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Goodbye, over-the-top kitchen remodel? Hello, sturdy but unshowy new windows?

Maybe so, if a recent report on where we’ll put our remodeling dollars in the coming years turns out to be correct.

We’re at the end of an era in home renovations. The big-bucks projects that transformed our spaces during the housing boom are giving way to more practical, dollar-conscious ones, according to analyst Abbe Will, who studied trends in remodeling for Harvard University‘s Joint Center for Housing Studies.

Home renovations soared with the real estate market, then crashed, Will said. Now, she said, although the phones are starting to ring again at remodeling companies, consumers are less likely to ask for the deluxe makeovers that were commonplace just a few years ago.

Here are Will’s answers to some questions about where our nest-feathering desires are likely to take us as the economy recovers:

What happened to remodeling during the housing boom and bust?

During the boom, people focused on major, upper-end kitchen and bath remodels and room additions. Americans took it to unprecedented heights.

Construction peaked and started crashing in 2006, and remodeling followed about a year after. The focus went away from big projects to things people were doing if they were trying to sell their house, whatever they could do for curb appeal to make [buyers] stop and take a look. It was a lot of siding, roofing and smaller projects.

It has been a dramatic shift from the boom. In the last couple of years, people were focusing only on whatever needed to be done, such as replacing heating and cooling systems. They were trying to take advantage of the tax credit for energy-efficient upgrades.

What did this do to the remodeling industry?

The remodeling business is extremely fragmented, and we don’t have terribly recent data, but the best data come from the census from 2007, which estimated there are 650,000 remodeling contracting companies. That number doesn’t include the smallest, self-employed remodelers who are doing it part time or making less than $25,000 a year. Where we’re seeing a change now is in the consolidation of the bigger companies.

At the peak of the market in 2007, remodeling of owner-occupied homes was a $327-billion business, and that number includes maintenance and repairs. In 2009, it was down to $286 billion.

Where is the business going now?

Our report doesn’t include maintenance and repairs, but through the third quarter, at least, we see a very respectable gain, a 6.5% increase in home improvement spending. We estimate that homeowner spending will increase 3.5% per year, compounded, in 2010 through 2015.

What’s going to lift the business?

We definitely think we won’t be returning to those levels of spending from the boom. People are nervous about whether they can afford that big project because the credit markets are still tight, and homes that have lost so much value don’t have the equity for big projects.

Once the foreclosures finally trickle through the market, once people start buying them, people will do some projects that have been backlogged, because any owner who was going through a foreclosure wasn’t likely to invest anything in the home. So these newly purchased foreclosed homes are going to need a lot of attention once they work through the system.

The aging of the housing stock in this country and the projects they’ll need to remain livable is another factor, along with people’s reduced mobility. People just aren’t moving very much because they haven’t been able to sell their homes.

Until the housing market is back to a healthy level of activity, until people are confident about the labor market and think they can move again, people won’t be changing their mind-sets. They used to think they wouldn’t be in a home more than three years, but now they’re thinking five or 10 years.

It’s possible that they’ll figure, “Well, if we can’t move, we might as well make this house into our dream house.” Reduced mobility will potentially lead to that, but we don’t think it’s going to happen soon. Instead, they’re going to be thinking of a new roof or windows or doors, where they might have just presumed that they’d move and the new owners would do the replacements.

They’re going to do smaller projects in the kitchen and bath instead of an overhaul. They might do parts of those fix-ups at a time. Mostly, they’re going to stick to the projects that really need to be done or that will help them save money in the long run.

One trend that will push remodeling is “green.” That’s a fuzzy word and not well-defined, but it’s a trend that’s been growing: window replacements, doors, insulation, heating and cooling systems and energy-efficient appliances. When people need to make a replacement, they’ll think about what’s going to save more money over time.

