While a number of resourceful people have converted shipping containers into make-shift shelters at the margin of society for years, architects and green designers are also increasingly turning to the strong, cheap boxes as source building blocks.

Shipping containers can be readily modified with a range of creature comforts and can be connected and stacked to create modular, efficient spaces for a fraction of the cost, labor, and resources of more conventional materials.

Discover some of the exciting possibilities of shipping container architecture, from disaster relief shelters to luxury condos, vacation homes, and off-the-grid adventurers. See what makes them green as well as cutting edge.

(Photo: Kool-Kini / Flickr )
De Maria Design Redondo Beach House

With its modern lines and appealing spaces, the award-winning Redondo Beach House by De Maria Design turns heads. The luxury beach-side showpiece was built from eight prefabricated, recycled steel shipping containers, along with some traditional building materials. According to the architects, the modified containers are “nearly indestructible,” as well as resistant to mold, fire, and termites. Seventy percent of the building was efficiently assembled in a shop, saving time, money, and resources.

One of the containers can even sport a pool! The lessons learned from Redondo Beach House are being incorporated into a line of more affordable, accessible designs, soon available as Logical Homes.

(Photo: Urban Space Management)
London’s Container City

Conceived by Urban Space Management, London’s Container City first sprang up in the heart of the Docklands in 2001. It took just five months to complete the original 12 work studios, at a height of three stories. Shortly after that a fourth floor of studios and living apartments was added.

Container City was designed to be low cost, as well as environmentally friendly. Recycled materials made up 80% of building supplies. Architect Nicholas Lacey and partners and engineer Buro Happold used component pieces to build up adaptable living and work spaces.

(Photo: Kool-Kini / Flickr )

Container City II

Container City I was a success, and in2002, Urban Space Management added an addition, dubbed Container City II. Reaching five stories high, Container City II is connected to its earlier iteration via walkways. It also boasts an elevator and full disabled access, as well as 22 studios.

(Photo: Paul McCredie)
Port-a-Bach

Need some flexibility with security? Need a temporary structure or small vacation home? Going off the grid? The Port-a-Bach system from New Zealand’s Atelier Workshop might be a good fit.

Costing around $55,000, Port-a-Bach sleeps two adults and two children comfortably, in a dwelling that folds up into a fully enclosed steel shell. It comes with large internal storage cupboards and shelves; a stainless steel kitchen; bathroom with shower, sink and composting toilet; bunk beds and dressing room. Fabric screens allow you to shape internal space, as well as shelter the outdoor deck area.

Bach (pronounced Batch) is Kiwi slang for “Bachelor Pad,” and refers to the many small cabins that dot the famously picturesque country.

(Photo: Urban Space Management)
Cove Park Artists’ Retreat

Set on 50 acres of gorgeous Scottish countryside, Cove Park is an artist’s retreat designed to stimulate and reinvigorate. Urban Space Management first brought in three repurposed shipping containers in 2001, and the center became so popular that more units have been added.

Doesn’t look like your average shipping box, does it?

(Photo: Bark Design Collective)
 All Terrain Cabin

Canada’s Bark Design Collective built the All Terrain Cabin (ATC) as a showcase for sustainable (and Canadian!) ingenuity. The small home is based on a standard shipping container, and is said to be suitable for a family of four, plus a pet, to live off the grid in comfort and style.

The cabin folds up to look like any old shipping container, and can be sent via rail, truck, ship, airplane, or even helicopter. When you’re ready to rest your bones, the cabin quickly unfolds to 480 square feet of living space, with a range of creature comforts.

(Photo: Courtesy of Ecopod)
The Ecopod

Another container home designed for on- or off-grid living is the Ecopod. Made from a shipping container, an electric winch is used to raise and lower the heavy deck door (power is supplied by a solar panel). The floor is made from recycled car tires, and the walls have birch paneling (over closed-cell soya foam insulation). The glass is double paned to slow heat transfer.

The Ecopod can be used as a stand alone unit or with other structures. It is designed to minimize environmental impact.

(Photo: Quik House )
Adam Kalkin Quik House

Want your own container house? There’s a six-month waiting list for the Quik House by architect Adam Kalkin, who is based in New Jersey. The distinctive Quik House comes in a prefabricated kit, based on recycled shipping containers (in fact a completed house is about 75% recycled materials by weight).

