About Dan Krell

December 3, 2008November 23, 2021

Home Energy Audit: facilitate your sale and save money on utility bills

by Dan Krell
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If you are planning to sell your home, you may want to begin to search for your last twelve months of utility (gas, electric, and/or oil) bills. As of January 1, 2008, the county will require a home seller to provide home energy efficiency information, which includes utility costs and any efficiency improvements or opportunities for energy efficiency improvements.

According to Montgomery County Bill 31-07, enacted into Montgomery County Code Real Property 40-13b earlier this year, a home seller must provide potential home buyers the last twelve months of utility bills and information approved by the Montgomery County Department of Environmental Protection (DEP) about home efficiency improvements including the “benefit of conducting a home energy audit” before entering into a sales contract. If you have a rental property, however, you must provide the information only if you have lived in the home anytime during those twelve months.

The law was actually scaled down from an additional requirement of conducting a home energy audit as part of a home inspection. Although the home energy audit is not required, it may be a good idea for a home owner to have one anyway. Information about conducting a home energy audit can be obtained form the Montgomery County Department of Environmental Protection (montgomerycountymd.gov) and The Residential Energy Services Network (RESNET; natresnet.org).

According to the DEP, a home energy audit will help identify inefficient energy consumption by appliances and systems as well as drains on heating and air systems created by holes and leaks. Addressing home energy efficiency issues can help you reduce utility costs, create a more comfortable home environment and help the environment.

According to the DEP, a home energy audit can be conducted by a professional or on your own. A professional energy audit can vary in scope and depth as well as price (estimated between $300 and $700). Programs offering certified energy auditors include the Maryland Home performance program with Energy Star (mdhomeperformance.org) and RESNET (resnet.us).

The Maryland Home Performance program is sponsored by the Maryland Energy Administration (MEA) and is part of Governor O’Malley’s EmPOWER Maryland initiative, which has a goal to reduce Maryland’s electricity consumption by 2015. The program offers MEA trained contractors to perform energy audits, as well as inspections on any improvements completed by the contractors.

The RESNET program is a non-profit organization that has created national standards for energy efficiency ratings. The program is recognized by the Federal Government, the mortgage industry, and states where there is minimum code compliance. RESNET certified auditors subscribe to RESNET’s code of ethics, standards of practice, financial interest disclosure, and complaint resolution process.

Although a professional energy audit may be more detailed, you can conduct your own energy audit as described by the US Department of Energy’s “A Consumer’s Guide to Energy Efficiency and Renewable Energy” (apps1.eere.energy.gov/consumer). The guide describes how you can identify and locate air leaks, check your home’s insulation, and discusses how to reduce your utility bills.

As States and local communities are moving towards requiring energy audits to increase home energy efficiency, why not start today and find out how your home rates? Who knows, you may end up with a more comfortable home and save money in the process.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 17, 2008. Copyright © 2008 Dan Krell.

November 23, 2008November 23, 2021

Maryland Foreclosure Resources: Help with mortgage problems

by Dan Krell
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Daily reports of increasing unemployment, shrinking GNP, and increasing government deficits leave many worried about the economy. But it’s not just the economy; people are concerned about their jobs and finances as well. Needless to say, many are worried about losing their home.

The initial foreclosure wave we endured was mostly due to those home owners who had exotic and questionable mortgages. However, the next foreclosure wave, which has already started, will also see an increased number of home owners who are casualties of a deteriorating economy.

The Federal Government has taken steps to create programs and initiatives to assist those who can no longer afford their mortgage or are already in foreclosure. Among the initiatives taken by the Bush Administration and congress include refinancing options for those in foreclosure through FHA (HUD.gov) and the creation of the Hope Now program (hopenow.com), which is a collaboration of HUD and mortgage lenders to provide foreclosure prevention assistance and loan modifications.

Local officials have also been busy to address the foreclosure problem. Local initiatives include partnerships with federal programs, such as the Maryland Hope Now program. Additionally, collaboration with non-profit organizations includes the Homeownership Preservation Foundation (995hope.org). These programs offer home ownership counseling and assist in dialoguing with your lender to facilitate a solution (such as a loan modification or short sale).

Additional state resources include the Lifeline Refinance Program offered through the Maryland Department of Housing and Community Development (mdhousing.org/Lifeline). The refinance loan program is described as assisting those who may be facing “unfavorable” mortgage situations. The program requires good credit and a mortgage in good standing, so if you are already delinquent they may recommend seeking other solutions.

