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Showing posts from January, 2008

Even PROPERTY TAX RELIEF FOR (most) HOMEOWNERS !

All Illinois homeowners will be eligible for at least some property tax relief with regard to their qualifying principal residences, as part a new law, passed in October, 2007.

The GENERAL HOMESTEAD Exemption is granted to properties that are the owners’ principal residence. The exemption reduces a property’s “Equalized Assessed Value” (EAV), one of the three critical data points used in calculating tax bills (together with the local tax rate and state equalization factors).

Effective with the 2008 tax year (payable in 2009) the maximum homestead exemption will rise from $5,000 to $5,500. In 2009 (payable in 2010) the maximum will increase to $6,000.

PROPERTY TAX RELIEF FOR SENIORS TOO !

Illinois homeowners who are also SENIOR CITIZENS will be eligible for at least some property tax relief with regard to their qualifying principal residences, as part a new law, passed in October, 2007.

The SENIOR CITIZEN Homestead Exemption, granted to persons that are 65 years old or older for their principal residence, will increase from $3,500 to $4,000 effective with the 2008 tax year (payable in 2009).

The exemption reduces a property’s “Equalized Assessed Value” (EAV), one of the three critical data points used in calculating tax bills (together with the local tax rate and state equalization factors).

The SENIOR CITIZEN ASSESSMENT FREEZE Exemption freezes a property’s EAV, provided that the maximum household income does not exceed a stated amount. That income level increases from $50,000 to $55,000, effective with the 2008 tax year (payable in 2009).

The exemption reduces a property’s “Equalized Assessed Value” (EAV), one of the three critical data points used in calculating tax bi…

PROPERTY TAX RELIEF FOR VETERANS and the DISABLED PERSONS

More Illinois veterans and disabled persons will be eligible for property tax relief as part a new law, passed in October, 2007.

Starting with 2007 property tax bills (payable in 2008) the following NEW tax exemptions will be available to qualifying homeowners:

The RETURNING VETERANS Homestead Exemption, affords a one time $5,000 reduction of a property’s “Equalized Assessed Value” (EAV) to veterans returning to Illinois from active duty in an armed conflict involving the armed forces of the United States.

The DISABLED PERSONS Homestead Exemption, affords a $2,000 reduction in EAV to qualifying property owned by a disabled person. The exemption may be taken every year, provided an annual application is filed with the County.

The DISABLED VETEREANS’ STANDARD Homestead Exemption will also reduce EAV to qualifying properties owned by vetereans who suffered service connected disabilities (certified by the US Department of Veterans’ Affairs) and for which annaial applications are filed with t…

(Some) new Mortgage Woes for Anyone in the New Contruction Mortgage Market

As many bad experiences as I am subjected to when working with inept or indifferent mortgage brokers, I really do appreciate the good ones. One such Mortgage Broker is Richard Cohen of Professional Mortgage Partners. I have been fortunate to have worked with Richard several times over the last few years. Aside from being a customer-oriented and hard working lending professional, he is a nice guy and a good writer.

Richard recently described the currently mortgage for buyers and sellers of new construction condominiums - (stop me if you've heard this before) - things are getting tougher.

He writes:
In the last several years, buyers of new condo projects had little difficulty in obtaining loans. It didn't matter if the condo was warrantable (in essence: certified by the lender that the condo meets Fannie Mae/Freddie Mac condo guidelines) or non-warrantable (not certified to the guidelines). A buyer could be the first one in the complex and have no issues. Things have changed in t…
Chicago Attorney Peter Olson operates a general civil practice not unlike my own. He also blogs actively on Chicago area real estate matters at Closing Real Estate in Chicago.

I don't know him personally yet, but I owe him some modest debt of gratitude for inspiring me to start this blawg. I have been looking at Peter's musings and alerts for some time now. If you have not seen it yet, you might probably ought to.

Now that I have praised him, lets all agree that he may have questionable tastes in regard to reviews of other blogs...

(thanks Peter, its nice to get noticed)

How Mortgage Fraud Can Destroy a Neighborhood

updated - Feb. 6, 2008

We all know that the mortgage industry is in turmoil and that local, national and global economies are all reeling as a result. The losses announced by lenders are surreal. For the most part, the numbers are too staggeringly large to comprehend. There is plenty of finger pointing going on, some of which has been detailed on this site. Certainly, some borrowers got in over their heads; others never understood what they were getting into in the first place; institutional investors demanded more “product” from loan originators who in turn utilized relaxed guidelines (loan approval standards) and gimmick loans to encourage more money lending. None acted alone or in a vacuum. Each parties “fault” is inter-twined with the others. There is shared culpability, more than enough for everyone.