The standard Quik House offers 2,000 square feet, three bedrooms and two and one-half baths, though larger options are also available. The shell assembles within just one day, and all the interior details can be finished within about three months.

The Quik House comes in two colors (orange or natural rust bloom), and the estimated total cost, including shipping and assembly, is $184,000. You can add even greener options such as solar panels, wind turbines, a green roof, and additional insulation (to R-50).

(Photo: Kool-Kini / Flickr )
LiNX Temporary Structures

Dublin-based designer Richard Barnwall envisioned this design, dubbed the LiNX, as a temporary structure for construction workers. The two-storey model pictured is to be comprised of four 20-foot containers. Such designs offer flexibility and rapid deployment, and may even work for more permanent homes.

(Photo: Ross Stevens / Flickr )
Ross Stevens House

Industrial designer Ross Stevens built this distinctive house in Wellington, New Zealand. Repurposed shipping containers form an intriguing contrast to the surrounding hill. In fact, the unique home makes use of the hill itself, expanding interior space beyond the containers.

Parts of the Ross Stevens house are surprisingly spacious and comfortable. There’s even a cool table made from a repurposed door.

(Photo: Kool-Kini / Flickr)
Student Housing Project Keetwonen, Amsterdam

Billed as the largest container city in the world, Amsterdam’s massive Keetwonen complex houses 1,000 students, many of whom are happy to secure housing in the city’s tight real estate market. Designed by Tempo Housing in 2006, Keetwonen is said to be a roaring success, with units that are well insulated, surprisingly quiet and comfortable.

Each resident enjoys a balcony, bathroom, kitchen, separate sleeping and studying rooms, and large windows. The complex has central heating and high speed Internet, as well as dedicated bike parking.

Keetwonen has proved so popular that its lease has been extended until at least 2016.

(Photo: Site-Specific )
Site-Specific Exhibition

Site-Specific and Buatalah Studio were asked to design a green building exhibition for Baan Lae Suan Fair in Bangkok. They came up with a design for a family of three, made out of four reused shipping containers and prefabricated modules. The home reuses graywater and incorporates spaces for growing food.

By Julie Schmit, USA TODAY

U.S. housing construction showed unexpected gains in February, but economists warn that the battered sector may suffer more before hitting bottom.

The Commerce Department said Tuesday that construction of new homes and apartments jumped 22.2% in February compared with January, pushing activity to a seasonally adjusted annual rate of 583,000 units.

The positive report contributed to a stock market rally that pushed the Dow Jones industrial average up 179 points, or 2.5%, to 7396.

The gain in housing starts was the first in eight months and reflected a “modest rebound” from January — the worst month in history for new home production, says David Crowe, chief economist of the National Association of Home Builders.

Even with February’s big increase, housing starts were 47% below their level the same time last year, the Commerce Department said.

FIND MORE STORIES IN: United States | Barack Obama | Federal Reserve | Dow Jones | Midwest | Northeast | United States Labor Department | United States Commerce Department | October-December | National Association of Home Builders | Credit Suisse | IHS Global Insight | Patrick Newport | Toll Bros | Soleil Securities | David Crowe | Anna Torma

February’s jump was propelled by an 82% surge in multifamily construction. That was likely driven by weather, as bad storms delayed projects in the Northeast and Midwest in December and January, says Patrick Newport, economist with IHS Global Insight.

A more meaningful surprise in February’s data was that building permits for single-family homes jumped 11% from the previous month, the first gain in nine months, he says. If that trend continues several months, it may signal that “housing has hit bottom,” Newport says.

That’s a big if, he and other economists say. IHS says housing starts and permits have further to fall, because the outlook for builders continues to deteriorate. Prices of existing homes are dropping, inventory of unsold homes remains near all-time highs and foreclosures are still increasing. If financial markets improve and banks ramp up lending, the housing market should hit bottom later this year, IHS says.

For the month, single-family home starts increased by 1.1% compared with January. They remain 80% below the peak in January 2006, says Soleil Securities equity analyst Anna Torma.

In a research note Tuesday, she warned that the slight increase is likely due to a sharp decline in January and is a “temporary reprieve.” She also says starts will decline further as a result of “further deterioration in market fundamentals.”

