HARP 2.0 – Part 3: Hitting a Roadblock

Posted on by
Reply

The short version of this story is that I’ve hit a roadblock in refinancing my underwater house under HARP 2.0. I cant get approval from Fannie Mae, despite stellar credit ratings and a strong balance sheet. Fannie Mae has five levels of HARP 2.0 ratings – Approved, Extended Approval I, II, and III, and Ineligible. Most places are currently only refinancing Approved and EA-I ratings. Many folks are getting EA-III approvals however, and there is really no recourse – Fannie Mae wont be able to tell you why specifically you’re getting that rating since its a software program that is spitting out only an answer with no justification as to why.

So now I sit and wait. I have two options – wait for mortgage companies to start accepting ratings below EA-I, or wait a few months and try again and see if my rating has changed between now and then.

30 Days with the Chevy Volt

Posted on by
Reply

The Car

The car is based on GM’s global compact car chasis. Its not the biggest car, but thats OK since most of my driving is as a lonely commuter. Unfortunately, no wife and no kids means its usually only me driving by myself to work. I don’t even drive my friends around much, since I’m so far away from them. The car itself isn’t a 5 seater, rather a 2+2 configuration, due to the large T-cell pack running up the center tunnel of the vehicle.

The outside styling is great, in looks like a normal compact hatchback model car. It doesn’t stick out like most other green cars (Prius, Leaf). Its a little different in ways that respect the aerodynamic necessities of electric vehicles, but for the most part it still looks like a normal gasoline car, except for the charge port forward of the driver door (the girl at the car wash asked me if my gas tank was at the front of the car, I said  thats where I plug it in, she was surprised).

The interior is well appointed for a Chevrolet, which is good considering how much it costs. There are two LCD screens, one replacing the speedometer, tachometer and gauges area, and the other is the infotainment/navigation screen showing your music, outside temperature, and other facets of the car’s operation (showing where power is coming from or going to, efficiency meters, total power and gas used, etc). The center-mounted infotainment screen is touch-based, and you can tap around on the different screens. Your heating and cooling are controlled through the center screen, and not by any knobs or buttons on the center console. This can be a little annoying since you cant turn knobs by memory to crank up the heat or A/C – you have to look at the screen to tap. However, I usually operate the system by the “Auto” button on the console to turn on the climate control, and two other buttons to turn the fans up or down.

The Electric Powertrain

The electric guts of the vehicle is a 16kWh (10.6kWh usable) liquid cooled lithium-ion battery. This feeds a 111kW (150HP) electric motor. When you’re out of juice, a 1.4L engine turns a generator that creates 55kW of energy at maximum. The energy goes from the generator to the electric motor to turn the wheels, and when there is extra energy, the rest goes into the battery. If there is a momentary energy defect, the electric motor can pull a little extra power from the battery. The car gets 35-40 miles in EV mode and 38MPG or so afterwards. Cold or hot weather decrease the range significantly (down to 25 miles in the worst cold cases, around 32F).

The battery is warrantied for 8 years or 100,000 miles. Long enough to make a good return on the investment of the Volt. However the resale market is a little iffy due to no one really knowing how the batteries will last with time – Chevy only offers an “EV Miles” metric available to the user, and not some battery life expectancy forecast that would be useful to second-hand buyers.

The Technology

GM really went to town with the technology. As I mentioned above, there are two LCD screens in the vehicle, and one of those is a touchscreen.

There is also an app for iPhone and Android smartphones. This app allows you to view battery charge state, fuel tank status, tire pressure, total EV milage and MPG, send commands to the vehicle to lock or unlock the doors, remote start, and for those with a nav system, send navigation destinations to the car. The On-Star system can also send you reminders to plug in the car if you forget.

The MyVolt website offers a view into the statistics GM is collecting on your driving (if you opt-in to having an On-Star account).  You can view efficiency information, daily mileage, as well as send commands like the smartphone apps. You can also program the Volt’s recharging cycle. You can specify to charge the car immediately on plug-in, or tell it when you’re leaving in the morning on which days of the week (it’ll figure out what time to start charging so its done when you’re set to leave), or setup a time-of-use schedule so it will charge when your electric rates are the cheapest (my utility offers time-of-use rates, and even a special cheaper night time rate for EV owners).

On-Star is included for three years. After that, the included package is $300/yr.

The “Goldilocks” Zone

What makes the Chevy Volt unique is that, given its high price tag, you probably want to do the math to make sure this is the right car for you. If your average daily driving is between 25-50 miles and your daily driving is somewhat regular (doesn’t vary outside that range often, in math terms – the standard deviation is small), the Volt is a good choice financially. You’ll drive it enough to save a ton on gas, while not driving it too much were a Prius would be a more sensible car.

