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from Local Attorney, Michael H. Wasserman

Thursday, December 27, 2007

MORTGAGE COSTS, GOING UP!

Matt Carter of Inman Real Estate News reports today that the bad news seems to be getting worse for home buyers; not only is getting harder to qualify for mortgage loan, the costs of those loans are going to rise next March.

The cost of private mortgage insurance -- required by most lenders on loans with less than a 20 percent down payment -- is going up, even for borrowers with credit scores considered well above subprime.

Government-chartered mortgage financers Fannie Mae and Freddie Mac have increased surcharges for borrowers with credit scores below 680, well above the 620 threshold sometimes used to define subprime borrowers, and will require down payments of at least 5 percent on all loans in "declining markets." New flow business pricing announced in November by Fannie and Freddie create new surcharges on most loans purchased after March 1 for borrowers with credit scores below 680. The surcharges range from 0.75 percent for borrowers with FICO scores between 660 and 679 to 2 percent for borrowers with scores less than 620. Lenders are already passing the new loan-level price adjustments -- which apply to loans with down payments of less than 30 percent -- on to borrowers.

Private mortgage insurers PMI Group Inc. and MGIC Investment Corp. have raised or are raising rates for borrowers with lower credit scores and loan-to-value (LTVs) ratios above 95 percent. Both companies have discontinued mortgage insurance on loans with LTVs above 95 percent for borrowers with credit scores below 620.


Wednesday, December 19, 2007

A Primer on Sub Prime Lending

John Vogel, Jr. of Dartmouth's Tuck School of Business explains the sub-prime lending market and the roots of its collapse.

Friday, December 14, 2007

Countrywide Financial under investigation in Illinois

According to this morning's Belleville News-Democrat, Attorney General Lisa Madigan has launched an investigation into Countrywide's business practices. Other lenders may be next as the probe continues.

The inquiry focuses on why people who appear to us to not be able to afford the loans they're in were able to get those loans and how Countrywide, the nations biggest mortgage lender may have contributed to that.

The AG is looking at how loans were originated, funded and sold "all the way up the line."

stay tuned for details!

Tuesday, December 11, 2007

New Water Department Fees for Chicago Homer Sellers

For years, and with very few exceptions, home sellers in Chicago have had to prove at closing that their municipal water & sewer bills were paid in full. Naturally, the City of Chicago's Department of Water Management has charged a modest fee to produce the required certification.

Effective December 17, 2007, that fee will increase from $25 to $50.

The new requirement will also apply to condominiums, a practice that was discontinued back in 2004, when the department was plagued by certain irregularities (scandals) and the volume of closings caused massive delays in getting such certifications processed.

There has been very little publicity about this change so I expect that more than a few closings are going to be delayed or skewered as uninformed condo sellers and their lawyers scramble to obtain the necessary paperwork. Making things worse, I understand that there have been several recent departmental layoffs so do not be surprised when you re-acquaint yourself with those nasty long lines at the department's service counter and payment window.

The measure is expected to generate $11 million in new revenue for the City.

Monday, December 10, 2007

Cycling and Real Estate - a perfect match!

We cyclists have long know the benefits of riding; its fun (!), healthy, environmentally friendly, and offers us a great way to experience the streets and neighborhoods we traverse.

Boulder, Colorado real estate agent and triathlete Matt Kolb has taken cycling to a new level and created a new paradigm for his brokerage Pedal to Properties as his agents now offer clients the opportunity to tour homes via cruiser bikes! What an efficient and fun way to tour multiple homes in a given area and check out the neighborhood at the same time!

Given that I am watching a freezing rain fall outside my window as I write this, it is a bit hard for me to imagine that anyone is going to bring this concept to Chicago any time soon, but come the spring, I cannot wait to see who is going to try this first!

Sunday, December 9, 2007

Golfer Dedicates Win to Grateful Dead

SIEM REAP, Cambodia (AFP) — American golfer Bryan Saltus secured his maiden Asian Tour title at the Johnnie Walker Cambodian Open after a solid five-under-par 67 in the final round on Sunday.