Despite the warnings, investors viewed the housing data as a glimmer of good news and snapped up shares of home builders. Lennar jumped 9% to $8.52. Pulte Homes rose 7% to $10.16, and Toll Bros. climbed 6% to $17.06.

In related news, the Labor Department reported that its wholesale price index edged up a slight 0.1% in February as a big drop in food costs offset a second monthly increase in energy prices.

The 0.1% increase in wholesale inflation was much lower than the 0.8% surge in January and smaller than the 0.4% increase economists had expected. Compared with a year ago, wholesale prices are actually down 1.3%.

Core inflation, which excludes energy and food, edged up 0.2% in February, only slightly higher than the 0.1% gain economists had expected. Core prices had risen 0.4% in January.

Only last summer, officials at the Federal Reserve had started to worry that a surge in energy costs could spread to other areas of the economy and boost inflation to unacceptable levels. But after the financial crisis struck in the fall, the Fed switched signals and is now aggressively fighting a deepening recession with no real threat of inflation.

Contributing: The Associated Press

WASHINGTON (AP) — Mortgage applications jumped last week, as low interest rates fueled refinancing activity.

The Mortgage Bankers Association said Wednesday its weekly application index climbed 21.2% for the week ended March 13. The index came in at 876.9, up from 723.4 a week earlier.

On an unadjusted basis, the index rose 20.7% compared with the previous week, the trade group said.

The average rate for traditional, 30-year fixed-rate mortgages dipped to 4.89% from 4.96% a week earlier, according to the MBA report.

About 72.9% of applications came from borrowers seeking to refinance home loans at lower rates, rather than purchase homes. The refinance rate was up from 67.9% in the prior week, the MBA said.

FIND MORE STORIES IN: Federal Reserve | Mortgage Bankers Association

The trade group’s application index remains below its peak of 1,856.7, reached in May 2003 at the height of the housing boom. The survey provides a snapshot of mortgage lending activity involving mortgage bankers, commercial banks and thrifts. It covers about half of all new residential mortgage loans made each week.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume.

Interest rates have plunged since the Federal Reserve said in November it would buy up to $500 billion in mortgage-backed securities in an effort to bolster the long-suffering housing market.

The average rate for 15-year fixed-rate mortgages slipped to 4.52% from 4.54% a week earlier, while the average rate for one-year adjustable-rate mortgages was fell to 6.20% from 6.21%.

By Alan Zibel, AP Real Estate Writer

WASHINGTON — If you’ve got a good job, solid credit and your home’s value hasn’t fallen dramatically, you’re likely to benefit from the Federal Reserve’s extraordinary action Wednesday to help drive mortgage rates to historic lows and revive the U.S. housing market.

The Fed’s plan to buy up to $300 billion of long-term government bonds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, should benefit many — but not all — borrowers.

It’s likely to produce a big drop in mortgage rates. Analysts expect rates will fall 0.25 to 0.5 percentage points as soon as Thursday.

The national average rate on 30-year, fixed mortgages was 5.15% on Wednesday, according to financial publisher HSH Associates, up slightly from a day earlier. Heralding a drop in mortgage rates, the yield on the benchmark 10-year Treasury note fell Wednesday to 2.51% from late Tuesday’s 3.01%.

“It’s going to keep rates low for a longer period of time,” said Greg McBride, senior financial analyst at Bankrate.com.

FIND MORE STORIES IN: Florida | Barack Obama | Britain | Georgia | Federal Reserve | Columbus | Atlantic | Tampa | Freddie Mac | Fannie Mae | Mortgage Bankers Association | Bank of England | Bankrate.com | HSH Associates | Greg McBride | Inside Mortgage Finance | Homeownership Preservation Foundation | Guy Cecala | Apollo Beach

Average rates for 30-year-fixed-rate mortgages hit a record low of 4.96% in January, according to mortgage finance company Freddie Mac. That was after the Fed launched its initial plan to buy $500 billion in mortgage-backed securities.

The Fed, seeking to push rates down further, is effectively planning to buy at least half of the home loans made in the U.S. this year based on last year’s total of about $1.4 trillion in mortgages. Around 70% of new loans in recent months have been backed by Fannie and Freddie, the mortgage finance companies seized by government regulators in September.