The effective cost of the car, when the tax incentive and gas savings are factored in, is closer to $25,000, rather than the $40,000 sticker price. The $15,000 difference is from the $7500 tax credit, along with $7500 in gas savings over the first five years of ownership compared to a standard 25MPG vehicle (15,000 miles a year).

For me this number is about right. I drive 12,000 miles a year, and my daily (four days a week) commute is 32 miles round-trip, plus weekend driving that usually stays in the EV range of the car.

So what happens if you’re outside of this zone? My advice would be to wait. Battery technology will get better, but slowly. As battery technology gets better and cheaper, the range will start to expand. Don’t expect a huge electric-only driving range (40 miles is about right given current US driving habits, though if that changes in the future then the range may change), but expect smaller, lighter, cheaper batteries. And eventually bigger cars. Don’t expect anything big for another 4-5 years though, since the batteries to make a crossover-style Volt wont be ready for a while, mostly because of how long it takes for a prototype cell to go through qualification to be used in an electric vehicle (2-3 years of testing to make sure it can last and it will be safe to charge in your garage every night).

My Power Bill

One Work Week of Recharging (the Volt is set to start charging each night at 10PM, to help out NV Energy’s grid so that it doesn’t get overloaded in the evening hours from 6-10PM)…

So the total kWh each night was 10.1kWh, 11.2kWh, 10.3kWh, 8.8kWh and 8.8kWh, finishing charging before 2AM. The data above was taken from NV Energy’s website via my Smart Meter. I tried to factor out baseload of my house, as well as minimize the impact of fans and air conditioners.

It’ll cost me an extra $25-35 per month for the Volt, most of the variability depends on how often I leave the house on the weekends to go hang out with friends (lately my weekends are spent at home and alone so it’ll be closer to the lower end of the range…). This will displace about $150 of gasoline from my budget each month based on my previous 23MPG car, for a savings of about $115-125 per month.

If I switch to a time-of-use plan with the electric vehicle rider, I would cut my monthly electricity costs to $12-15/mo. I’m waiting to see what kind of effect this would have on my electric bill, but my preliminary estimates indicate it would save me about $150/yr before the electric car savings are factored in, or about $350/yr total. I’ll find out when June and July hit and my smart meter can tell me how much power I use during the peak hours. (I’m also looking at new thermostats that claim to reduce A/C costs by 30% in dry environments like Nevada.)

Energy Implications

If there was one thing George W. Bush taught me (the only thing, perhaps) is that oil is fungible. When you buy an oil-based product, it doesn’t matter where that specific gallon of oil product came from. Because there is a worldwide, robust trading network to transport oil around the world, the money you give the oil company essentially is paid to each company and country that produces oil in the amount they represent the world market. A gallon of oil not purchased by me in the US is a gallon of gas purchased somewhere else in the world for a slightly lower price.

According to EIA, that $4 gallon of gas you bought, 72% of that cost was the cost of oil (or $2.86), and the economic impact of that $2.86 is spread out amongst every oil producing country in the world. So the US gets 12% ($0.34), Russia gets 12% ($0.34), the middle east gets 31% of that ($0.89), and Venezuela gets 3% ($0.08), and the rest to various other countries around the world. But if I buy electricity, not only do I get equivalent motive force for much cheaper, but that money stays in the US – to my friends and neighbors who work for the power company (and their CEO’s ever increasing total compensation), all that natural gas from fracking that pushed the price of natural gas to its lowest price ever, and coal from coal mines throughout the country (my utility’s energy mix is approximately 70% natural gas, 18% coal and 12% renewables, and natural gas only creates 1/4 the amount of CO2 per MWh as coal).

As far as the power grid goes, NV Energy says they can accommodate 1,000,000 plug-in cars on their grid at night without needing any substantial transmission and distribution upgrades (read: rate increases). Don’t expect to be able to charge those vehicles during the day in the summer time though. Nationally, the US power grid can accommodate an electric vehicle penetration rate of about 40% using overnight charging, and 70% using a smart grid-optimized recharging scheme based on information from 2006 (the grid has added substantial transmission capacity, especially in the West, so those numbers might go up). We have a very long way before those numbers become a reality.

The Unknowns

The biggest unknown is the resale value of the car. This car has a few things working against – first generation technology, only 4 passenger seats, along with the state of the battery along with replacement battery costs.

Replacement battery costs are closely tied with how successful (or not) electric cars become. If EVs are prominent in the future and lots of lithium-ion batteries are made, its likely that a replacement battery wouldn’t cost much in 2020 (around $3500). If EVs don’t take off, and the technology remains a niche application, batteries will be more expensive due to lack of mass production.

The Only Thing I’d Change

The front air dam. Chevy offers a shorter air dam, but it comes with an aerodynamic penalty and I lose about 1 mile of EV range if I switch to it. I scape this longer air dam everywhere I go.