In Montgomery County, County Executive Isiah Leggett and the county counsel have made funds available for additional housing counseling through the Latino Economic Development Corporation and Home Free USA (both non-profit organizations). Another local program is the Bridge to Hope program, which is a short term loan (up to $15,000) to assist home owners who need a financial “bridge” during an uncertain time. More information can be obtained from the Montgomery County government (montgomerycountymd.gov).

Recent additions to local foreclosure relief efforts include Governor O’Malley’s new initiative (announced November 7th) with mortgage lenders and servicers. The program reportedly includes such companies as HSBC, Ocwen, GMAC, ResCap, Litton Loan Servicing, AmeriNational Community Services and Citi Mortgage. The plan is highlighted in five points that includes: adhering to timelines for loss mitigation (which may include short sales); designating a network of employees for Maryland residents, called “Team Maryland;” participation of collection and reporting of data to facilitate the loss mitigation process; creating loan modification guidelines; and participation in community outreach.
Even though government foreclosure relief programs exist, many home owners are unaware of these resources. Additionally, the emotional toll of facing foreclosure can leave home owners feeling helpless and without hope (especially when their lenders have turned them away). If you know you may be nearing financial challenges that may affect your ability to pay your mortgage, contact one of these resources as soon as possible; if you know someone who may be facing foreclosure, please help them by providing the foreclosure relief information. Be proactive by contacting your lender as well as contacting one of the local approved foreclosure relief programs.

November 5, 2008November 23, 2021

Identity Theft can lead to a stolen home

by Dan Krell
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Identity theft and mortgage fraud continue to plague the nation; both crimes are an ongoing concern for law enforcement. Earlier this year, the Federal Bureau of Investigation (FBI.gov) reported that these types of crimes were increasing, as well as a new disturbing trend in real estate related crimes called “house stealing.”

You may have heard of identity theft; but maybe you did not know that once a perpetrator steals your identity, they can defraud others in many ways. The Federal Trade Commission (FTC.gov) states that besides unauthorized use of your credit cards, perpetrators can use your information to get jobs, healthcare services, social services, and open new accounts (including mortgages, utilities and credit cards).

In January, the FBI reported that there were over 1,200 open cases of mortgage fraud. Most of these cases were “fraud for profit,” where a scheme was used to flip homes to get cash and allow the home to go into foreclosure. Other cases involve corporate schemes and possible insider trading.

So what is house stealing? The FBI reported earlier this year that house stealing is a hybrid crime that is a combination of identity theft and mortgage fraud. There are several forms of house stealing, but essentially the perpetrator will fraudulently take title to your home or steal your identity to ultimately sell your home and disappear with the cash. This can even occur while you are occupying your home!

Perpetrators of house stealing will obtain your personal information much like other identity thieves, and use the information to sell your home. Although the end result is to take the cash from selling your home, the crime can occur by the perpetrator fraudulently taking title to your home and then selling it “for sale by owner” (usually providing little or no information to prospects), or the perpetrator can act as if they are you and list your home with a real estate agent (sometimes the agent may be in cahoots with the perpetrator).

The FBI only recently publicized this new trend as they prosecuted a woman in California who pleaded guilty to devising a scheme to defraud over 100 homeowners and $12 million from lenders (www.fbi.gov/page2/march08/housestealing_032508.html).

In their report, the FBI concedes that there is not much you can do to prevent a house stealing crime other than being vigilant; this may be due to the fact that most people do not go to the county court house on a regular basis to check the deed to their home. However, the FBI recommends that you check documents and signatures filed in the court house “from time to time.” Any discrepancies should be looked into (and reported to authorities) immediately.

Fortunately, there is more you can do to protect your identity. The NAR, in conjunction with the Federal Trade Commission (FTC.gov), has published a brochure called, “AvoID Theft: Deter, Detect, Defend.” The FTC attempts to educate consumers about identity theft; it is recommended that that you become aware of how these crimes occur so you can defend yourself from perpetrators, monitor your information regularly to spot any irregularities, and be prepared with a plan if you are a victim of identity theft. More information about protecting yourself from identity theft can be obtained from the FTC and FBI (and their corresponding websites).

November 5, 2008November 23, 2021

Short sale is an option

by Dan Krell
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Simply put, a short sale is asking your lender to take a lower payoff and “forgive” the difference. In today’s market, where home values have depreciated significantly in some areas, the short sale is a viable option for many home owners who need to sell their homes but find themselves “upside down.”

Although the concept is simple, the process can be lengthy and full of surprises. You should consult an attorney about your options (which may include and is not limited to a loan workout or modification, forbearance, deed-in-lieu, or bankruptcy), because the process is not a guaranteed sale and your lender may still foreclose if you have not paid your mortgage.

