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City of Chicago - In Color

I am a real estate lawyer. I help buyers buy and sellers sell their homes, their condos, their apartment buildings. One at a time. 
Each deal I work on is the most important contract in the local real estate market. To my clients and the parties on sitting accross the table they are. And because each individual transaction is to each individual client, that specific deal is also the most important case I am working on too. 
But in a wholly other sense, each transaction is part of a larger real estate marketplace. Each transaction adds another data point that economists and sociologists can pick over and analyze. The collective information gleaned from all transactions informs us all about the larger trends and patterns in our communities. The collective body of information gathered in real estate conveyancing and from census data, all helps paint a very different picture.
It is real estate pointillism. Think of Georges-Pierre Serat or Chuck Close.    
Now check out this New York Times int…
Homeowners - think back a moment to your last re-finance or purchase transaction....

How did you chose your lender? According to a just released study by Lending Tree & Harris Interactive, chances are you probably signed on with the first lender you spoke with. True?  Lending Tree reports that roughly 40% of homeowners surveyed went with the first loan officer they spoke to.
As restated in a Forbes article on the report, 2 out of 5  buyers take the very first home loan deal presented to them, regardless of whether a better one could be had.Curiously, 96% of the survey participants said they compared prices when shopping for anything else besides mortgages.  Heck, the average consumer compared at least three home computers before buying. And special question for all the Realtors: How many houses did that buyer look at before picking "the one" to make an offer on?  The end result? Only28% surveyed felt confident that they got the best possible deal on their mortgage loans.

Closing Costs Heading Higher (again) ... another State Mandated Fee

Buyers and Sellers (and the knowledgeable lawyers, Realtors, and mortgage originators that represent them) should all brace themselves as title charges are going up again as of January 1st. When an amendment to the State's Title Insurance laws kicks in. Buyers should expect to pay at least $25 more on each transaction. Sellers will be shelling out at least $50 more. Those are minimum fees folks. Be on the alert for title agents who may charge more.

Make no mistake about it either, the new requirements for Closing Protection Letters are important. We will address the specific reasons why in a future post, but on the bottom line, they afford some parties to a closing aadditional title insurance coverage against losses caused by errors or infidelity of closing agents in the handling of the transaction. Important? Ask anyone who lost money when a mortgage loan was never actually paid off from the proceeds of a sale or loan re-finance, or who's title agent disappeared overnight, ne…

SHOULD LISTING AGENTS DISCLOSE HOW FAR UNDERWATER THE SELLER IS?

It has long been a standard operating practice in my office to make immediate inquiry with Sellers and in the public records to try to ascertain the status of a seller's mortgage liens at the outset of every Chicago area short sale transaction I work on. Buyers certainly want to know information like this as they determine how much (or whether) to make an offer in a short sale situation. If the deal is unworkable, why bother putting up earnest money or wasting time, right? 
Do listing agents have a duty to disclose this, even without a specific inquiry? According to one appellate court in California, the answer seems to be yes.
RIS Media reported today on a California appellate court decision earlier this week (Holmes v. Summers) to the effect that real estate practitioners (Realtors)  have the same responsibility as sellers to disclose information they have that affects the “value and desirability of the property.” 


In that case, the seller and the listing associate withheld from p…

Do You REALLY Need Homeowners Insurance at Closing? (yes)

A cautionary tale for all my friends and colleagues who represent buyers in real estate transactions.

I had the good fortune to help a long time client close on her purchase of a three flat last Friday. In a year that has been replete with difficult transactions, this one was pretty easy. An all cash purchase of a bank owned property. Clean title to boot. (What can possibly go wrong, right?) The deal came together pretty quickly. We closed in just three weeks.

It is a lovely building  (purchased by a delightful client). The bank that was selling had foreclosed on a developer who (like many others) had apparently run out of money before he could complete a conversion from a rental to condominiums. Overall the place was in good shape. The first floor unit lacked finish plumbing, fixtures and  appliances on the first floor, but the second and third were pretty much rent-able and ready to go. The purchase price seems a bargain. My client is very likely to do well on this one

REALTOR ALERT - International Scammers Have You In Their Sights

Realtors - What would you think of representing an all cash buyer who is moving his family to Chicago from out of the Country, and who needs your urgent help to find a suitable home? Sounds nice, right?  He needs you to send him listings ASAP as he really needs to move quickly. Even better. Oh yeah, one more thing, he wants to wire you money, lots of it now, so that he can have it ready for the closing. Still interested?