Fannie and Freddie own or guarantee almost 31 million mortgages worth about $5.5 trillion, more than half of all U.S home mortgages.

The Fed actions were great news for John Tuggle, a mortgage banker in Columbus, Ga., where the economy and housing market have remained relatively healthy.

His business already had been looking up this year due to a new $8,000 tax credit for first-time buyers, and the Fed’s moves amounted to icing on the cake.

“Bottom line is, those people who already are gainfully employed and can qualify for mortgage can buy more of a house,” Tuggle said. “Whenever you see rates drop, people that are on the fence thinking about buying a house, they jump in and buy.”

Still, mortgage lenders have severely restricted the availability of new loans to borrowers who don’t have 20% down payments and good credit, making it tough for many first-time borrowers to qualify.

“These lenders are making their credit criteria so outrageous,” said Dana Devine, a real estate agent in Apollo Beach, Fla., south of Tampa. “It’s that credit score that’s killing everybody.”

Many lenders, after laying off workers in droves, are swamped with applications for refinanced loans. With so much business, there is less pressure to compete, and lenders have not pushed rates down as far as might be expected given their extraordinarily low borrowing costs, said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication.

“They’re looking to boost profitability,” Cecala said. “Many of them already have all the business they can handle for the foreseeable future.”

While the Fed’s actions are likely to aid those who have saved up to make a down payment on their house, or have enough equity in their homes to refinance, they are less likely to benefit the nearly 14 million American households that owe more on their home loans than their houses are worth, or those on the verge of foreclosure.

The mortgage industry, armed with $75 billion in federal bailout money that President Barack Obama wants to use to prevent foreclosures, is receiving record-high levels of requests for help from troubled homeowners.

More than 13,500 homeowners a day have called the Homeownership Preservation Foundation’s 1-888-885-HOPE hot line since the Obama administration’s program launched earlier this month, about triple the daily level of calls received before the plan was announced.

Mortgage applications jumped 21% last week from a week earlier, as low interest rates fueled refinancing activity, according to the Mortgage Bankers Association. About 73% of applications came from borrowers seeking to refinance home loans at lower rates.

Also Wednesday, Fannie Mae said the volume of mortgage loans it refinanced in February totaled $41 billion, nearly triple January’s volume.

The mortgage finance company said Wednesday it was the largest figure in almost a year as a surge of homeowners took advantage of low interest rates and higher loan limits.

The Fed’s actions mirror those being taken across the Atlantic, where the Bank of England last week began buying government bonds from financial institutions as it turned to other ways to help revive Britain’s moribund economy. The Bank of England, like the Fed, already had lowered its key interest rate to a record low of 0.5%.

Contributing: AP Business Writers Jeannine Aversa and J.W. Elphinstone

By Jeannine Aversa, AP Economics Writer

WASHINGTON — Citigroup’s chief economist is being tapped for a job at the short-staffed Treasury Department, which is at the center of the Obama administration’s efforts to battle the financial crisis.

Lewis Alexander will become a counselor to Treasury Secretary Timothy Geithner, according to a government official who spoke on condition of anonymity because a formal announcement has not been made. Alexander will work on domestic finance matters, the official said.

AIG: 11 who got $1M bonuses no longer work for the company

Alexander had worked at the Federal Reserve and also served as the Commerce Department’s chief economist in the 1990s.

Geithner so far has battled the crisis with no key deputies in place. That’s made for a rocky start for the man President Barack Obama put on the front lines of the financial crisis.

FIND MORE STORIES IN: Congress | Barack Obama | Wall Street | Federal Reserve | United States Treasury Department | United States Commerce Department | Bank of America | Citigroup Inc | International Group | Treasury Secretary Timothy Geithner | Lewis Alexander

Treasury’s handling of a $700 billion financial bailout fund has drawn fierce criticism from Congress and the American public. The government has put up hundreds of billions of taxpayers’ dollars to rescue troubled financial companies, including American International Group, Bank of America and Lewis Alexander’s own Citigroup Inc.

In late February, the government said it will exchange up to $25 billion in emergency bailout money it provided Citigroup for as much as a 36% ownership stake in the struggling bank, a move that could put taxpayers at greater risk. The deal represented the third rescue attempt for Citigroup in the past five months. It’s contingent on private investors agreeing to a similar swap.