As with most things in our society, clever, nefarious individuals and collectives find ways to take full advantage of these situations. Mortgage scammers took millions of mortgage doll…

The Mortgage Graveyard -

Here's a pretty grim web page -> The MortgageDaily.com, a subscription site that covers the mortgage industry, has gone live withe the Mortgage Graveyard which details historical data of failed, bankrupt, acquired/merged, and struggling lenders. the data goes back to 1999. Your gonna have to subscribe to the service to actually read the details underlying the numbers on this page, but does make a rather impressive point about the breadth and depth of the carnage

According to the Wall Street Journal, the Mortgage Daily project joins an already crowded field of online lists of failures in the wake of our subprime mortgage "situation," including Aaron Krowne’s Mortgage Lender Implode-O-Meter, SNL Financial’s subprime scorecard, and National Mortgage New's list of defunct firms.

Market Slow Down? Blame your Agent!!!

Who takes the blame when a buyer over-pays for a property? That question is about to be answered in a North County, California courtroom.

It seems that disgruntled Buyer Marty Ummel thinks that she over-paid for her new home, perhaps as much as $100,000 too much. How upset did that make her? Upset enough to have sued her real estate agent, her mortgage broker and the mortgage company's appraiser. The claim seems to be that they (the professionals knew she was overpaying, but withheld information from her so as not to "lose the deal." The appraiser and mortgage broker have already "settled out" but the case against the agent will be presented in court next week.

Its easy to write this one off as another case of someone refusing to accept personal responsibility for a mistake or for a bad decision. Blaming the other guy it seems is the "american way."

The buyer may have taken guidance from the agent and placed misplaced reliance on the appraisal, but shoul…

Buy a House, Save a Municipal Pension.... (part 2)

Now that the State legislature approved the Hamos bill (our mass transit bail out) all eyes turnb to the City Council who must now vote on the proposed transfer tax increase. As realtors and others in the industry wring their hands with worry about how the increased fee will effect the already slow market, it looks like our neighbor to the north in Evanston may well get into the act themselves.

I'll explain in a minute, if you'lll indulge me this digression about my closing this morning.

Most of the parties late to arrive, as they all had trouble finding nearby parking. One of the real estate agent proudly announced that she avoided that problem by riding the el. She proceeded to grimace, look the buyer in the face, and comment to the effect that at least she (the buyer) saved money by closing before the City raised the transfer tax. She proceeded to lambast the legislature for making her poor buyers bear the brunt of saving the transit workers pension funds. I, rather smugly, …

Walk Score - a new tool for home buyers

Did you hear the news? Apparently oil prices have been rising, and gas for our cars is getting more expensive. Then there's also something or other about global climate change and carbon emissions and such. Oh, and the kids are all getting really, really fat. Obesity seems to create health problems and there is some crisis or other in the healthcare industry too. Wow, I though the real estate market slow down and mortgage lending crises were a mess.

So much bad news.

So, here is a neat tool that could help buyers, renters, and their agents identify properties in neighborhoods that are "walkable." Enter a street address into the system and walk score will show you a map of what's nearby and calculate a "Walk Score" rating of the relative "walkability" of the area for you. Its not perfect, but hey - its a (great) start and a really cool idea.

Pick the right house - reduce your dependence on the car; get some exercise; support your local (micro…

Market Slow Down? Recession? Not for the FBI, anyway

I posted last week about concerns that arson claims will increase as borrowers fall behind on their mortgages. Looks like that they aren't the only scammers out there....

The FBI has announced that mortgage fraud investigations tripled during the last fiscal year compared to 2003. Conviction rates may not be holding pace (they doubled in 2007). Fear not, Financial crimes section cheif Sharon Ormsby predicts that the number will likely rise this year.

The prime growth areas in this field? what else but sub-prime/distressed borrower situations and reverse mortgages held by senior citizens.

Source: Donna Leinwand, USA Today (01/14/08)

the 4 most dangerous words your loan officer will ever tell you: "Your Loan is Approved"

Most loan officers I work with are nice people. They are hard working. They are well intentioned. They want to make loans for the buyers they work with. Turns out however, that many of them speak an entirely different sort of English than the rest of us.