The Cost

As I mentioned above, the actual cost of the Volt is around $25,000 once you factor in gas savings and the federal tax credit. Recently, GM has been throwing money “on the hood of the car” (term used by dealers to describe cash rebate or financing incentives). When I purchased the car, the deals were $350/mo for a 36 mo. lease (not including taxes or registration) or 0% for 60 months to purchase. As of May 1, GM upped their incentives even more, to 0% for 72 months to purchase, and increased the lease capital cost reduction from $3000 to $4500, resulting in a lower payment – I’ve seen some dealerships offer sub-$300/mo lease offers, factoring in gas savings, that can lower your effective monthly payment to under $200.

One thing to remember, is that if you don’t qualify for the full $7,500 tax credit when buying the Volt, you can still take advantage of it by leasing the car. The lease rate factors in the leasing agency will take the $7,500 credit for themselves. Also, leasing reduces the risk associated with buying first generation technology.

The good news is that I believe GM is able to increase incentives because the Volt is getting cheaper to make as they manufacture more of them each month, as well as moving the battery cell production from Korea to the US – a GM executive stated that the cost savings of manufacturing batteries across the state of Michigan instead of the opposite side of the world was significant. Its my hope that the 2013 model year vehicle may have an after-rebate price below $30,000 (about the same as an after-rebate Prius Plug-in), compared to the current after-rebate price of around $32,500.

Final Verdict & Future Outlook

I’m very happy with my Volt. Unless world peace breaks out and the geopolitical instability oil premium goes away and prices retreat to $60/bbl ($2.50/gal), its a wise financial choice for me.

Almost five years ago now I stood in line for nine hours to buy the first iPhone for $600. I feel the same way about the Volt. The price wont come down nearly as fast but I’m confident that this is the wave of the future. (The rate of improvement on silicon chips is 40-50% per year, while the improvement in lithium-ion batteries is between 8-10%.) But I still look at it as the dawning of a new era. The electrification of transportation starts here, in the early 2010s. Once electrification takes off, we move to self-driving cars. Then self-driving flying cars. And then we’re the Jetsons.

Also, see my article on the six things regular car owners need to know when they buy a Volt.

Debunking the Spin

A lot of people (mostly right wingers) like to hate the Volt (to hurt Obama, to hurt the UAW, to support big oil, whatever). So here are the few bits of truth to counter the lies…

  • Its a rolling fireball. The battery fire was 3 weeks after the Volt had been crash tested. I’d die of exposure or starvation if the fire department cant get me out of the wrecked Volt after three weeks. I’d also want to move to a different city with a more competent fire department. The testing facility did not follow proper post-crash procedure to drain the battery of energy. GM knows through the On-Star system to contact field staff when there is a severe Volt crash.
  • The Volt is subsidized $250,000-500,000 per car ($3B/6000 units as of late 2011). Most of that subsidy money went to domestic lithium-ion battery manufacturers, an infrastructure shared amongst all domestically made electric cars that use lithium-ion batteries – the Chevy Volt and Spark EV, Ford’s C-MAX Energi Hybrid and Plug-in models, Ford Focus Electric, Chrysler’s various electric vehicles in various stages of development, and even the Nissan Leaf later this year. Also that money is spread out over 20 years in many cases (tax breaks on property taxes), so you’re taking 20 years worth of tax breaks vs less than one year of car production. Sloppy math.
  • It can only go 40 miles. I get this one repeated to me a lot, and I think it has to do with people not understanding its a dual-fuel vehicle. I can go 40 miles on electricity and then forever on gasoline as long as I keep putting fuel in the tank. I don’t have to recharge the battery before I refill the tank. Once the battery is empty, it acts like a hybrid car.
  • Obama is responsible for the Volt, and he is giving owners a hand-out. Development was initiated by Bob Lutz (who wanted a pure EV) and then with Jon Lauckner (who came up with the extended range idea) in 2006, and unveiled as a concept in January 2007. The $7,500 tax credit was in the 2008 Energy Act signed by George W. Bush. This is one of those things where, if successful, Republicans will try and take all the credit for the Volt’s success, no matter how much they bad-mouth it now.

All the Math!

Vehicle MSRP: $44,875 as delivered
Voltec at-home 220V charger: $1,000 total – $550 for equipment (including tax and shipping), $225 for installation, $103 for city permitting and inspection fees (hopefully it ends there, I just need to get the installation inspected and approved, if I have to get any alterations done, that’ll cost extra).

