’s have shown how the problems of the last 10 years were about having sound and prudent regulation of lending, not just whether the loans were prime or subprime.”

He added, “One of the great and unsung tragedies of the whole crisis was the end of the subprime market.”

Friday, September 3, 2010

How to Navigate Short Sales

How can you get in on a good short-sale deal? It takes a certain amount of fortitude and patience, plus a lot of luck.

What's a short sale?

Selling a home for less than the amount the current owner owes the mortgage company is called a short sale.

Buying a home that is a short sale is different from buying a property that is actually owned by the bank, known as an REO, or real-estate owned property, or a property that is in foreclosure.

All of this sounds arcane, but it's lingo that anyone shopping for a home needs to understand to navigate today's marketplace.

A short sale can be a good deal for a buyer, and it can help the seller avoid having a full foreclosure on his or her credit record. Although a short sale and a foreclosure negatively affect the seller's credit score, in a short sale the damage can be minimized if the homeowner can persuade the lender to report the debt to credit bureaus as "paid in full."

In a short sale, the proceeds from the transaction are less than the amount the seller needs to pay the mortgage debt and the costs of selling. For this deal to close, everyone who is owed money must agree to take less -- or possibly no money at all. That makes short sales complex transactions that move slowly and often fall through.

An extension of the government's housing rescue plan could make it easier to buy short-sale properties. The new version of the Making Home Affordable plan will pay lenders up to $1,000 if they allow a short sale of a property when the owners don't qualify for loan modification because they owe too much money on the home. The program will spell out a short-sale process and provide standard documents, the U.S. Treasury says.

The government's plan probably still won't help if there are multiple liens on the property, but it should encourage lenders holding the first mortgage to move the process along.

Keep your eyes wide open

If you're house hunting and spot what seems like a great deal, chances are good that you are considering a short-sale property.

Most of the time, the seller has already fallen behind on the mortgage, but occasionally the seller is current but unable to continue to pay because of ill health or job change. This is particularly true in parts of the country where home prices have fallen significantly.

Before you rush in, consider the issues. The advice below comes from Scott Thompson, senior vice president of Mortgage Resolution Services, a distressed sales consulting company, and Vicki Vidal, associate vice president of government affairs for the Mortgage Bankers Association.

Know what you are getting into. Under the best circumstances, short sales take a long time to close and may require extra effort on the part of the buyer. Walking blindly into a short sale can be a losing and distressing proposition, so push for disclosure before you get involved, Thompson says.

This is not a do-it-yourself project. Find a real estate professional who understands the territory. Having a real estate agent on your side who knows how short sales work and who has negotiated others will increase the chances of closing the deal.

"I would ask the agent to provide references, specifically on an REO or a property that was in short sale," Thompson says. "You certainly don't want someone who is a shrinking violet."

Thompson and Vidal advise staying away from "short-sale counselors," those who say they can jump in and expedite the deal. Their game often involves negotiating a low price with the lender, charging the buyer more money -- often significantly more money -- and pocketing the difference. This "counselor" probably won't make the deal go any more smoothly for you and certainly won't do you any favors pricewise.

Be wary of the condition of the property. If the seller is in financial distress, chances are the home may not be well-preserved. The seller also may be reluctant to reveal serious maintenance issues. Proceed cautiously and get the property inspected by a knowledgeable person before you commit.

Make sure the deal has a prayer of closing

If you've decided to go for it, the first step is to have your real estate agent talk to the real estate agent representing the seller and determine the status of the short sale. Below are items that most lenders require from a short seller. If the seller is unable or unwilling to provide this information, the short sale won't close and any buyer is wasting his or her time. Your real estate agent should push for candor from the seller's agent.

A hardship letter. The seller must explain why he or she cannot continue making payments. The sadder the story, the better. A seller who is simply tired of struggling probably won't be approved, but a seller with cancer, no job and an empty bank account may.

Proof of income and assets. If the seller has money in the bank, including retirement funds, it is unlikely that the lender will let the debt slide. This package of information must include income tax and bank statements, going back at least two years. Sometimes sellers are unwilling to produce these documents because they conflict with information on the original loan application, which may have been fudged. If that's the case, this deal is unlikely to close.