Information from: http://www.latimes.com/business/realestate/la-fi-umberger-20110327,0,7668990.story

So-called nonbank lenders are trying to stage a comeback now, through two relatively new lobbying groups based in Washington that are seeking to burnish the image of those nonbank lenders that steered clear of risky lending.

While a few nonbank lenders still offer higher-risk loans with exorbitant rates, others, including stalwarts like LendingTree and Quicken Loans, sell plain-vanilla fixed-rate or adjustable-rate loans that are marginally cheaper than those from big banks.

Many borrowers are suspicious of the loans offered by smaller, nonbank lenders. “Most consumers say, ‘Who are these people?’ but the fact is that these are mainstream loans with good pricing,” said Glen Corso, the managing director of the Community Mortgage Banking Project, a trade group of 43 nonbank lenders.

Some nonbank lenders say they are seeing a steady increase in business from middle-income borrowers who may be unable to get a loan elsewhere.

“So far this year, we’re up 15 to 20 percent in the total value of loans we make,” compared with last year, said David Wind, the president of Guaranteed Home Mortgage, a nonbank lender in White Plains, N.Y.

Mr. Wind said the average loan amount in the New York City area was $240,000, compared with $220,000 a year ago, an indication that higher-end customers were seeking out nonbank lenders amid tighter underwriting standards at the larger banks. Because nonbank lenders tend to be smaller and have lower operating costs, he said, they can offer rates that are 0.125 to 0.375 percentage points below those offered by major banks.

The nonbank lenders extend money through one of two methods: the lenders have a line of credit with big banks and funnel that money to consumers in the form of home loans, or they collect money from private investors to lend to consumers. (The most recent data from the Federal Financial Institutions Examination Council showed there were 914 nonbank lenders nationwide at the end of 2009.)

It is the second category that borrowers need to be wary of, said Diane Thompson, a lawyer at the National Consumer Law Center, because the interest rates may be significantly higher.

Nonbank lenders with lines of credit from big banks often find themselves with the same tough underwriting standards as the banks, said Stephen Adamo, the president of Weichert Financial Services, a nonbank lender in Morris Plains, N.J.

Still, Mr. Wind admits that nonbank lenders still have a battered reputation among consumers to overcome. “There’s a tremendous image problem,” he said.

And the new Consumer Financial Protection Bureau has made regulation and oversight of nonbank lenders a priority.

Enter the Community Mortgage Banking Project and Community Mortgage Lenders of America, both created in 2009 to promote the interest of nonbank lenders. “Nonbank lenders don’t have the name recognition of a Wells Fargo or a Bank of America, so they have to compete on price,” Mr. Corso said.

He said that contrary to popular belief many nonbank lenders these days do not offer subprime or other risky loans, and instead were offering conventional mortgages or loans backed by insurance from the Federal Housing Administration.

But Ms. Thompson advised home buyers, especially those who aren’t inclined to comparison shop or read the fine print in lending disclosures, to stick with a bricks-and-mortar bank. “There’s a long track record which indicates that this is where consumers will get the best deal,” she said.

Information from: http://www.nytimes.com/2011/04/03/realestate/03mortages.html?ref=realestate

The median price of a vacation home was $150,000 in 2010, down 11.2% from a year earlier, the National Association of Realtors reported Wednesday. In contrast, the national median for primary residences fell only 4.5% in 2010, according to NAR.

“The fall in prices has opened opportunities for more families to enter the second-home market,” said Lawrence Yun, NAR’s chief economist.

Still, vacation homes accounted for just 10% of all sales last year, and investment properties made up another 17%.

Those percentages were little changed for 2010 as home sales declined across the board. There were 543,000 vacation homes sold, down from 553,000 in 2009; investment purchases fell to 867,000 from 940,000.

One factor depressing sales was the difficulty in getting mortgages due to tight credit markets. Buyers often did an end-around this problem by paying cash. Nearly 40% of vacation home sales were cash deals, while nearly 60% of investment deals were handled that way.