Monthly charging costs: $25-30 at 11.7c/kWh, or $12-17/mo at 5-7c/kWh if I switch to time-of-use (TOU) billing
Total miles driven: 1,000
Miles driven on electricity: 914
Miles driven on gasoline: 86
Fuel Savings over my old 23MPG Escape:  $123/mo at $3.75/gal

Six things new Volt owners need to know…

Posted on by
Reply
  1. The car switches from electric to gasoline seamlessly. I get this question asked by non-owners a lot, so you might want to be prepared. That and they generally don’t understand the dual-fuel approach.
  2. Hook up the smart phone app. Its really awesome. Plus in the cold winters and hot summers you can pre-condition your car before you get there. Plus it’ll remind you to plug it in at night if you haven’t. Also check out myvolt.com for many of the same features, plus the ability to set delayed & time-of-night charging.
  3. Make sure your recharge outlet doesn’t have anything else installed on that circuit (or get a dedicated 120V or 220V circuit installed). I had problems with my Volt tripping my 120V GFCI circuit that also had a refrigerator on it.
  4. To override delayed charging settings (so you can charge immediately upon plug-in), open the charge port door before you open your car door, then select temporary override.
  5. Charging at night is best for the power grid in most cases. Energy use peaks during the evening hours (5-10PM) and then goes way down. Most power companies have a lot of unused capacity at night.
  6. Make sure you take advantage of all financial incentives possible. Everyone gets the $7,500 tax credit if they buy the car (not lease), and many states have their own tax credit for state taxes (Colorado has a massive $6,000 tax credit). Contact your power company to see if they offer any incentives – from cheaper rates at night to recharge your vehicle or incentives to install a 220V home charging station. Also check to see if your state allows you to drive in HOV lanes with just one person.

 

Two weeks with the Chevy Volt

Posted on by
Reply

I’ve had my Volt for two weeks now, and I’ve been pretty happy with it so far. I’ll probably post a more detailed report a few months into ownership detailing all the costs associated with owning a Volt and how much money its saving me every month.

But there is nothing bad to say about the car right now. Other than some poor sight lines out the rear window (which is why I got the model equipped with the backup camera), the design of the vehicle is strong. I’ve been getting anywhere between 39 and 44 miles on the battery so far (in the mild spring weather), but that will probably decrease to around 32-35 miles once I have to use the AC full blast during the summer months.

In my driving so far, I’ve driven about 600 miles and have used 2.8 gallons of gas (thats about 215 MPG). By my initial estimation, my electric bill has gone up about 20 dollars a month, but thats only judging by two weeks worth of numbers. So, compared to my old car, I’m not spending $150-200 a month in gas, and replacing it with about $20 in electricity and about $10-15 in gas every month. When I factor those savings into the 5 years I’m going to have the car (because the loan is 5 years), thats $8,400. Combined with the tax rebate, and the real price of the car is closer to $24,000. We’ll see if those numbers hold up…

HARP 2.0 – Part 2: Finding a lender

Posted on by
2

So you’ve read part 1 and figured out that you’re qualified for the HARP 2.0 program. Good, now comes the more difficult part of the process, finding a lender that will refinance you. This can be easy or difficult depending on how underwater you are on your house, and whether or not your current mortgage servicer offers refinancing programs. I was in the difficult position of having two strikes against me – my current mortgage servicer does not lend (they’re strictly a mortgage servicer) so I had to find a different lender and my Loan-to-Value (LTV) ratio was above 125%. The only thing that could have made that worse would be if I paid PMI when I bought the house or if I had a second mortgage (neither of which were a problem for me).

Your Existing Lender

If your current mortgage servicer offers programs to refinance your loan, this process will go much smoother. You aren’t required to refinance with them, but it is a good place to start looking and comparing rates. If your LTV is below 125% then it’ll be easy to shop around, but if its above 125% you might be stuck with your current servicer with only a few other options to check out.

A Different Lender

If your current mortgage doesn’t offer programs to refinance (like mine) you’re stuck having to find a new company to refinance with. This becomes especially difficult if your LTV ratio is above 125% as many lenders aren’t refinancing Fannie Mae and Freddie Mac backed loans above 125% even though March 15th has passed and the new software (Desktop Underwriter or DU Refi Plus) has been rolled out to everyone.

Also in my case and the case for those refinancing at above 125% LTV, only one loan program through Fannie Mae is currently being offered – 30 year fixed rate. No other programs (20, 15 year) are currently being offered for those above 125% LTV. They may be rolled out in the next few months (June 1st was a date I had heard but I don’t know if thats accurate).

In my experience, I had tried the major banks and none of them were accepting customers from other loan servicers with LTV ratios above 125%. Even major online mortgage companies were capped at 125% for the time being. I had to contact about 12 banks before I was able to find two that would refinance me in my current situation. (names intentionally omitted until I’m done with the process)

Getting Multiple Quotes

Finding multiple lenders is important, as you can play them off each other to get a better rate. When I had first got my house, I had two rate quotes, and one lender was able to match the other’s lower rate and pay for part of the closing costs, instead of just having the lowest rate.

Moving Forward

The last step is getting all the documents from both the lender and that you’ll need to complete the underwriting process.

Thats it for part two. As I move through the process I’ll post the third (and presumably final) part when my loan closes and I get a final figure for how much my payment will go down a month, and what I have to do to amortize at the same rate as my current loan.