When your friendly loan officer assures that "your loan is approved," she does not necessarily mean that you are going to get your loan. "Approved" does not mean "Approved!" weird, huh?

Most Buyers who hear this however are willing to take the Loan Officer at his work and they direct me to waive their mortgage financing contingencies. BAD MISTAKE.

Two or three weeks later, when that same loan officer tells those same buyers that the underwriter denied their loans, it is too late. The protection of that contract provision is long gone and, in the worst of situations, so it that Buyer's earnest money and dream of buying that dream home.

The loan officers, like D-Day in the 1978 Film Classic, Animal Hous…

Save Public Transportation -> Buy a House !

Until this morning, few of us would have made a direct connection between the funding of public transportation in the metropolitan Chicago area and real estate conveyancing.

But now the link has been established and it spells bad news for anyone wanting to buy or sell real estate in the City of Chicago. Buyers about to absorb the brunt of yet another closing cost increase; a possible (likely) 40% increase in the amount of the City of Chicago Real Property Transfer Tax.

With just five days left until the 3rd public transit funding "doomsday" in the last six months, the cat has finally jumped out of the bag. This morning, we all woke to the news that the proposed transit "bail out" will be funded by a combination of local county sales tax increases, state general funds, and that transfer tax increase.

Never mind that the transfer tax is levied by a completely different body of government - the City of Chicago and not the State. We must all prepare for the coming reali…

Hey Buddy, Got a Match? (or, How to Get Out from Under Your Mortgage with just NO easy payments

Here's more proof that I am a better lawyer than white collar criminal. If they would only use their higher level thinking for good and not evil....

The time honored tradition of burning one's note and mortgage AFTER the loan has been repaid seems to be falling victim to our short attention spans, need for immediate gratification, - and harder economic times.

Seems that "with the national foreclosure rate zooming and the real estate market in a two-year funk, the insurance industry fears more homeowners will see arson as a way out of their financial woes. A recent report by the industry-funded Coalition Against Insurance Fraud notes that with "untold thousands of homeowners struggling with ballooning subprime mortgage payments, fraud fighters are watching closely for a spike in arsons by desperate homeowners who can no longer afford their home payments." more details in the CNN press release of the full report from Fortune Magazine

Following the perverse logic th…

The Bizzare Rituals of Mortgage Lending

My brother, a corporate lawyer, used to carry a bag of lapel buttons with him in his attache. When one of his deals took an odd turn, he would whip one out and offer it to his opposing counsel. They bore the legend "thank you, for turning a routine transaction into a bizarre ritual" I've coveted those buttons for years.

Just imagine how many I'd have to print, if I could only find a way to meet the mortgage underwriters my clients are subjected to. If there were ever an industry that specialized in the bizarre, could anyone do better than the mortgage underwriters?

In the past four days, I have seen
A lender demand a sales contract be modified to exclude the seller's bar stools from the transactionA lender assert that Fannie Mae guidelines require a 6 unit condo association hire a lawyer to give a written opinion that the association meets all FHA guidelines and is properly organizedAnother lender refuse to consider the rental income generated by a four flat under c…

Income Tax Deductions for (some) PMI payments extended until 2010

Most recent news relating to the costs home buyers must pay has been bad. Its not only getting harder to obtain the mortgage financing, its getting more expensive to do so. Finally, some good news for at least some of us. The Feds have finally gotten around to extending the income tax deductability of private mortgage insurance (PMI) through 2010.The tax deduction is available to mortgagors
(1) of a personal residence and a non-rental second home,(2) that originated after January 1, 2007.
(3) for the purchase or refinance, provided that the loan amount did not exceed the acquisition loan amount.
(4) BUT ONLY IF your family may earns no more than $100,000 per year. If your family’s income is over $109,000, the PMI deduction will not apply. The deduction is reduced by 10% for each additional $1,000 of household income, in between.

hey - its better than nothing!

2008 market outlook

Real Estate Agent Peter Fugiel's 2008 market outlook report for the Chicago area sets out a pretty thorough analysis of the local market conditions. On the whole, a pretty positive assessment and an interesting read. American real estate is still right up there with other high demand world markets. American real estate, like oil, scarce commodities, fine art, and an American college education, are all still in wide demand. The full report is available on my web site.