Skip to main content

LENDERS BUNGLING THEIR FORECOLOSURES - part 1

Any looking to understand how and why the mortgage companies got themselves into the financial mess they are in will appreciate the experience a client of mine had recently while trying to buy a foreclosure property from the bank.

The property in question was one of three units in a condominium building. For whatever reason, all three units are now owned by the three banks that foreclosed on the three mortgages used by the three original unit owners.

Each bank undoubtedly made their borrowers covenant to maintain insurance on the condominium common elements. After all, if the building were to burn down, the lender would want to either see it rebuilt or to apply the insurance proceeds towards the loan repayments. Each of those banks also insisted that, in the event of an insurance policy lapse or cancellation, they would have the right to purchase insurance - at their borrowers expense - to prevent such losses. Standard procedure there. No surprises.

BUT, now that the banks took control of the three condo units, guess what? Each stopped paying the monthly assessments. There is no condo association. That "master" insurance policy on the building? Long since lapsed. They are all uninsured!

Worse yet, no one who wants to purchase any of those units (and use a mortgage loan to do so) can buy one until insurance is in place! Or until an association exists, in order to get necessary lien waivers from the association.

We spotted this problem early and canceled the contract.

The only buyers who will likely be able to purchase any of these units are going to be cash buyers who are willing to also buy insurance for the whole building, or speculators who are able to buy all three units in order to re-establish the condo association.

How many buyers can possibly qualify to do this? who knows. until then, this property will sit idle and empty.

Comments

Popular posts from this blog

Do I HAVE to shovel? Chicago snow shoveling law and etiquette

Set aside any discussion of climate change for a moment. It’s winter. It’s Chicago. It snows. As a homeowner, you owe it to your friends, family, neighbors and delivery people to keep the sidewalks free of snow and ice.

The Equifax data breach and you — 6 steps to take now

Identity thieves hit a major credit reporting agency—hard. Millions of consumers’ confidential identity information has been compromised.

Equifax, one of the big three credit reporting agencies announced that a massive security breach took place earlier this year. Offenders accessed data sets of 143 million US consumers.

With federal tax reform looming, should I prepay 2017 Cook County property taxes?

By Michael H. Wasserman

Paying property tax bills before the end of the 2017 may help some owners save on their federal income tax liabilities.

The Tax Cuts and Jobs Act has been called the most sweeping tax reform bill in decades. Like it or
not, tax reform is coming. Others might wring their hands with glee or with worry. We are already working on ways to minimize the pain this reform might cause. 
One aspect of the pending tax reform plan presents a clear challenge for most Chicagoland home owners, the elimination of deductions for State and Local Taxes (SALT). The house and senate plans both limit deductibility to $10,000. Once the tax reform is signed into law, we will pay federal income taxes on the money we use to pay our local taxes exceeding that $10,000 threshold. Some homeowners who have the foresight (and lets face it, the savings) to act swiftly may want to pre-pay their first installment 2017 property tax bills this year before the tax laws kick in, so that those payments …