GM shutting down Volt production for 5 weeks…

Posted on by
Reply

It was annouced last Friday that GM would be shutting down production on the Chevy Volt for five weeks starting in mid-March until mid-to-late April. The stated reason was that there was too much channel inventory, about twice as much as a normal car.

There are a few problems with that outlook, in that the Volt isn’t a normal car. Its a specialized low-volume (for now) car. If a GM dealer only sells about 1 car for every 3 dealerships per month (3,000 dealerships, 1,000 cars a month), that would mean a dealership would either have zero or one Volts on their lot when the customer shows up to look at them. Not very pleasing from a customer point of view, “well this is the only one we have, and we wont get another one for 2 months, and all the other dealers in town only have one each too!” If you want the customer to have a reasonable choice of configurations, you’ll need about 3-4 cars per dealership, varied in color and configuration throughout the city. My local market has about 15 Volts (including 4 models that were originally demo units) for sale, some of which are still in transit to the dealer. My rough approximation is about 10 cars per million people in a metro area. So where I live should have about 20 cars for sale. This is also roughly a 4 months inventory. The problem with 4 months of inventory is what are you going to do when the new models come out in August or September? Take huge losses on 1/3 of your annual inventory? Not likely.

So what I’m expecting is that GM is trying to push down inventory to about 5 cars per million people so that when it comes time for the 2013 models to show up, dealers aren’t stuck with four or five really slow selling cars.

I’m somewhat optimistic that such an aggressive early push is hinting at some bigger, better things to come in 2013. By then, GM should be producing both the engine and battery cells domestically (Austria and S. Korea, respectively). GM has stated that the cost of freight for the battery cells is non-trivial, possibly in the range of $100-200/kWh. This would translate to a $1600-3200 cost per vehicle when the freight costs are factored in. Combined with the engine’s reduced freight costs as well, a $2,000-4,000 price cut could be in store for 2013, necessitating even deeper cuts in the 2012 Volt price to move them off the lot. Plus, the idea of a $29,950 price tag after rebate seems really appealing from a marketing standpoint — after tax credit it would be cheaper than the plug-in Prius, and the same price as the high end Prius, and all the comparisons with a loaded Civic start to look better.

EDIT: On April 8, GM announced that in the wake of record sales in March 2012 (including the one Volt I bought!) the plant will open one week early, on April 16 instead of April 23.

Groundbreaking Battery Announcement? 400Wh/kg

Posted on by
Reply

I woke up this morning to read of the Envia energy company talking about how they had breached the 400Wh/kg battery barrier. While the average person has no idea what it means, lets just say thats 3-4x better than batteries available today in early 2012. These batteries wont be available until 2014 with smaller improvements between now and then (200-250 Wh/kg batteries available in late 2012-2013).

Extraordinary claims require extraordinary proof. 

Luckily, Envia seems to understand this. They’ve had the cells tested at private labs, and as well by the US Naval Surface Warfare Center. From the report’s conclusion.

The test results from the prototype cells tested at [NSWC] Crane were in line with the results obtained from the manufacturer. The claims of 400 Wh/Kg were substantiated through the cycling tests performed at Crane. This is a 160% energy density increase over the industry standard indicated in paragraph 5.1 [Panasonic's 2011 year 18650-cell battery, 3.6Ah 245Wh/kg]

The cells are built around a cathode licensed from Arggone National Labs. The cathode was first licensed in 2007. The anode is developed using the new silicon nano-technologies used in other batteries (the new late 2012 Panasonic and Sony cells are supposed to use Si anodes and a significant boost to capacity).

The second big announcement is price – they tout a $180/kWh price tag for these cells. That is approximately 1/4 the price of batteries in 2010, and 1/2 the price of batteries today, and roughly the price expected for batteries in 2015 (around when the cells are set to hit the market). The recent stories about Tesla replacement batteries costing $40,000 for 53kWh (full pack price), this would be only cost about $10,000 (batteries only). If you look at the Tesla Model S incremental battery prices ($10,000 for 20kWh more), this dramatically undercuts those prices by roughly half – instead of $10,000 more for 20kWh, it could eventually be $5,000 more.

Battery Math

These batteries are very well suited for full EVs. A 300-mile pack for a Nissan Leaf style vehicle would be the same size and weight as the current pack and cost about the same as the initial cost of the pack in 2011. The five characteristics – capacity, power, weight, volume and cycle life – are sufficient for EVs — 85kWh, 250kW, 210Kg, similar to the current pack size, and 275,000 miles on the pack to 80% original capacity. This battery would yield about 275-300 miles per charge. A cut down pack that offers 150 miles would offer 150,000 miles, along with half the weight and power (but still enough for an EV).

