Archive for March, 2013

Ask Mark & Sheila: Polybutylene Pipes Burst… Who Is Responsible?

Written by Mark T Fiedler - The Mark and Sheila Team
March 27th, 2013

Q: My house had to be completely replumbed at a cost of thousands of dollars. I was told that inferior pipes were installed by the builder (Amrep). My neighbors are going through the same thing and it’s not the cold weather causing their pipes to suddenly burst. One of the plumbers told me that the cause of all this was actually that the water pressure in the neighborhood was too high. Doesn’t this make the Water Company responsible for all these breakages? We have no way to recoup this tremendous expense as homeowners insurance does not cover this loss. Can you research this problem? PL in Rio Rancho.

A: This is such a common question and concern of Rio Rancho residents, we’re going to spend some extra ink to give you and your neighbors the full story. You did not explain what happened in your home that caused you to replumb it. Usually if a pipe in the wall bursts without outside influence, homeowners insurance companies will cover the loss. They usually won’t replumb the whole house, they’ll just repair the break and any water damage.

Based upon the info you supplied, you probably had polybutylene pipe in your home prior to repiping. Originally referred to as ”The Pipe of the Future”, polybutylene is a semi rigid gray colored plastic pipe which allowed Amrep and other builders across the country to build homes a little quicker and at a lower cost than if they used copper plumbing. Polybutylene pipe had been used successfully in Europe and Asia for many years before a variant of the product was installed in 6-10 million structures in the U.S. The variant used a slightly different material, which was not as durable. In Amrep’s case, during the first few years of use the plumbers doing the installation had issues with making the crimp connections properly. If their tools were not correctly calibrated, they could make too loose a connection, making a future leak likely. If the tool was set a little too tight, they could overstress the pipe at the connection. Eventually microfractures at that joint could become macrofractures, causing a failure. Over time, the installation problems were solved, and the crimp-on connections were changed from plastic bands to copper ones.

The primary failures in plumbing systems in the Amrep homes changed from failures at the crimp connections to mid – pipe failures, often inside walls or under concrete slabs. The theory is that chemicals used to disinfect city water cause a breakdown in the material. The pipes flake and disintegrate from the inside out, making it impossible to know where a failure will occur. It is also known that the pipe does not react well to high water temperatures, usually found within 10 feet of a water heater. Pipe close to the water heater should be copper, or other material which is not so temperature sensitive and then transition to plastic pipe, if that is what you have.

In 1995 a large class action lawsuit against Shell Chemical Company and several other pipe and fitting manufacturers was settled prior to trial and a fund of over $1 Billion was set up to make repairs and to replumb homes that qualified. For many years plumbers put their children through college with the money paid out from this settlement. Not all claims made were legitimate, and there was a lot of misinformation out there. The time for claims to be made under this settlement has now expired, so you can no longer make a claim for reimbursement.

Insurance companies have different attitudes when it comes to polybutylene pipe. Several of the major companies will not knowingly insure a home plumbed with this material. Others have no restriction against it initially, however, if you have a sudden plumbing failure and make a water damage claim, most will pay the claim and then may cancel your insurance policy. If you totally replumb your home with another type of pipe, they may continue to insure the property (unless they determine that the cause of the plumbing failure is likely to reoccur). If you make two water damage claims against your homeowners policy in a five year period, you may not be able to get homeowners insurance at all without paying two to three times the premium amount for a high risk policy. This is one reason to think twice before reporting a loss to your insurance company if the amount of damage is near or below your deductible. They won’t pay you anything and you’ll still get a strike against your claims history.

