Skip to main content

Posts

Showing posts from May, 2008

CONSUMER "CONFUSION" LEADS TO HIGHER LOAN CLOSING COSTS

Yesterday, the United States Department of Housing and Urban Development released a study conducted by the Urban Institute that suggests that "[m]any American consumers overpay by thousands of dollars in total closing costs when they purchase their homes. There are significant and unsupported variations in loan charges, title fees and other closing costs charged to unsuspecting (most typically minority) home buyers.

The study found significant disparities in closing costs even when it compared borrowers with identical credit scores, loan terms and mortgage amounts. Variations appeared to be based on education level, geography, race and ethnicity.

Of course, in an information-era, free market system this shouldn't happen. HUD mandates that all mortgage loan applicants receive two critical documents: a "Good Faith Estimate of Closing Costs" and a "Truth in Lending Disclosure Statement" (the "TIL") that should enable consumers to compare the costs of…

FBI: ILLINOIS IN THE TOP TEN STATES FOR MORTGAGE FRAUD (again)

The FBI has released its "2007 Mortgage Fraud Report." Its a fascinating study and quick read. It covers all the basic types of mortgage scams and cites statistics from several different sources. An excellent overview of the scope and magnitude of the problem, including a particularly fascinating description of "short sale" and "mortgage rescue" scams that are particularly popular in the current market climate.

Illinois (again), makes it into the national top ten for states most effected by such criminal activity.

CHICAGO TRANSFER TAX takes ANOTHER BITE OUT OF BUYERS

Nothing should be simpler than a real estate closing. The buyer shows up with money. The Seller has a deed and some keys. They shake hands and trade. Nice.

Turns out (over and over) that in the Venn Diagram of life, "simple" and "closing" seldom intersect. We learned of yet closing-related complication this week, courtesy of our friends at the City of Chicago, Department of Revenue. The Department is charged with "maximizing revenue collections to support the City's "vital" infrastructure.

One way they are doing this is by scrutinizing tax declarations filed with the County Recorder, every time a deed or other document is recorded of record. The Department is, apparently, checking the transfer tax declarations to see when they are dated and then comparing them to the dates when the transfer tax stamps are actually purchased.... and they going after purchaser's who may not being paying the tax in a "timely" fashion.

For better or for …

NEW CAR CONTRACT FORMS now online!

Our good friends at the Chicago Association of Realtors have published new stock contracts for local real estate transactions. It had been about five years since the last set of revisions. At first blush, it seems like some good work.

Then again, one of the occupational hazards of being a lawyer is the compulsive need to read all the fine print and I'm still reviewing mine to decide how happy (disgruntled) There is at least one silly gaffe on the condo contract -> sellers are supposed to purchase surveys for their buyers? Fat chance that. But until my colleagues pick up on that one or the board revises the revision, I am looking forward to poking some seller lawyers in the sides when they show up at closing without....

MORTGAGE FRAUD & MONEY LAUNDERING

I help a lot of buyers slog through stacks and stacks of mortgage loan documents at closings. Anyone who has sat through a closing with me has heard "the routine" my explanation of the various disclosures and certifications that lenders subject their customers to.

Buyers produce photo ID to the closer. A whole lot of trees give there lives to help the lenders and title companies verify borrower identities and to warn borrowers of the penalties for mortgage fraud. Multiple promises that the borrowers have told the truth. Affidavits attesting that the Buyer is using his/her true signature. Stern warnings that the lender is going to comply with the Patriot Act. Even the scary FBI notice over on the margin here. Cynical me. I tend to poke fun at a lot of these documents, and all the redundancies, and the silliness attendant to them.

Turns out, I may be wrong for making light of these issues. Inman news reports today that:
About one in five suspicious activity reports banks file wi…

PLM Title Shuttered

Title insurance is a critically important part of any real estate transaction; or at least it should be. The title company guaranties the "quality" of an owners interest in the property - that there aren't any (unknown) liens or defects. No buyer that I work for will purchase a property without it.

Title insurance is only as good as the insurer. We want to know that the insurance company, like the Rock of Gibraltar, will always be there. We want to sleep easy at night, knowing that the client is protected.

That said, it was a bit distressing to see that PLM Title Company shut its doors, without any forewarning last week. Worse still, this morning's news is that there is a criminal investigation underway - and that we do not yet know why. Old timers like me shudder with memories of the great Intercounty Title debacle five years ago. Here's to hoping that this one is nothing like that one.

Set aside the problems involved trying to make a claim against a defunct title …