For plug-ins, these batteries would probably need to be in up-sized packs based on power needs (the pack needs to be able to produce enough power to push the vehicle up steep mountain grades and pass on the highway). So a Volt pack might go from 16 to 20kWh. The bouns would be more extended range (from 35 miles to 40-45), and longer life on the battery, the battery would still be smaller, lighter and cheaper (welcome back 5th seat!) at 1/2 the size, 50kg, and only around $3,500 instead of $8,000 or so.

It isn’t really suitable for hybrids or small plug-ins (Prius Plug-in), not without an adjustment to the manufacturing to change the battery characteristics from high density to high power (you’d want to sacrifice energy storage for power/kg).

HARP 2.0 – Part 1: Getting your ducks in a row

Posted on by
Reply

I’m in a severely underwater mortgage (175LTV), and when Obama announced HARP 2.0 in late 2011, it was a way to shave some money of my mortgage payment (and the administration hopes I put that money back into the economy in the form of consumer spending). This and future blog posts under the HARP title will chronicle my progress of going through the process and hopefully help others who want to do the same thing. Its a departure from the tech stuff I normally talk about, but there is a dearth of information out there about going through HARP 2.0.

The HARP program is long and complex, and every bank and loan servicer I’ve talked to (Wells, Chase, Quicken Loans) seems to follow their own set of rules even though there are the rules the government sets out (the only thing they all seem to agree on is anything limited by the Fannie Mae/Freddie Mac software they must use to underwrite the loan).

So the first step is to find out if your home loan is underwritten by Fannie Mae or Freddie Mac. Each one has tools on their website (Fannie, Freddie) to help you figure this out. If your loan is backed by either one and you haven’t missed any payments in the last 12 months, then you are eligible for HARP 2.0 (with a few other conditions). If its not backed by either one, then you might be eligible for HARP 3.0 or the upcoming settlement with the banks.

From this point, you can start the refinance process.

Your Steps

Start with your current mortgage servicer. Contact them about the HARP program, and go from there. Most institutions aren’t accepting HARP-based refinances from other banks as of the date this was posted. In my case, my mortgage servicer is not a lending institution but they referred me to a lending institution that picked me up and started the refi process straight away. If your loan is less than 125LTV you should be able to proceed now, if its at or above that amount (like mine), then you might be able to start getting your ducks in a row now, but nothing can officially start until March 15.

After March 15, it will be possible to “shop around” for HARP refinances, but it is still at the discretion of the lending institution as to whether they will accept loans serviced by other companies (HARP is itself voluntary, but refinancing to a lower monthly payment increases the likelihood people will stay in their home, so its in the bank’s interest to do it).

March 15, 2012

This date pops up a lot in the HARP program. Its the day Fannie and Freddie roll out the new version of their Desktop Underwriter (DU) software. This software update will allow institutions to evaluate loans from other institutions, and also for homes with greater than 125LTV to refinance. This is the day that refi applications like mine can be officially put into the system and the process started, and interest rates locked.

HARP 2.0 Flexibility

HARP 2.0 allows for a bit more flexibility than HARP 1.0 did. The two big features are the expansion of LTV ratios (to 300%) and the ability to shorten the term of the loan (you can go from 30 years to 20 or 15 years). An additional feature is not needing an appraisal of the house, they’re going to use a software algorithm to determine your home value based on comparable sales and foreclosures.

Paperwork

Things I needed to start the refi process (this is not a comprehensive list of what you might need, especially if you’re self employed, it may also vary from lender to lender).

  • W2/1099 forms
  • Recent bank statements (within the last 3 months)
  • Recent mortgage statement (within the last 3 months)
  • Pay stub (current)
  • Home insurance statement (current)

At this point I have all my paperwork ready except for the pay stub (it has to be the most recent one, so I wait). If I get it ready now, the loan will close quicker.

Crazy Idea: Apple should buy Clearwire, build iDevice LTE network

Posted on by
Reply

On a recent episode of Critical Path, it is noted that the fastest growing slice of the earnings pie for carriers around the world is data. Voice and SMS revenues are slumping, as users are turning to data networks for more and more of their communication. Phone apps like Apple’s iMessage and RIM’s BBM move text message traffic off SMS and to data networks. Phone calls will soon be replaced with Facetime calls when cellular networks are up to the task of carrying video traffic, with the exception of calling while driving.

If we look at Apple’s iPhone (and most cellular phones in general), the most disappointing facet of the device is often the carrier, specifically data traffic; followed closely by battery life (that’s another article entirely). So what is it that Apple can do to drive additional revenue as well as provide it a leg up on the competitions devices – tablets and phones, plus anything else they may think of in the future? It would need an end-run around the current cellular carriers. And this means owning and operating a cellular network.

This is initially difficult to do on a worldwide scale because of licensing issues. Each country has their own spectrum authority (FCC here in the USA), and the same slice of spectrum can be allocated for different uses around the world with the main exception of unlicensed ISM bands (2.4Ghz and 5Ghz for WiFi). Steve Jobsreportedly wanted to build their own network using these unlicensed ISM bands, but it was easy to see that it wouldn’t be technically possible.

