In a move to ward off foreclosure, a luxury condo developer has turned the units intended to sell for more than a quarter million dollars into a homeless shelter with the help of a New York-based nonprofit.

The Brooklyn units come complete with granite counter, terraces, marble bathrooms and walk-in closets, according to the New York Daily News, and the city is paying out hundreds of thousands of dollars per month ($90 per unit per night) to house homeless families in the city.

“City officials said the condos – which couldn’t attract buyers in the fizzled housing market – are part of an effort to help an “unprecedented” number of homeless families who have ended up on the street because of the tough economy,” according to the report.

It’s the first time luxury condo has gone homeless shelter, according to Steven Spinola, president of the Real Estate Board of New York. Avi Shriki, the developer of the project, says leasing the building for the next 10 years to the Bushwick Economic Development Group, a non-profit homeless shelter group, was the best Plan B he could find.

He can pay the mortgage with the deal and still keep the building, instead of going into foreclosure.

M.A. Carr

Fannie Mae’s and Freddie Mac’s controversial new appraisal rules are now coming direct attack by the biggest lobby on Capitol Hill – the National Association of Realtors.

Though the association is saying nothing publicly, officials have confirmed to Realty Times that they are gearing up for a fight in Congress and elsewhere to derail the “Home Valuation Code of Conduct” (or HVCC) for 18 months.

The code, which took effect May 1, has been widely criticized for raising appraisal costs to consumers, encouraging the use of inexperienced appraisers willing to work for rock-bottom fees, and for giving too much control to unregulated “appraisal management companies,” some of them owned by major mortgage lenders.

The Realtors campaign is targeted initially at Fannie Mae’s and Freddie Mac’s chief regulator – James Lockhart, director of the Federal Housing Finance Agency – and New York Attorney General Andrew Cuomo.

Cuomo’s office drafted the HVCC last year as part of a settlement with Fannie Mae and Freddie Mac. Cuomo threatened to subpoena Fannie and Freddie executives as part of an investigation of the companies’ appraisal practices. No evidence that an investigation actually took place or turned up problems has ever been made public.

In a call to action memorandum to state Realtor association leaders last week, NAR laid out a strategy of fly-ins to lobby Congressional representatives, and said the association would pursue a legislative fix on the HVCC issue if Lockhart and Cuomo declined to go along with the idea of an 18 month moratorium.

The legislation could take the form of either a stand-alone bill or an amendment that could be attached to an appropriations bill already moving through Congress with a high likelihood of passage.

In identical letters to Lockhart and Cuomo, Charles McMillan, president of the National Association of Realtors, complained that the HVCC is causing significant problems for home sellers and agents – “delays in closings and cancelled sales, which result in artificially low existing home sales.”

In an unusual move June 23, Lawrence Yun, chief economist for the association, attributed a lower than expected increase in existing home resales in May to appraisal problems caused by the new code.

“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional houses with distressed and discounted sales,” said Yun.

In his letter to Lockhart and Cuomo, McMillan said the heavy involvement of lender-owned appraisal management companies leads to conflicts of interest. The association wants regulators – or Congress – to prohibit lenders from using any appraisal report from an appraisal management company where the lender, or the lender’s affiliate, has an ownership stake in the management firm.

K. Harney

Leaking toilets result in six billion gallons of water loss every day according to Richard Quintana, founder of AquaOne Technologies. That astonishing figure is a real problem with financial and physical effects. Here’s how the water gets washed away. Quintana says there are more than one billion toilets in the U.S. and, according to the American Water Works Association, one out of five leaks. The toilets can lose anywhere from 30 to 500 gallons of water daily just from a small silent leak that is the size of a staple.

According to a report from the Associated Press, handyman jobs are increasing for practical repairs like leaking toilets. These days, in a tough economy, homeowners are trying to preserve their homes and to conserve wherever they can. But, Quintana says it’s not just water loss which translates to financial loss that can hurt homeowners. Leaky toilets lead to black mold and even injuries.

“A senior who had a problem with his toilet getting plugged walked into the bathroom and didn’t notice the water on the floor and had a slip and fall injury,” says Quintana. Due to his age and the injury, the fall landed him in a nursing facility.