As a Wall Street insider from a bank that has been one of the largest recipients of government rescue funds, Alexander’s appointment could raise some eyebrows. In December 2007, he was quoted as saying that while he believed the housing market would remain weak well into 2008, it was more likely that the economy would keep growing than head into recession, adding that the housing bubble was “correcting on its own.”

by Jim Adair

When times are bad, it seems there’s no shortage of scam artists around who try to make things worse.

“During Hurricane Katrina and the 2005 tsunami, scammers quickly jumped in to take advantage of people when they were desperately looking for help, and we are seeing the same thing happen in the current economic crisis,” says Douglas Simpson, president of the Canadian Council of Better Business Bureaus (BBB). “In this financial environment, it is more critical than ever for consumers to guard against fraud artists and scammers working to cheat them out of their hard-earned money. This is especially true online, where it’s harder to know with whom you are dealing.” The BBB says that Internet fraud artists are sending emails that offer consumers new mortgages and loans, even for those with poor credit ratings. The catch is that it costs a fee to take out the new mortgage.

“Before you jump up and send in that processing fee or security deposit, be warned that this is likely a scam and advance fee loans are illegal in Canada,” says the BBB. “You should never have to pay cash in advance for a loan. Many people have filled out their application for their loan, sent in their money and then have never heard back from the company. Now, the consumer is out the anticipated ‘pre-approved’ loan but also the processing fee as well.”

Real estate fraud continues to catch unaware homeowners, who discover that someone has taken out a mortgage on their home without their knowledge. Fraudsters use stolen identities or forged documents and transfer the registered owner’s title to themselves. Then they take out a mortgage on the property and disappear with the money.

You can help avoid this and other identify fraud consequences, such as having your credit card or debit card used for unauthorized purchases, by carefully protecting your personal information. Keep your birth certificate, social insurance card, bank account numbers and credit card numbers in a secure location that no one can access. Don’t carry your birth certificate or SIN card in your wallet. Never reply to emails that supposedly come from your bank, asking for personal information – if the bank needs such information, they won’t ask for it by email.

If you’re thinking of renting your home or have an investment property, check the references from prospective renters carefully and check on your property regularly.

You should always check your credit card and bank statements carefully to make sure there are no irregularities. Bells should go off if bills that you are expecting don’t arrive, or if you start getting calls from companies about purchases you didn’t make, or about a new mortgage you didn’t arrange.

In 2008, Canada’s Competition Bureau received almost 15,000 complaints about mass marketing fraud – the term for fraud by mail, telephone and the Internet.

Among the most common were notices that the recipient had won a prize, but they were asked to send some money in order to collect their winnings. Legitimate lottery and sweepstakes contests never charge a fee to deliver or collect a prize. If you get a call about winning a contest that you don’t remember entering, chances are it’s a scam. The old adage that “if it sounds too good to be true, it probably is” still applies.

Another popular rip-off is the cheque overpayment scheme, where the scam artist overpays for a product or service you are providing, and then asks you to provide a refund. Or, a consumer is asked to be a “mystery shopper” and is sent a cheque and asked to deposit it. Then they are asked to deduct a small amount for their “wages” and wire the rest back to the company, and complete a survey about the service they encounter. In both cases, by the time the victim has cashed the original cheque, the bad guy has taken the money. You should never agree to wire money to another location – legitimate buyers or employers would never ask for this.

Some other ways to protect yourself from scams:

• Shred old personal documents.
• When dealing with salespeople over the phone, ask for a call-back number. Take the time to think the offer through – if you are feeling pressured, you don’t have to decide right now.
• If you are moving, get the moving company to provide a detailed estimate in writing. Ask what kind of insurance they have in the case of lost or damaged items, and make sure this is spelled out in your quote.
• When hiring someone for home renovations, get written estimates of the work to be done and check out the contractor’s references. Home renovation contractors are one of the biggest sources of complains to consumer protection agencies.

If you think you have been a victim of fraud or have been contacted by a scam artist, call the Canadian Anti-Fraud Call Centre at 1-888-495-8501.