Clear?

In the United States the obvious choice would be for them to acquire Clearwire’s spectrum and assets. Its market cap is incredibly low (less than $2B) and it doesn’t need a whole lot of cash to fix up ($900M in the next few yearsto build and operate a new LTE network), and is in desperate need of cash to pay its debt obligations, even choosing to skip a debt payment recently. Cheap considering how much spectrum they’re holding on to in major cities across the USA – 192MHz in many cities, 125MHz in NYC and as low as 75MHz in Detroit. The difficulty is that its majority owned by Sprint, however Sprint is in need of cash too and I expect it will have to be acquired by Verizon within the next five years if they don’t get their act together. Sprint seems less interested in Clearwire lately, especially since they announced they’re going on their own with LTE (using their own spectrum and Lightsquared spectrum instead of Clearwire spectrum). The downside to using Clearwire’s spectrum is that it is in the 2490-2690MHz band, which doesn’t have the best propagation characteristics (e.g. going through walls, into basements, etc). Apple would need to use their extensive antenna engineering knowledge to build a device that will still get fantastic reception even with poor signal strength.

The phone will still need (and should use) the voice networks from the old carriers. There is no need to build up that infrastructure again. Apple would roll out the TDD-LTE-Advanced (rel. 10) network on Clearwire’s 2.5-2.6Ghz spectrum in 2013 and provide tremendous speeds to end users – better than any of the current network carriers could offer. While LTE offers 10Mb/s down, the enormous spectrum holdings of Clearwire would allow speeds up to 50Mb/s on a regular basis, and peak speeds well above that. Putting their spectrum to use in a 50MHz TD-LTE-Adv configuration provides for over 250MB/s raw throughput (downlink, 2×2 MIMO) with user speeds around 20-50Mb/s and upload speeds around 10-15Mb/s.

How would the carriers react? A mixed bag – they’ve invested money in building up a network to handle tons of data, and while they might welcome Apple taking a load off their network (their CapEx would slow down dramatically, for a few quarters at least after rollout), they aren’t going to be happy with Apple taking revenue away – presumably because everyone could switch to no data plan or a minimum data plan for roaming outside of Apple’s initially incomplete network. But Apple recently just took a bite out of their revenue pie by introducing iMessage, reducing carrier revenue from text messages, though that is an order of magnitude smaller than the equivalent data revenues.

Killing Cable?

It also offers a hand in creating their own mini-cable system. With an abundance of spectrum, a separate 20MHz channel could be used just for broadcasting their own live TV on multicast – a 20Mhz channel (2×2 MIMO) with a 87:10 down/up ratio would have 120Mbs down, enough for 10 12Mbps 1080p feeds, the 8Mbps upstream channel would just be for device authentication and updates only. In true Apple/Pixar fashion, they’d only be showing a few choice channels with high quality content. During the low traffic periods of the day (would Apple sell informercials? I don’t think so…) they could turn off a few channels and stream prime content to the devices to be “unlocked” as prime-time TV shows. If they needed to increase throughput, they’d move to 4×4 MIMO and change the ratio to 90:7 for 255Mb/s down (21 channels 1080p channels) and a small control channel up.

Technical Difficulties

Apple would need to build dual-SIM devices, it would need a carrier SIM for voice and SMS, but an Apple SIM for data. However, Apple was rumored to be building a SIM replacement. This would allow for still one SIM card and Apple’s SIM would be based in software.

Building a network is no easy task, and considering that Clearwire is moving to a co-located configuration with Sprint (the same tower would have Sprint’s and Clearwire’s transmitters), any buy out might negate that cost-sharing benefit.

But overcoming one of the last poor aspects of the smartphone experience would be a huge deal, and give Apple a leg up on both other cellphone vendors and their carrier partners, at least here in the US.

Battery Magnitude

Posted on by
Reply

Recently, there was news on a new formulation of lithium-ion battery using a Si-Graphene anode that would provide for 10 times the charge in 10 times the power capacity that current lithium-ion batteries in the same size (and I’m assuming the same weight). Now the standard three to five years disclaimer applies – in that it has to be brought out of a lab, commercialized and they have to figure out how to mass-produce them and not lose any of their stand-out characteristics.

But it didn’t immediately seem apparent to most observers that it would be useful because of rapid capacity fade – the battery would only last 150 cycles before it had only 50% of it’s original capacity, although that is still five times current battery capacity. Traditional lithium-ion batteries last 300 cycles to 80%, lithium-polymer (the battery in your iPhone and Mac laptop) last about 1000 cycles to 80%, and lithium-titanate batteries can last 5000+ cycles to 80%.

The difficulty with the Si-Graphene battery is managing the user experience. If a user were to go through their entire battery in a day, every day, in 5 months they’ll only have half the capacity. So the device developers have to oversize the batteries but artificially clamp the energy storage to keep heavy users from destroying the battery in a short time frame.