If you decide to go through the short sale process, you should know that your sale will be subject to your lender’s approval. The lender will decide what they will accept to pay off your loan based on the home’s “fair market value.” They will review a proposed settlement sheet that will include all liens to be paid as well as any unpaid taxes and Realtor commissions. If the net is acceptable, then they will issue an approval. If the net is not acceptable, they will most likely counter the home buyer’s offer to increase their net proceeds.

Additionally, if you enter into the short sale process, you can expect your lender to pry into your personal life by asking for your income and financial documents, a hardship letter outlining your need for a short sale, and any supporting documents.

The pros and cons of going through a short sale include forgiveness of debt, credit reporting, and tax liability. By going through the short sale process, your lender essentially accepts a lower payoff for your mortgage. This differs from a foreclosure, when your lender may serve you with a deficiency judgment to repay any shortage they incur when they sell your home in a foreclosure sale.

Additionally, your credit will most certainly be affected by foreclosure as well as a short sale. However, experts have debated that having a short sale may be the lesser of the credit evils, as there may not be late mortgage payments nor reported judgments or other foreclosure related credit damage.

You also need to know that your lender will most likely issue you a 1099 whether your home is sold at foreclosure or short sale. What an awful surprise for you during your hardship to find out you have a tax liability! If you decide to go through the short sale process, consult with your accountant about your tax liability and if you qualify to file the little known IRS hardship form.

Finally, once you begin the short sale process, you should keep records of documentation of your correspondence with your lender, which includes phone calls, emails, financial packages you complete, and all supporting documentation.

If you owe more on your mortgage than your home’s value and you need to sell your home, the short sale process will allow you to sell your home for less than what you owe your lender without having to pay the difference at settlement. A short sale is a “win-win” for all involved, but there are many considerations. Before you enter in such an arrangement, you should consult with an attorney to understand your options.

November 5, 2008November 23, 2021

Check your furnace!

by Dan Krell
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As we head toward the winter months, our thoughts turn towards our home furnaces. Regular furnace maintenance by a licensed heating professional can save you money and keep your family safe.

Having a qualified and licensed heating professional service your furnace is highly recommended due to the nature and complexity of the system. Having your heating professional conduct an annual furnace check can ensure that your furnace is clean and operating safely and efficiently. An annual thorough assessment of your furnace includes (but is not limited to): looking at the burner and pilot assembles; checking the heat exchanger for cracks; looking at the pilot thermocouple; examining the filter; checking vent piping; testing gas piping for leaks; testing the electronic ignition; testing the fan; adjusting the burner for efficiency; testing the limit switch; measuring the manifold gas pressure; measuring the temperature rise; checking for carbon monoxide; setting the heat anticipator; checking belt/tension; examining the draft diverter and lubricate the fan motor.

Although, having a licensed professional check your furnace is highly recommended, your heating professional can provide you with a list of items that you can check regularly. The list of light maintenance items may include: changing filters, installing a carbon monoxide detector, clearing the area around the furnace, looking for soot, and looking for vent leaks.

Replacing the furnace air filters every month, as well as ensuring the area around the furnace is free of dust and debris can help increase efficiency by as much as 3%. Dust, dirt, and household debris (such as pet dander) can clog the furnace blower, thus reducing efficiency and eject particulate in the air.

Changing the air filter can help maintain your health too! Keeping dirt and debris out of the furnace and changing the air filter regularly can reduce particulate in the air you breathe. The American Lung Association (healthyhouse.org) recommends using filters with a high MERV rating; the American Lung Association also recommends a higher frequency of filter changes when family members have asthma and allergies.

If your furnace uses a combustible fuel, you should have a carbon monoxide detector installed in your home. Never operate your furnace without having a working carbon monoxide detector installed. Carbon monoxide can be produced by the combustion of fuels in your furnace. Normally, carbon monoxide is vented away safely. However if your furnace is operating properly, carbon monoxide can escape into your home causing illness or death.

Unfortunately, many of us use the areas around our furnaces for storage. Heating professionals recommend that the area around the furnace be clear of combustibles and other items because they may ignite or block air flow.

Soot on or around your furnace may be a sign that your furnace is not operating properly- you should contact a licensed heating professional immediately.

Leaks in duct work can cause a significant decrease in furnace efficiency. Regular checks of your ducts can help maintain your furnace’s peak efficiency. Heating professionals recommend leaks be sealed by a ductwork approved tape (usually foil).

Having a clean and efficient furnace will not only safely warm your family during winter, but may possibly save you money in heating costs. If you are unsure about your furnace’s maintenance, always consult a licensed professional heating contractor.