We talked with Larry Webb, Rio Rancho Utility Division Manager about the water pressure issue. Depending upon where you live, you could very well have higher than normal water pressure at your home. Rio Rancho is hilly in many areas. To get water to homes at the top of a hill, they may have to boost the water pressure at the main. Homes on the same main line near the bottom of the hill would experience higher pressure. Normal water pressure for a home is between 65 and 80 psi (pounds per square inch). According to Mr. Webb, city ordinance authorizes the utility to supply water at between 30 and 125 psi. We have personally seen homes in town where the water pressure was at 125 psi, but never higher. The thing is, if your pipes are in marginal condition, water pressure at the higher range could increase your chance of a leak or an outright plumbing failure. We have actually seen homes where they had a blowout due to high water pressure, had repairs paid for by their insurance company, then had another one within a couple months. To keep this from being an issue, residents where the water pressure is high should consider installing a pressure regulating valve behind the water meter on their main water line. Estimates we got ranged from $250-400 for a plumber to install one. You should also install a thermal expansion tank on your water heater at the same time. When a pressure regulating valve is installed, your home becomes a “closed system”. When you heat the water in your water heater, it expands. If you do not have an expansion tank, this can over pressurize your plumbing, risking damage. This is a $50 part, and takes a couple hours to install. This is cheap compared to dealing with a leak or other plumbing failure, and would have kept the aforementioned homeowners from having a second blowout.

You said that you had replumbed your entire home, but did not share what type of new pipe was used. Here’s a little guidance for your neighbors who might need to do so in the future: There are three types of pipe commonly being used for re-pipes in this area. The gold standard was and still is, Type L copper pipe. This is slightly thicker than type M, and will probably last longer. The cost of copper has shot up in recent years, and proper installation requires some skill and experience, as joints need to be made using solder and a torch. It is pressured rated at 582 psi at 100 degrees Fahrenheit and 475 psi at 200 degrees. If the home is on a raised foundation and the plumbing is in a crawlspace below, be sure to secure the access, as thieves have been known to tear out copper plumbing for the scrap value if they can get to it. Copper pipe is very thermally conductive, and is subject to damage from freezing. The second type of pipe is AquaPex, or Pex pipe, which is cross-linked polyethylene. It is flexible, easy to install, and can often handle freezing temperatures without damage. The joints are crimped in a way similar to polybutylene. AquaPex is rated at 200 psi at 80 degrees and 100 psi at 180 degrees. When used for hot water, if your pressure is too high, you could be exceeding its rated capacity. Most new homes today are being plumbed with this type of pipe. The third type in current use (and the cheapest) is CPVC. It is a white, semi-rigid plastic pipe which is very similar to polybutylene in many ways. It is installed using glue on fittings. It is rated at 480 psi at 73 degrees and 96 psi at 200 degrees. It is sensitive to UV exposure, so it needs to be kept out of sunlight. Over time it can become brittle, so it might not do well if exposed to very cold temperatures. Neither of the plastic pipes should be used where animals or vermin might be able to access it, as they could gnaw through it.

All the plumbers we talked with were in agreement about one thing: No type of pipe lasts forever. While copper pipe sometimes lasts 30-50 years under ideal conditions, plastic pipe may only last 20-25. In some parts of Albuquerque, copper pipe can deteriorate and fail in only 5 years if installed underground, due to the PH of the soil. You need to pick the product which is best suited for your home and your budget, install a pressure regulating valve and an expansion tank if needed, and understand that your home may very well outlast the current plumbing.

Ask Mark & Sheila: FHA Rule Changes

Written by Mark T Fiedler - The Mark and Sheila Team
March 27th, 2013

Q: I have been looking for a home to buy, maybe in Northern Meadows as soon as I have the down payment saved. I am prequalified for an FHA mortgage, which means I’ll only need to save 3.5% of the purchase price. My concern is that I’ve read that the FHA may be insolvent soon because of their foreclosure losses over the last few years. What should I do? Celestina in Rio Rancho

A: In November 2012, the FHA held a press conference and did indeed disclose that their capital reserve ratio of the MMI Fund (Mutual Mortgage Insurance) used to support FHA’s single family home and reverse mortgage insurance programs were at a negative 1.44 percent. Without explaining the math, their reserves against losses are well below where they should be. In spite of this, the FHA is backed by the federal government (that means you and me, the taxpayers) and they will not be defaulting anytime soon. However, the FHA mortgage program is supposed to be self sustaining, so they do have to make changes. Earlier in 2012 the FHA raised the amount paid for up front mortgage insurance from 1.25% of the loan amount to 1.75%. This increase started to rebuild the reserve funds, but it wasn’t enough.