Consumer Electronics? Sure…

Putting this battery into a smartphone to replace the current lithium-polymer battery would let average users go 10 days between charges. However every 250 days (25-30 charges) the user would notice they’ve lost a day of use before it was time to recharge, so from 10 days to 9 days. Will users be upset that they lost a day? Will they even notice? Or will they beat down the door of the store where they bought it demanding an exchange on a perfectly good product? How can we avoid this? By artificially limiting battery capacity.

If we were to limit the battery capacity artificially to a value that the 80th percentile user will have after 2 years of usage, we can save the trouble of users noticing their battery doesn’t last as long as it once did. I’ll assume this number is 75% of capacity, that is the 80th percentile user will go through enough battery capacity in two years that will cause a 30% capacity fade (this also factors in an increase in usage due to the bigger battery). So the phone will be setup so the average user can go 7 days before hitting the 25% warning and then recharging. Using 4Wh/day the user will go through 36.5 full cycles per year, which represents a 12% capacity fade per year. After two years, the capacity fade will be 24%. So after two and a half years, the average user will start to experience the battery holding less energy, and probably notice it around the end of year three – about which time the user will need to buy a new phone anyways as this one will be long out of warranty. An 80th percentile use will probably start to experience capacity fade earlier, around 18-24 months. A 95th percentile user is likely to do crazy stuff with their phone like stream audio all day and go through one cycle per day, and run into capacity fade in 6 months. This last case could actually be accounted for in software – if the phone notices its being used heavily it could ask the user to plug it in while engaging in the heavy activity, or just nerf capacity in software in the name of getting out of the warranty period without having to replace the battery.

Below is a chart of a traditional Li-Polymer batter (5.3) and a new Si-Graphene battery (53). You can see that the new battery has much larger capacity, it also fades much quicker. If you were to limit the Si-Graphene battery at 40Wh (40) capacity, the battery would get to two and a half years of average use before the user experienced any capacity fade.

The downside to this approach over traditional batteries is that users might increase their phone use and suck down more battery power per day knowing they have a lot more energy available to them, which is all the more reason to artificially limit capacity in the name of having the battery last long enough to have a useful device for 2-3 years.

The same results from the smartphone situation above would also apply to tablets. Laptop computers would probably see more agressive artificial capacity restrictions, as users usually run out of battery on the laptop before they are done with whatever they were doing (like doing internet research and writing a blog post about batteries ಠ_ಠ), so the issue of using more energy per day and higher annual cycle counts would apply.

Electric Vehicles? Not so fast…

If the approach of limiting battery capacity in the name of extending its life sounds familiar, it should, as it is how the battery in the Chevy Volt is managed. So what would happen if you applied this to the battery in the Volt? Not much difference, and probably an increase in cost.

If you recharge the Chevy Volt once a day, 365 days per year, it is equivalent to 237 full battery cycles per year (10.4kWh used for 35 miles, 16kWh capacity), and the battery type they use is expected to have a life of 1500 cycles (without any depth of discharge reduction bonuses). But if you were to drop-in a replacement battery with this new technology (assuming same size, weight, etc), you’d have a 160kWh battery. Now that doesn’t mean you drive 10 times as far, rather you just use an increasingly small portion of the battery, specifically an initial depth of discharge of 6.5%, and a rate of 25 full cycles per year. By the end of year 10, or 250 cycles, the battery would have degraded enough where it will start to run into problems storing and producing enough energy (assuming they can last that long from a calendar standpoint). This doesn’t appear to be a significant change from the current battery regimen, where the battery is warrantied for 8 years or 100,000 miles (12,500 miles per year). The only benefit to using the Si-Graphene batteries would be the increased power output – a Volt’s 9-second 0-60mph times could improve dramatically, along with faster recharging times.

What would help

The problem with this is that batteries are predominately priced in $/kWh, which would make the above scenarios prohibitive. The fundamental question is would it be more appropriate to charge by mass and volume? Does it cost 10 times the amount of making traditional batteries to these batteries? I don’t think it will. They might be able to charge more than the highest end batteries, but the $/kWh would need to be discounted compared to other types of batteries that have higher cycle lives. The best figure to use when it comes to battery prices is $/lifetime kWh, or the amount of energy a given battery will output until its no longer usable for the specific application (e.g. smartphone, EV, etc). A battery might cost $700/1500 kWh lifetime, and it might not matter that its 1kWh of storage for 1500 cycles or 10kWh for 150 cycles for certain applications – assuming other factors are held constant (volume, weight, safety). In fact, the latter configuration helps in applications where power demand is high (e.g. a car).

So the most basic thing to help these batteries would be an increase in cycle life. Even a relatively small increase in cycle life would dramatically impact the usefulness and increase the impact these batteries can have.