If you are, better take a deep breath before reading on. This is the script to a  fairly elaborate - and pervasive scam that is being perpetrated on unsuspecting Realtors all across the country. I have seen it now twice in just the last three weeks. One agent was approached via Trulia. The other received a lead directly from the brokerage's web site.
More details about the scam can be found in this Trulia posting, and this Orlando, Florida lawyer's blog.

The first time this came up, I advised the inquiring agent to take extra care to try to verify the would-be b…

UPDATE: Cook County Property Tax Bills will be mailed out (eventually)

Some news is (finally) starting to leak out regarding those inevitable Cook County property tax bills everyone has been waiting for.

We all, of course, know that local property tax bills are sent out in two installments. The first installment, a/k/a the estimated bill, is always taken as a percentage of the previous years levy. Formerly half of the prior years taxes, the most recent bill demanded 55% of the last known taxes, owing to a recently changed state law. The County, it seems, needs more money sooner. A prior blog post alerted readers to this change earlier this year.

The second, of final installment of the tax bills is supposed to get mailed out in August, providing a theoretical due date of September 1st. These bills are very often mailed much later. Last year they went out in November  and were due December. There has been a good deal of rumor mongering and speculation about the timing of the second installment 2009 tax bills. Harken back to this report in the Daily Herald…

Latest Real Estate Closing Disaster? Federal (flood) Disaster Declaration

Ronald Reagan famously remarked that "[T[he nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"
I am reminded of the quote as a wave of emails and voice messages cascades through the office today. Last Thursday's declaration that Cook, DuPage and five other local counties are federal disaster areas should be a great help for the hundreds of homeowners and small business that were adversely effected by last months severe storms and flooding.
The disaster declaration however is fast becoming a disaster of its own for many Chicago area buyers and sellers hoping to close their contracts this week.  
As a direct result of the declaration of a flood-related disaster area, most mortgage lenders are requiring re-inspections on all appraisals dated August 7th, (the last date of the storm/flooding "incident" or earlier. 
How many closings will be delayed as lenders and appraisers scramble to document the ab…

Mortgage Fraudsters - if we could only harness their powers for good and not evil

I am continually amazed by the creativity and effort that goes into mortgage fraud. Ask anyone who has been through the process of trying to use a mortgage loan to buy a home or condo in the last two years. Dollars to donuts you are going to see an eye roll, hear a clucking noise, or a heavy sigh before that person describes an ordeal of verifications, re-verifications, and cross-verifications. The majority of transactions I have worked on this year have been delayed as loan originators and underwriters try to parse every bit of data presented in a loan application.

Lest your toil be for naught dear borrower, check out this story reported on Crib Chatter today that picks up on a report from Reuters about the scam running over by Back of the Yards.

How big is the problem?

In its first-quarter report, Interthinx said its Mortgage Fraud Risk Index rose 4 percent to 151, the first time it had passed 150 since 2004. A figure of 100 on the index would indicate virtually no risk of fraud.....…

FED BANS YIELD SPREAD PREMIUMS

On Monday, the Federal Reserve Systems' Board of Governors issued a final rule that places strict new limits on the way in which mortgage loan originators can get paid.

The new order:

Prohibits lenders from paying originators added compensation when borrowers agree to accept higher interest rates or other loan terms than they might otherwise qualify for  (the yield spread premium or "YSP").Disallows originators receiving compensation from lenders or other third parties if the borrower pays them too, andMandates that originators not "steer" consumers to loans that increase originator compensation but that are not in the consumer's best interest. Consumers have long been at risk when dealing with loan originators who are compensated based on the terms of the loans offered. Loan officers, having superior knowledge about various loan programs were often offered very lucrative inPublish Postcentives (i.e. more money) if they could convince (or mislead) borrowers …

Mercury Title - Closed

I was very sorry to learn today that Mercury Title Company closed its doors yesterday. Great company. Really nice staff. Another victim of the down real estate market. Mercury is transitioning all active files and post-closing matters over to Chicago Title.

Fallin' & Flying

I really enjoyed watching  Crazy Heart on the Netflix with Susan last week. A whole lot more than I expected to.  The scenery and music were really nicely captured. A fair mix or sweet/sappy romance and fortune re-gained. Nice show, with one significant problem - every time Bad Blake hit the chorus on Fallin' & Flyin'  my mind kept wandering from whatever west Texas bowling alley or honky-tonks he was singing in to that other Southwester icon, Wile E. Coyote. More specifically, the look on Wiley's face every time he ran off a cliff while chasing road runner, just after he lost all forward momentum, and looked down. In terms of Chicago area real estate transactions, I wonder - where are we on the falling/flying continuum?