That’s why Quintana promotes the use of a small product that’s the size of a goose egg. The product, H2Orb, is a water management system that has a sophisticated microprocessor in it to help with toilet overflows and water loss by detecting, identifying, and resolving toilet malfunctions. The product was initially designed for use in senior housing and assisted living facilities but today it’s being used by homeowners to ward off toilet troubles.

Quintana says the product not only stops overflow but it also tells you where a leak exists. “It can tell you if you have a silent leak. A silent leak is often from a flapper that’s closed but it’s [slightly] warped,” says Quintana. The flapper is the part of the rubber mechanism on the flush valve that seals water into and out of the tank when the toilet is flushed. A silent leak can cause significant water loss.

“The H2Orb can tell you exactly what needs to be taken care of in your toilet. It will show you an icon on the device screen telling you to change a particular part,” says Quintana. The device actually sounds an alarm and stops the water flow. For more information visit “A toilet overflow creates a tremendous amount of property damage and one leaky toilet alone can cause that in your home,” says Quintana.

Here are a few tips to help prevent water loss and leaks.

1. Check toilet for cracks. Even a tiny crack in a toilet can cause significant water damage that may not be visible unless inspected thoroughly.

2. Make sure the base of the toilet is sealed using special waterproof caulking.

3. Replace flappers every two to three years or as needed.

4. Install appropriate device to detect leaks and manage possible toilet overflows.

5. Check for toilet sweat. Not a pleasant concept, it can cause water damage. In regions where the water coming into the toilet is colder than the humidity in the room, the toilet can produce condensation and leave a puddle of water behind the toilet.

Toilet insulation kits are available. They provide rigid pieces of foam that fit inside the tank and prevent the cold water from touching the tank walls. Or you can buy a new toilet with an insulated tank.

P. Chongchua

Now, mortgage modifications can include second mortgages — not just first mortgages — and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.

The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down — or turned off — because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.

Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.

Second mortgage modifications

Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.

Under Making Home Affordable’s new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.

Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.

Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.

Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower’s second mortgage in exchange for a lump-sum payment from the government.

New short sale incentives

Short sale incentives were among recent refinements to the Obama administration’s housing rescue programs.

In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It’s important to include a tax professional’s advice in the deal.

Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.

Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.

Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.

B. Perkins

It might sound a little surprising, but in investment real estate, residential lots are hot, especially in markets that saw the highest peaks and the worst busts during the past three years.

On Florida’s west coast, Gary Tasman of Cushman & Wakefield affiliate Commercial Property Southwest of Florida, says bulk purchases of developed building lots are “really brisk right now” with prices in some local areas nearly doubling from their low point.

The reason: Home builders are now looking ahead to 2010 and 2011. They see the rebound already taking shape. And they need well-located lots ready to go for the future construction they’re planning.

The best deals are bank-owned lots taken back in foreclosures from earlier, unsuccessful developers. They often come with bare-bones pricing, but Tasman warns that rising demand – from builders and investors – is putting pressure on those prices.

For example, in Cape Coral, some lots that once were selling at $5,000 to $6,000 now command $9.000 to $10,000 or more, Tasman told Realty Times in an interview last week.

In other boom-to-bust-to-rebound markets – Arizona and California for instance – similar land rushes are getting underway again.

Gregory Vogel, CEO of the Land Advisor Organization, based in Scottsdale, Arizona, says demand for bulk-sale, deep-discount residential lots is now, in his words, “nothing less than stunning.”

Publicly-traded builders are scooping up developed lots by the hundreds in REO transactions, he told Realty Times, and are then “land banking” them for their own building – or for resale to other builders or investors – in the coming several years.

In one recent sale, Communities Southwest bought 891 foreclosed single family lots from Bank of America for $8.3 million. A major land banker in its own right for the past two years, Communities Southwest now is marketing about 2,000 lots – primarily targeted at builders gearing up for better days ahead.

But there’s an important factor to keep in mind if you’re looking to invest in residential lots in the coming months: There is virtually no financing available for developed lots. So-called “A-D & C” loans – that’s acquisition, development and construction – are few and far between from banks or other conventional lenders.

So buying lots at deep discounts – attractive as it may be — is an all-cash investment activity. You go in with your own bucks. Or you partner with equity investors who know good timing when they see it.

K. Harney