"This is awesome. I would like to dedicate this win to Grateful Dead as they have inspired me all the way. Siem Reap is right up my alley so I've enjoyed my time on and off the course this week," said Saltus, who is an avid Grateful Dead fan, having been to 153 concerts.

full story

Saturday, December 8, 2007

Giving Thanks

Chicago Tribune business section reporter Barbara Rose recently filed a story about a growing trend: businesses sending thanksgiving cards to customers in lieu of Christmas greetings. Not that I am any sort of trend setter, but I adopted this practice several years ago. Saying thank you to clients is only right, and it just makes the most sense to me to do it around a holiday specifically created for that purpose. Getting my cards out before the onslaught from my colleagues and vendors? So much the better. Ms Rose's article, quoting yours truly, available here. A for the record, no, I am pretty sure that I am not the "holiday creep" she references.

Friday, December 7, 2007

Bike Winter!

Lest anyone think i am mad for proposing a bike ride to take up ones idle time, waiting for the phone to ring with a new real estate matter,....
here's a video by bike winter commuter Steven Lane.
i'm not (yet) this hard core, but here's to those Hart soles who are.

more info?
bikewinter!

Too Much Time on My Hands - On Surviving the Real Estate Slow Down

Washington, D.C. real estate attorney Pamela Rothenberg hit the nail on the head in today's Legal Times. Real Estate is a cyclical market. There are booms and busts. Anyone who has practiced in this field long enough knows that the pendulum swings back and forth. Rothenberg describes the angst of the real estate attorney watching yet another tilt in the "wrong" direction.

My job is to help my clients buy and sell. When they are frustrated in their pursuits, I am too.

So, its pretty horrific having to watch owners who (sometimes desperately) want to sell, unable to find buyers willing or able to buy. Its sad to witness sellers pay money at a closing to make up the difference between what is gained at sale and what is owed to mortgage and lien holders. It is annoying to try to negotiate short sales with lenders (themselves desperate not to lose money in behalf of sellers who cannot sell for enough money to repay their loans in full, and it is no easier watching a willing buyer unable to satisfy lender "guidelines" that seem to change hour to hour these days.

Getting an contract to closing is hard and its getting harder. We of course make up for the increased ratios of "drama to contract" by having fewer contracts to work on.

Now don't get me wrong. Sure I want to make a living, and I want escpecially to make my living representing buyers and sellers in their dealings. But my relative volumes of business and income have never really been a large priority for me. I'm the guy who reminds everyone at a three hour closings that we are lucky to truly like what we do. I get alot of muted laughs and cynical looks when I say this, but the weird thing is that I really mean it. Don't cry for me Argentina, and all that. Its hard work and there may be a few lean months on the horizon, but the pendulum will swing back the other way. All in good time.

The real problem for me is figuring out what to do with my "spare" time now that the phone isn't ringing 24/7 and the time lag between closings increases. Rothenberg voices this same facet of the slow-down -> we just can't seem to....

If you are like us and find yourself with too much time on your hands, check out her very good suggestions. Then get out on your bicycle or take a walk, and enjoy the quite time while you still can.

Tuesday, December 4, 2007

WELCOME

So, either hell has frozen, or I ran out of productive things to do and decided to experiment with the blogosphere.

The premise here, frankly, is absurd: Lawyers with opinions? Who will share them, unsolicited, with the world at large? For free? Go figure.

Professionaly, my universe is fairly well limited these days to helping buyers and sellers survive the bizzare ritual practice commonly known as the residential real estate transaction.

At first blush, what could possibly be simpler - buyer and seller agree on a price; buyer gives seller money, seller gives buyer keys, fini!

Sadly, the process has become much much more complicated. A sad, sad combination of lawyers, institutional investors; red tape; governmental regulation. Arrgh!!! Factor in the emotional and psychological overlays that crop up for many of us when we make these large dollar transactions (when else do most of us deal in these numbers except when we buy and sell our homes?) Its enough to scream, and all too often I do.

My aim here is to present some of the challenges and obstacles we see in our real estate dealings and in the larger community, together (we hope) with strategies and gambits we are using to meet these ever changing conditions.

if you find value here, dont keep it a secret. tell your friends.
until then,
cheers!