This weeks' Illinois Association of Realtors news release certainly has a lot of  pundits feeling lighter than air. The headline says it all really: Illinois Home Sales Up 10 Months in a Row, Chicago Region a Full Year, Statewide Home Prices Stabil…

Buyers/Sellers Prepare to Pay More to Close your Contracts - Title Rates are Going Up

Chicago Title Insurance Company sent out notice today that, effective August 1st, it is increasing escrow closing fees and title insurance premium charges for residential closings.  Escrow services will cost an additional $100 per transaction. Fees charged for Owners and Lenders insurance policies will also rise, $50.00 each.

I have not yet checked with any of the other title insurance companies but do not be surprised if others follow suit with rate increases of their own in the coming months. For the records, this is CT's 4th rate increase in the last in the last three years. Owners policy premiums have increased 20% since July, 2007. Lenders policies are up 33%. The cost of escrow closings, depending on the amount of insurance purchased, have increased as much as 55% in that time span as well.  (To be clear, these historical rate increases span the whole Chicago Residential Market, not just at CT). 

Chicago Title remains my preferred source for title services. I am an attorney-…

Illinois Housing Development Authority Awards $2.8 Million to First Time Home Buyers

Last week, the I.H.D.A. announced that it awarded a total of $2.8 million to 436 first time home buyers in the form of down payment assistance and contributions towards closing costs of up to $5,000 and subordinate financing (0% loans of up to $30,000). The funding for this program is derived from the Illinois Affordable Housing Trust Fund, which itself is funded from property transfer taxes.

Has the economic slowdown impacted this very important and valuable program? You betcha. In 2009, the IHDA awarded $4,178,000.

Welcome to the Machine: the Illinois Anti-Predatory Lending Database Now Playing in Peoria. Kane & Will Counties, Too

Two years ago today, the Illinois Department of Financial and Professional Regulation initiated the Illinois Anti-Predatory Lending Database (IAPLD) project. Since then, details of most every Cook County mortgage transaction have been manually entered into the State's super computers, not once, but twice, sometimes even three times.... all at additional expense to the borrowers the process aims to protect. Closing are taking longer too. Predatory lending, while "discouraged," remains legal.

Today, the program expands to three neighboring counties, Kane, Will and Peoria. As with Cook, all three have been hit hard by foreclosures, many the result of those too-good-to-be-true loans we saw so much of  back in those go-go days before the bubble burst.  
The APLD law requires loan originators to enter details of proposed loans into a state database. The state computer screens the loan and - where appropriate - mandates that would-be borrowers attend  loan counseling from a HUD a…

Keep your eye on Chicago City Council

Is the City of Chicago preparing  to start taxing foreclosures?

@ Properties agent Robert Darrow of @ Properties posted an interesting piece yesterday on his always informative blog, suggesting that very thing, Apparently, 26th ward Alderman Roberto Maldonado has  introduced proposed legislation to the City Council, assessing the transfer tax on bank acquisitions of foreclosed properties.  There is not much other information on the internets to flesh this story out, so it may be a bit premature to take sides on this one. What the heck, here is my take so far:

Fannie Wants Second Credit Report Pulled

It is just not getting any easier for home buyers hoping to finance their deals with mortgage backed loans. Beginning June 1, lenders originating mortgages being sold to Fannie Mae will have to pull a second credit report just before the loan closes. According to the National Mortgage News, the new quality control requirement is designed to prevent a type of mortgage fraud called "shotgunning," a mortgage scam in which someone obtains several loans (from multiple, unwitting lenders) on the same property. all at the same time. Typically, a shotgun fraudster skips town with the proceeds of all his loans. Most of the lenders do not recoup a cent because their mortgages are subordinate to the first one recorded and the home will not fetch enough in a sale to cover the junior liens.  The second credit reports, it is thought, will alert lenders to other creditors who have recently requested information about the mortgage applicant. 
Buyers are cautioned (as always) to defer major pur…

Bicycle Rush Hour Utrecht (Netherlands) I

direct from the you tube:


markenlei—April 28, 2010 — Morning rush hour in the 4th largest city in the Netherlands. Streets look like this when 33% of ALL trips are made by bicycle!
This is an ordinary Wednesday morning in April 2010 at around 8.30 am. Original time was 8 minutes that were compressed into 2 minutes, so everything is 4 times faster than in reality. The sound is original.

This is one of the busiest junctions in Utrecht a city with a population of 300,000. No less than 18,000 bicycles and 2,500 buses pass here every day. And yet Google Street View missed it. Because private motorized traffic is restricted here.

These cyclists cross a one way bus lane (also used by taxis and municipal vehicles), two light rail tracks and then a one way street that can be used by private vehicles.