Comparative market analysis. This document shows that the price of the property has declined and that the property won't sell anytime soon for the amount owed. This packet of information should include a list of comparable properties on the market and a list of properties that have sold in the past six months or have been on the market in that time frame and are about to close. This packet of information is similar to what's known as a Broker Price Opinion, which is less formal but often more informative than a property appraisal. The prices should support the seller's contention that the property is worth no more than the short-sale price.

A list of liens. There may be more than one, so determine how many liens are on the property. The good news is that since late 2008, the IRS has been willing to release a federal tax lien. The IRS is not forgiving the back taxes that homeowners owe; it is just no longer requiring that the lien be paid off before the property can be sold. And a single mortgage lien is an easy problem to solve.

If there are first and second mortgage liens, the question becomes: What's the plan to satisfy these lien holders? The seller and the real estate agent should have a plan that is more sophisticated than crossing their fingers, Thompson says. In the best of all possible worlds, the seller will be willing to contribute to paying off the second lien, so the first lien holder gets the full amount from the sale.

If there is a third mortgage lien, reaching any deal is very iffy. Deal killers include child support liens, state tax liens and homeowners association liens. If they exist and there are no obvious solutions, walk away, Thompson says.

Here's one more deal killer, something that can be difficult to sleuth out, says Thompson. Because a short sale generally doesn't cover the whole amount owed or other liens, it can trigger mortgage insurance. If the property is covered by a mortgage insurance policy that doesn't have to pay off until the home has been in foreclosure for 150 days or some similar length of time, chances are the insurer will hold up the sale because it won't want to pay any earlier than necessary and hopes the foreclosure will just disappear. Often the mortgage insurer will simply go silent. Thompson says: No response, no approval.

Be realistic

The bottom line: Don't choose a short sale if you're in a hurry.

"It's a waiting game," says Vidal.

Part of what slows down short sales is buyers' insistence on making really lowball offers, she says. "You get really crazy, ridiculously low offers -- and they are rejected."

Another factor is the increasing number of government programs aimed at keeping people in their homes -- about 50 percent of defaults never go as far as foreclosure, according to the Mortgage Bankers Association. So lenders see short sales as potentially the least attractive option and aren't willing to expedite them.

How can a potential short-sale buyer be protected from getting involved in an extended negotiation that doesn't go anywhere in the end? Thompson says you should negotiate an agreement with the seller and the seller's real estate agent that your offer will be the only one presented to the lender. If the lender isn't flooded with offers, it will be more motivated to move forward. If the lender turns down the offer without countering, then the restriction disappears.

Once you've crafted a deal, you better know where the money is coming from to close. If you're getting a loan, you need bank approval in advance.

As is true with any of these deals -- REOs, short sales, foreclosure auctions -- make sure you have money lined up. Cash is the best financing alternative in these cases.

Thursday, August 26, 2010

Mortgage Rates Hit Low of 4.36 Percent

Thursday, August 26, 2010

Associated Press business staff

NEW YORK -- Mortgage rates fell to the lowest level in decades for the ninth time in 10 weeks as concerns grow that the economy is weakening.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week. That's the lowest since Freddie Mac began tracking rates in 1971.

The average rate on 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week. That's the lowest on records starting in 1991.

Rates have fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

The low rates have fueled borrowers to refinance their home loans. Refinancing is at its highest level since May 2009 and made up 82.4 percent of all new loan activity.

However, low rates haven't budged home sales, Those have been stymied by high unemployment, slow job growth and strict credit standards, and have dropped sharply since the expiration of home-buying tax credits in April.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Average rates on five-year adjustable-rate mortgages were unchanged at 3.56 percent. Rates on one-year adjustable-rate mortgages fell to an average rate of 3.52 from 3.53percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 a point for 30-year and 1-year mortgages. They averaged 0.6 of a point for 15-year and 5-year mortgages.