To learn more about various types of fraud, the Competition Bureau has set up a website with an interactive fraud quiz, letters from victims and prevention tips.

by Peter L. Mosca

[Note: To follow is an excerpt of an interview with Adrian Arriaga CCIM CIPS, the 2008 chairman of the NAR Legislation and Regulatory Subcommittee for the Realtor Commercial Alliance, and H. Blaine Walker chairman of the NAR TIC Workgroup and 2007 chair of the NAR Realtors Commercial Alliance Legislative and Regulatory Subcommittee. To listen to the show archive or download an MP3, go to www.IncomePropertyInvestmentTalk.com/020608.]

Peter: A pending Securities and Exchange Commission exemption could allow commercial real estate professionals to receive a fee for opining on the real estate aspects of the securitized TIC or tenant in common deal. Currently, brokers and agents can receive a fee for referring an investor into a real estate TIC offering. The way I see it, many savvy realtors will be able to supplant and in some cases, if not most, earn more money via this exemption; this ability to opine on tenant in common type deals. Adrian, do you see this as a major moneymaker for realtors and of course, the real estate investing consumer?

Adrian: Thanks to the leadership of the National Association of Realtors and the RCA, Realtor Commercial Alliance, we’ve opened a door for real estate professionals in the commercial area to really have an upside. With that said, that also brings a big upside to investors that have never had the opportunity to invest in something called a TIC or tenant in common.

Blaine: Let me echo the comments of Adrian about the staff at the National Association of Realtors. They work very hard in working with the SEC to consider this exemption. The exemption could allow for a commercial real estate professional to be exempt from registering as a broker/dealer or securities rep and be able to opine on the real estate aspects of the transaction for their client. The benefits of this is to the client, he or she can now access the expertise of their commercial specialist to opine on the real estate aspects of the transaction. Of course they can’t get into the securities issues but they can opine on that aspect of it. The beauty of the tenant in common offering is it basically offers another arrow in the quiver of a commercial broker. As they present properties for a 1031 exchange, many of the buyers are moving out of smaller apartment complexes where they’ve been unable to higher professional management because of the size of the property. It doesn’t justify it. With the tenant in common offering, they’re now able to be involved with a class A type property and have professional management, which removes some of the day-to-day problems of tenants, toilets, trash etc. By affording this professional management and being able to move their money from a smaller property into a class A property still receive the tax benefits of depreciation and interest deductions and also take advantage of any appreciation that occurs over a long-term hold for the property, the investor now has opportunity to be a small investor in a large property.

Adrian: The biggest challenge and obstacle is if you have $50,000 or half a million dollars, you can not buy one property because of lending restrictions, but TICs are extremely beneficial for someone that wants to get in and have the benefits that Blaine just described.

Blaine: When you sell a property and want to do the exchange you have a 45 day period in which to identify a target property or a property to exchange into. Where the tenant in common sponsors has already identified the property, they’ve already done all the due diligence and the investor has an assurance of being able to close.

Peter: When do we expect to hear from the SEC?

Blaine: The SEC is reviewing the comments that have been put in during that comment period. The SEC will do its own due diligence and review all of the comments. From there, they will make their decision as to moving the exemption forward.

Peter: The National Association of REALTORS does a great job with its public image campaign but one of the greatest assets is they help to maintain a marketplace for investors like us and professionals like you can buy, own, and transfer real estate in a way that really is emulated globally. Their work in this effort is also a major positive to the general public and investors, do you agree?

Adrian: That’s correct. The next step for us is to educate the real estate professional to be up-to-date on TIC opportunities so they are able to help their investors.

Blaine: The national association is in the process of putting together an educational piece that will help the commercial practitioner on the TIC issues that they need to be aware of, and the pitfalls. A critical issue is, if this exemption is granted, that the real estate investor can have their real estate professional, who in most cases is selling what is commonly called the ‘down leg,’ or selling their liquidated property, they can now have the opportunity to use that same professional in analyzing another property for them to invest in. While the real estate broker can’t opine on anything that has to do with the securities aspect of the transaction, they can review the real estate aspects, they can show them comps to the property, and discuss the net operating income with them, the cash flow analysis review, the types of leases that are included in the transaction, and all aspects of the transaction where you need a real estate professional.

Peter: What are the steps a commercial real estate professional investor should look at when looking to partner with or work with a tenant in common provider?