Those buyers who did get mortgages brought big down payments to the closing tables, according to Walter Molony, a NAR spokesman. For vacation homes, the average was 30%, far more than the standard 20% down. Investment buyers with financing paid an average of 32% down.

Many of the second homebuyers targeted distressed properties. About 17% of investment purchases were foreclosures, while vacation homebuyers chose distressed prosperities 10% of the time, NAR said. Only 10% of families buying primary residences last year went with foreclosures.

Information from: http://money.cnn.com/2011/03/30/real_estate/second_home_sales/index.htm

Critics say yes. The government says the critics aren’t providing the full picture.

Those critics include Sen. Benjamin L. Cardin (D-Md.), who is sponsoring legislation that would prohibit Federal Housing Administration lenders from collecting a full month’s worth of interest from sellers and refinancers who pay off their mortgages — close escrow — before the final day of the month.

No other major source of financing — not Fannie Mae, Freddie Mac or even the VA — requires interest payments from borrowers beyond the date they pay off their loans. On an FHA loan, however, if you sell your house and close early in the month, you are charged interest through the rest of the month.

To illustrate: Say you pay off a $200,000 FHA-insured mortgage April 5. You’ll be charged an extra $820 to cover interest for the remaining days of the month, according to estimates prepared by the National Assn. of Realtors, which supports Cardin’s bill. If you pay off the same loan April 15, the additional interest would total $492.

Where does the money go? Ted Tozer, president of the Government National Mortgage Assn. (Ginnie Mae), which bundles FHA loans into bonds and sells them to investors, said it flows to the bondholders, who are guaranteed payment of interest for the full month even if the balance is paid off much earlier.

Tozer said the approach afforded FHA borrowers a slight discount on their initial interest rates — probably in the range of 0.10% to 0.15% — compared with conventional loans.

But critics charge that the extra interest payment has a far greater economic effect on FHA sellers and refinancers — often cutting their proceeds by hundreds of dollars — than the barely perceptible rate break they received on the mortgage itself.

“This is an issue of fairness,” Cardin said. “Homeowners should not have to pay interest on loans that they have fully repaid.”

His bill, the Reduce Excessive Payments Act, would prohibit the practice and require FHA lenders to compute payoffs on a per-diem basis rather than a full-month basis.

Real estate agents are especially critical of FHA’s interest prepayment policy because they say it squeezes money out of sellers who have little or no control over the timing of their closing. Many sellers don’t know about the FHA’s requirement, realty agents say. Even if they do, the buyers of their houses generally are in a better position to control the closing date because they are dealing directly with title and escrow companies.

The National Assn. of Realtors says the out-of-pocket costs to unwary consumers are huge. Citing the most recent statistics on early payoffs that it claims it could obtain from the FHA, the group says that during 2003:

•FHA borrowers paid $587.4 million in “excess interest fees” because of the full-month rule.

•Only 16% of loans were prepaid during the final five days of the month.

•The average “excess interest” payment from borrowers to lenders and investors was $528.

Between January 2000 and January 2004, according to the Realtors’ analysis of FHA data, borrowers paid more than $1.375 billion in excessive interest. The corresponding amounts today could be significantly higher since the FHA has a much larger market share.

Asked for comment, Vicki Bott, who heads the FHA’s single-family mortgage office, acknowledged the controversy and said the agency was “examining this issue very closely” and considering a regulatory change.

Tozer said Ginnie Mae could readily sell its FHA mortgage-backed bonds using the per-diem payoff approach that is standard in the conventional mortgage marketplace. But investors would still need to be compensated for the full month’s worth of interest, he said, and that would probably require a slightly higher rate on the mortgage.

Where is this headed? With pressure coming from Congress, the FHA may move off its disputed practice.

In the meantime, if you have an FHA loan and plan to refinance or sell your house, try hard to schedule the close at the end of the month. You could save a bundle.

Information from: http://www.latimes.com/business/realestate/la-fi-harney-20110403,0,6735337.story