Thursday, August 19, 2010

Tremont Valley Turnaround: New Townhomes Aim to Bridge the Gap Between Trendy Tremont and its Wilder Side


On a sunny June morning, the clatter of construction rings out across a once-forgotten Tremont hillside as crews finish up four new townhomes in time for the summer home-buying season.

This part of Tremont used to be famous for much less desirable activities. Up until a few years ago, car thieves dumped stolen vehicles here and set them on fire. The street was home to one of the largest illegal cockfighting rings in Ohio until the city came in and tore the coops down in 2006, when a raid rescued more than 400 chickens.

David Sharkey, a former resident of West 12th Street and one of the developers of the Tremont Valley Townhomes, remembers when West 11th was something of a walk on the wild side.

“I used to walk across the pedestrian bridge over the highway to get to Lincoln Park,” says Sharkey. “Heading back home, I never knew what I’d find when I got to the other side.”

Even then, it was obvious to Sharkey that the location had tremendous potential, if the land could be assembled into a contiguous site. This part of West 11th Street is close to the heart of Tremont and offers unobstructed views of the Cuyahoga Valley and Tremont Field.

Today, West 11th is the site of the new Tremont Valley development, which broke ground earlier this year. The project aims to bring affordable townhouse living to Tremont’s south side. So far, the developers have built one four-unit building, and one townhouse is sold.

“Tremont is a very popular place to live, and it’s well known for the Tremont Art Walk and as the home of Michael Symon’s Lolita,” says Sharkey. “We have an opportunity to create a substantial new community of homeowners on West 11th, and to connect this area with central Tremont.”

“With the creation of the dog park at Tremont Field, improvements to the park itself, and the promise that the Towpath Trail will eventually run right in front of the townhomes, we knew it was time,” he adds.

The Tremont Valley Townhomes are being developed by David Sharkey and Keith Brown, the principals of Progressive Urban Real Estate, a real estate brokerage with offices in Ohio City and Cleveland Heights, as well as David Fragapane of Civic Builders LLC in Tremont.

The project, which fits in with the community redevelopment plan for the Tremont neighborhood, has received support from the local block club, Tremont West Development Corporation and Ward 3 Councilman Joe Cimperman.

“The area in and around Clark Field is the next big thing in Tremont,” says Chris Garland, Director of Tremont West Development Corporation. “The Tremont Valley Townhomes are a key part of the redevelopment that’s taking place there.”

Village Capital Corporation (VCC), a nonprofit lender whose mission is to help revitalize the neighborhoods of Cleveland by lending to catalytic projects, provided the construction financing. Cleveland Action to Support Housing (CASH), a nonprofit organization, partnered with VCC to lower the interest rate on the construction loan. This subsidized rate increased the lender’s confidence in the project and helped make it possible for the developers to break ground. The total cost of the first four-unit phase is approximately $650,000.

“We’re confident that we’ll sell more units over time, but due to the low interest rate, we can afford to float the debt for now,” says Sharkey. “This is only possible because of the involvement of CASH. It’s tough right now, but we know we’ll be successful over time.”

The townhomes are priced from $180,000 and offer one- and two-car garage units. The project is set against a steep hillside, a natural feature that presented a design challenge and required additional retaining walls. Building the units against this backdrop, however, also offered an opportunity, opening up space for small yards. The rear patios are nestled into the blooming hillside. The fronts of the units have broad second-story decks with quintessentially Tremont views of trees, parkland and steel mills.

The townhomes’ narrow footprint, Sharkey says, is no deal killer – the units offer a surprising amount of space. The first floor has an open floor plan, with a handsome kitchen that opens up to a great room. The second floor has two bedrooms, including a large master with a spacious closet. The two car garage units have two full baths on the bedroom level, while the one car units have a single bath with shower and bathtub.

All of the units offer 15 year 100% tax abatement on the improved value of the property, and include a one year builders’ warranty.

Sharkey is a realist about the market, but he claims the project will succeed because of location, design, and price point. “There isn’t much new construction available in Tremont at this price,” he says. “These townhomes offer a lot of value for the money.”