Blaine: It’s somewhat of a loaded question, but at any rate, from the standpoint of a commercial specialist or an investor some of the questions that they should be concerned with are the length of time that a sponsors been in the business, their financial strengths, their ability to obtain financing on the properties, what their experience is in the tenant in common industry and in real estate in general. Many of these sponsors are real estate professionals in and of themselves and have been in the business for a number of years. They’ve purchased real estate over the years and now they’re providing them as tenant in common offerings, so check that experience. The types of properties they’re offering, and the reason I say the types of properties, that plays back to the interest of the client and what type of properties they are familiar with, comfortable with, also what type of properties are performing currently in the marketplace. I think a client needs to understand the ups and downs of the real estate market as a whole and the various risk factors involved in different types of properties. Lastly, the type of due diligence the sponsor has done on the property to make certain that they’ve done all the environmental testing, and the structural issues, and the civil engineering issues; all those types of things.

Peter: What is your golden nugget?

Adrian: Keep in mind that not every Tom, Delores and José can actually become an accredited investor. SEC defines an accredited investor as an individual that has a net worth of at least $1 million and more guidelines that go along with that. Times are tough and getting tougher because of the economic real estate crisis. This is one element that I think people can take advantage of, absolutely.

Blaine: We’re excited about the proposition of the exemption being issued. We think that it will benefit the investor as well as the commercial real estate broker.

by Phoebe Chongchua

The advancement of technology is meant to ease the burden of everyday living by making things more efficient, accurate and less expensive but when it comes to determining the value of real estate, can technology really be better—or, take the place of a certified appraiser?

In a prepared statement by the Nation’s Professional Appraisal Organizations (the American Society of Appraisers; the Appraisal Institute; the American Society of Farm Managers and Rural Appraisers and the National Association of Independent Fee Appraisers– which represent 35,000 real property appraisers in the U.S.), contend that using only computer-generated Automated Valuation Models (AVM) to determine the value of homes can lead to trouble.

“Inadequate home valuation requirements leave taxpayers exposed to unnecessary losses and homeowners vulnerable to improper exclusion from Treasury’s loan modification plan,” the release states.

It further states, “Our organizations applaud the fact that the plan will allow millions of families to remain in their homes. However, we are deeply troubled that the Treasury Department’s $75 billion government-guaranteed modification program fails to protect taxpayers from avoidable losses when reworked loans default in the future, as some of them inevitably will; and fails to protect homeowners from mistakenly being declared ineligible for modification because they are told, erroneously, that the current market values of their homes do not meet plan underwriting criteria.”

According to the released statement, the reason some may not meet the underwriting criteria is because of the way the valuation of the homes is determined by the use of AVMs or Broker Price Opinions. “For reasons we find inexplicable, Treasury’s plan ignores this invaluable “safety and soundness” human resource and, instead, relies on computer-generated values and the opinions of real estate agents who are not subject to nationally accepted appraisal qualifications and standards to safeguard taxpayers and determine whether homeowners are or are not eligible to decrease their mortgage burden.”

To be most effective and accurate, Michael H. Evans of Evans Appraisal and also a member of the American Society of Appraisers says that certified and designated expert appraisers must be used. “It’s kind of a black box,” says Evans about the information that comes from AVMs. “Unless that valuation is done by an appraiser who understands the data and interprets it, we don’t know if it’s accurate or inaccurate,” says Evans.

The appraisal industry is making an effort to ensure that its voice is heard. Earlier this month industry members testified before congress about what it perceives to be structural weaknesses with regulations in the mortgage industry. Evans says, especially now, relying on AVMs is risky, “In a down market it’s really hard for the AVM to analyze listing data or understand that concessions were made on a particular sale and how much they were,” says Evans.

“An AVM can be an excellent tool in the hands of a professional, the problem is the people who are putting that data in are not appraisers, nor are they looking at the data and interpreting it and saying ‘Yes, that’s okay, that makes sense or no, I need to get something better than that,” he added.

Evans says using a certified and designated appraiser provides you with a report and someone who is responsible for the information in it. “The appraiser is tied by his appraisal to the transaction, pretty much, for the life of the loan. If we do something wrong you can come get us for the life of the loan—we’re tied to it,” says Evans.