Behind the camera is a railway (you can hear the squeaking sounds of the trains passing) and the main railway station is very close too. A number of rental bikes from the station pass and many of t…

SO FAR - The Long Strange Trip Continues

Not only is Sunday Mothers Day and my sister Judy's birthday, it marks the 25th anniversary of my admission to the Illinois Bar. A heart felt thanks Mom (& Dad) for encouraging me in my studies, and in my pursuit of a life-long dream. Thank you to everyone who has supported my efforts and who helped me reach this goal.

Thank you.

EZ Dec Goes Live - here goes nothing.

You lost your house - but you still have to pay

This morning, CNNMoney.com reports on an ugly phenomenon - the fact that many mortgage lenders are chasing borrowers for "deficiencies", the difference between what is owed and what is recouped whether by "short sale" or foreclosure or a deed in lieu of foreclosure.

You lost your house - but you still have to pay

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Notes, Mortgages, and Deeds are all legal documents. Short sales and Foreclosures are transactions that significant legal consequences. The cases described in this report all seem to have involved borrowers who entered into these arrangments with their mortgage lenders without legal counsel.

Good Lawyering can help distressed homeowners avoid these sorts of deficiency judgments. I have helped clients avoid these and other pitfalls as they try to extract themselves from distress situations.

Please let me know if I can help you (or anyone you know) too.

2010 North & Northwest Suburban Triennial Property Tax Reassessments

Local property tax bills are computed using a formula that takes four important variable into consideration:

Governmental tax rates (set every year based on the budget needs of the various taxing bodies that collect property taxesAssessed Valuations (what the County thinks your property is worth) The State Equalization Factor, a/k/a the multiplier (a formula used to balance the assessment formulas used by various counties state-wide), andExemptions (special discounts afforded to particular classes of tax payers, such as Homeowners, Seniors, and Veterans).All Cook County properties are all reassessed on a triennial basis (see graphic), that is, once every three years. Properties in our north and northwest Townships are due  for re-assessments in 2010.


Chicago Property Tax Assistance Grants

A friendly reminder to readers who own real estate in the City of Chicago -

If you call Chicago your home and reported income of less than $200,00o, the City wants to give you back some of your tax money.

For real!

Up to $200 of it.

Details here.

The deadline for this program is March 31st. Do not delay.

As always, please feel free to contact me if you have any questions or would like additional information about this program.

Cook County Property Tax Bills

We all know that the first installment, the "estimated" installment comes out every spring - due and payable on the first business day in March. (March 2nd for us here in 2010).
Two big changes this year - one expected and one a surprise:
First installment tax bills are higher than in past years - Previously, the County assessed 1st installment taxes at 1/2 of the previous year's taxes. This time, we will pay 55%.
Now the surprise - bills were mailed out this week and hit many mail boxes this weekend - a full week earlier than in past years.
What does this say about the state of governmental cash flows?

FHA "no-flip" Rule to be Suspended for 1 Year

A significant change in FHA lending guidelines is likely to spur quicker rehabilitation and absorption of foreclosure properties back into the real estate markets. On Friday, the Department of Housing and Urban Development announced that it is suspending the "90-day no flip" rule for one year, beginning on February 1, 2010.

Simply put, FHA policy denies mortgage loan guaranties to buyers if the seller had owned the property for less than 90 days. Buyers and Sellers that were agreed on sale terms were being forced to sit on the sidelines and wait until the Seller's title was properly "seasoned." This loan regulation tripped up several would-be buyers and sellers that I worked with last year. No doubt many other buyers and sellers hit the same road block.

"Flipping" is the practice of selling a property quickly after acquiring it. The idea of course is to buy low and sell high. The idea here is to enable entrepreneur/rehabbers to purchase bank-owned or d…

Mortgage Foreclosures up 33%

In all likelihood, someone you know is facing (or has already had to address) some sort of mortgage delinquency. One in every 31 households in the Chicago area received a foreclosure filing last year. That is up 33% from 2008 and nearly five times the number in 2007.

No doubt many news outlets and real estate bloggers will be reporting this data as well, but for more of the gory details, check out FRANCINE KNOWLES' summary in the Sun Times.

There are many ways that homeowners confronted with delinquency notices or foreclosure lawsuits can minimize - or avoid - financial loss. This can only happen if the homeowner is willing to confront the problem and acts quickly to mitigate potential losses.

Homeowners facing mortgage delinquencies or foreclosures should consult an experienced real estate lawyer to evaluate their situation and to help deal with their lenders.

There are often several options available including -
loan forbearancesloan modificationsdeeds in lieu of foreclosureshort sa…