FHA mortgage holders not only pay the up front mortgage insurance, but they also pay a monthly mortgage insurance fee. In 2012 the rules read that after at least five years and if the mortgage balance has fallen below 78% of the home’s value (based upon the scheduled principal reduction), a borrower could stop paying the monthly mortgage insurance. On a $150,000 mortgage, would mean a reduction in the mortgage payment of $156.25 (at the 1.25% rate). On January 31, 2013 the FHA announced that they were making the monthly mortgage insurance permanent on all their new loans. Starting June 1st, 2013, new FHA loan holders will contribute this money every month for as long as the loan stays in place. The amount of the monthly mortgage premium payments will also go up by about 8% on new loans starting April 1st, 2013. (The above effective dates are not the date the transaction closes, but the date the lender gets a new case number for your loan in process.) These permanent payments will help rebuild the FHA reserves. If you are considering making a purchase utilizing FHA financing, you might want to get off the fence and find a home prior to this policy change going into effect. If you already have an FHA loan, the original terms will not be changing.

Ask Mark & Sheila: Unser and Abrazo 4 Plexes

Written by Mark T Fiedler - The Mark and Sheila Team
March 27th, 2013

Q: I drive up and down Unser Blvd. practically every day, and I’ve noticed crews working on the 4-plexes that were never finished near Abrazo and Unser. What are they going to do with that project? Can I buy one of the buildings for investment when they are done? Larry in Rio Rancho

A: We’ve been asked about this project every month for the last couple years, and we’re happy to finally be able to give an uplifting answer! First, here is the history of the project: The units were originally built as standalone 4-plexes to be sold individually to investors. The construction was being financed by First Community Bank. First Community was closed by NM State Regulators in January 2011 and sold by the FDIC to U.S. Bank. When the bank closed, the builder’s access to the funds needed to complete the project disappeared. Since First Community was closed due to allegedly making bad commercial real estate loans, US Bank couldn’t very well make the same mistake, so the project was effectively shut down. The buildings were foreclosed upon and sat, deteriorating for a long time. They were purchased by the Lissoy Family Trust in the Summer of 2012 and planning to complete them was begun. Engineers evaluated each structure, some of which were pretty much completed, and some that never even got wrapped and stuccoed. According to Scott Lissoy, who is heading up the project, any deteriorated materials have been repaired or replaced and interior work is progressing.

The project’s original name, Puerto del Sol may or may not survive, but the owners have big plans. 18 additional buildings are underway, for a total of 128 units when the project is complete. None of the buildings will be sold, as was the original plan. All will be leased to tenants, starting in Spring, 2013. The new plan includes a clubhouse with a gym, a tot lot and an outdoor pool. All the units are 3 bedrooms, 2 baths and between 1040 and 1140 square feet. Each unit will have a single carport for covered parking. The upstairs units will have a fireplace and vaulted ceilings. Plans call for upgraded kitchens with slab granite counters, stain grade cabinets and stainless steel appliances. Some of the upstairs units should have really great views of the Sandias as well. It sounds to us like this will be a great final outcome for this project, which has been an eyesore for so long.

2093 Clearwater Loop NE Rio Rancho

Written by Mark T Fiedler - The Mark and Sheila Team
March 20th, 2013

4 Bedrooms, 3 Bathrooms, 3211 Square Feet

Built into a hill, it looks like a 1 story home from the front, but a lower level walkout gives access to the back yard. The 180 degree mountain view from the upstairs deck and main living area is breathtaking. The flooring everywhere but the kitchen and baths is 3/4 inch oak planking. There is surround sound wiring in 3 rooms, security cameras at every entrance, ethernet throughout and more. A huge basement storage space runs the width of the house plus there is an RV pad with 50amp service.

218 2nd St SE Rio Rancho

Written by Mark T Fiedler - The Mark and Sheila Team
March 6th, 2013

3 Bedrooms, 2 Bathrooms, 3426 Square Feet

Its all about space – LOTS OF SPACE! This rambling ranch style home goes on and on. There are 3 living spaces – a formal living room, a family room and a rec room. The laundry room is not just spacious, its large enough to double as an office! The 2nd and 3rd bedrooms are roomy enough to use as a barracks. The roof was new in 2012. The oversized detached garage has a single width door front and back. The back yard goes on and on (.85 acres) with access for an RV or just about anything else!