But part of the attractiveness of AVMs is that they’re cheaper. A traditional appraisal costs approximately $250 - $300 to pay for several hours of evaluation done by a certified appraiser whereas an AVM can cut the cost to about $50 - $100 for a typical single-family home.

The National Association of Realtors supports the call to protect consumers and is recommending that lenders be required to inform borrowers about how their property value was determined as well as provide them with a copy of the appraisal for no additional cost. The National Association of Realtor, President Charles McMillan, had this to say to the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit, “Realtors believe that a strong and independent appraisal industry is vital to restoring faith in the mortgage origination process.”

McLEAN, VA — Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.98 percent with an average 0.7 point for the week ending March 19, 2009, down from last week when it averaged 5.03 percent. Last year at this time, the 30-year FRM averaged 5.87 percent. The 30-year FRM has not been lower since the week ending January 15, 2009, when it hit an all-time low of 4.96 percent in Freddie Mac’s weekly survey.

The 15-year FRM this week averaged 4.61 percent with an average 0.7 point, down from last week when it averaged 4.64 percent. A year ago at this time, the 15-year FRM averaged 5.27 percent. The 15-year FRM has not been lower since the week ending June 13, 2003, when it averaged 4.60 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.98 percent this week, with an average 0.7 point, down from last week when it averaged 4.99 percent. A year ago, the 5-year ARM averaged 5.56 percent.

One-year Treasury-indexed ARMs averaged 4.91 percent this week with an average 0.7 point, up from last week when it averaged 4.80 percent. At this time last year, the 1-year ARM averaged 5.15 percent.

“Long-term mortgages followed bond yields lower for the second week as reports of slower industrial production suggested that business spending might ease this year,” said Frank Nothaft, FreddieMac vice president and chief economist. “Output at factories declined for the fourth consecutive month by 1.4 percent in February driven by declines in computers and machinery and experienced the largest 12-month drop since June 1975. In addition, factory capacity utilization slumped to 70.9 percent, matching the lowest rate since records began in January 1967.”

“Following the March 18th Federal Reserve monetary policy statement, which announced further spending initiatives on financial assets, long-term bond yields plummeted. Yields on 10-year Treasury bonds fell by about a half percentage point after the announcement, marking the largest one-day decline since October 20, 1987.”

by Kenneth R. Harney

Small-scale investors who own condo units are facing tougher financing challenges as the biggest players in the market are imposing new restrictions — worse, it seems, every month.

Fannie Mae and private mortgage insurers don’t say it this way officially, but their actions make it clear: They don’t want to finance condos in large numbers any more, and they are making it increasingly difficult for developers, unit owners and potential investors.

That wouldn’t be a big a deal if Fannie were not the number one traditional source of financing for condominium units. Freddie Mac, its smaller rival, has been far less active as a buyer or guarantor of condo loans.

Fannie’s latest moves, which took effect March first, ban mortgages in new condo developments where fewer than 70 percent of the units have been pre-sold. The previous cutoff point was 51 percent.

Also Fannie no longer will finance units in projects where more than 15 percent of unit owners are behind on their payment of condo dues, or where more than 10 percent of the units are owned by a single investor, individual or company.

On top of that, Fannie now declines to finance units in buildings where more than 49 percent of all units are owned by investors. Forget most resort area rental condos. Forget condo hotels.

Private mortgage insurers have joined the condo-avoidance bandwagon by either refusing to insure low-downpayment loans in any of dozens of local markets deemed to be “declining,” or by charging exorbitant premiums on units in healthier markets.

Even Freddie Mac may soon be following Fannie in restricting condos sharply. It recently raised the minimum downpayment on condo unit loans to 25 percent, and added a three quarter point penalty on top of its regular fees for condos. Fannie also hits all condos with a three quarter point add on.

Fannie Mae now reserves the right to REJECT financing on condo units in projects where — in its sole opinion — developers or sellers are offering “excessive” come-ons to buyers, either on below-market financing or other subsidies designed to get buyers to sign contracts.

Fannie says such concessions distort the true market values of the condo units in the entire project.

One glimmer of possibly good news here: Fannie Mae says it is willing to review individual loan on a case by case basis in situations where condo projects don’t quite make the grade — for example, there are more investor units in the building than normally permitted, but lenders will need to submit documentation that the overall project is healthy economically and presents minimal risk.