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Showing posts from 2011


A recently amended municipal ordinance that becomes effective on January 1st is likely  to cause some headaches for unsuspecting  real estate practitioners and will definitely increase fees that some of our clients are going to have to pay to effect property transfers

The City of Chicago has long required that real estate sellers obtain a water department "full payment certificate (FPC)" before a sale transaction is completed.  The Chicago Department of Revenue will not seller property transfer tax stamps without the full payment certification, and the Cook County Recorder of Deeds will not accept a deed without the transfer tax stamps.

Certain classes of transactions are exempt from having to pay transfer taxes and have been historically also exempt from the requirement of obtaining / presenting a full payment certification. These include transfers to add a spouse (or other party) onto a title; transfer to change the form  of ownership of a property, and transfers that are …


Goods news this week from Washington, DC for real estate investors, and the real estate agents that represent them -

The temporary waiver of FHA’s "anti-flipping" regulations has been extended through 2012.

"Flipping" is the industry term of art for a real estate purchase that is quickly followed by a resale - presumably for a higher price and resulting (but not excessive) profit.

With certain limited exceptions, FHA rules prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In other words, Buyers willing to purchase a property that want to rely on an FHA guaranteed loan would only be able to do so if the seller has owned the property long enough.

The FHA temporarily waived this regulation in 2010 through January 31, 2011, then extended the waiver through year's end.

The extension allows buyers to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales.

The idea here is to allow homes to r…


Title Insurance Companies owned by Fidelity National (including Chicago Title Insurance) have a announced a new policy that will, among other things, help Buyers, Mortgage Lenders, and Attorneys estimate closing costs more accurately.

Effective January 1st, 2012, the Fidelity companies will charge Buyers a flat rate to record closing documents with local county recorders of deeds.

County Recorders of Deeds keep the "official" public registry of all land title transfers and liens placed against real estate, such as mortgages, foreclosure proceedings, and the like. The Recorders charge fees based on the number of pages in any given document,

This causes problems for residential mortgage lenders who are obligated by federal regulations to give their borrowers accurate "good faith estimates" of their closing costs, but may not know exactly how many pages of mortgage paperwork a borrower will need to sign at closing,. This  happens because the loan originator may not kn…

Cover story: Incentives upgraded in down market - Washington Times

What will it take to get your property sold these days?

An attractive home, in a nice neighborhood, well staged and ready for showings? An attactive price ?
Of course these things help, but cannot assure a sale, let alone an offer.

Many sellers are resorting to various forms of promotions  to entice buyers agents to show/sell their offerings. Other promotions are geared directly towards buyers.

Here is a great article from the Washington Times on some of the various techniques being used.
Cover story: Incentives upgraded in down market - Washington Times:

The article falls short a bit for Chicago area home buyers and sellers. There are some pitfalls to be avoided. Mortgage underwriting guidelines may limit the types (and amounts) of concessions a buyer can take from a seller. Some concessions can have unintended tax consequences for unsuspecting sellers.

Do your homework before agreeing to offer - or accept a seller incentive. Better yet, do your homework, AND check with your lawyer.

A Landlord's (new) Duty to Re-Key Locks

Declining property values over the past several years have caused many property owners into reluctant landlords.

The difficult lending climate has turned many would-be home buyers into  temporary tenants.

Whichever side of the Landlord-Tenant relationship a person finds himself on, at least some familiarity with local landlord-tenant statutes is worth while.

City of Chicago landlords and prospective tenants ought to take note of a newly enacted provision of the State of  Illinois Landlord Tenant Statute.

Effective New Years Day, 2012, many landlords in Chicago will be obligated to change or re-key locks for incoming tenants.

The law APPLIES to:

City of Chicago LandlordsWho rent residential dwelling unitsIn buildings with 4 or more residential units, OR fewer, if the Landlord does not live in the building. 

Owner-occupied buildings with 4 or fewer apartmentsWritten leases that obligate the tenant to change or re-key the locksRentals of a singe room within a private home. …


First American Title Insurance Company announced today that it too will no longer accept third party checks at Chicago area residential real estate closings. They join Chicago Title and PNTN, who already declared an end to the age old practice of telling buyers to bring funds to closing in the form of cashiers checks made payable "to themselves."

These net effect of these three announcements (and the many more that are about to follow) is that the rules have changed for ALL local closings... and anyone not keeping abreast is going to have an unfortunate  problem at their next closing.

1st American's notice takes the issue even one step further, and this will be of particular concern and import to real estate lawyers:  First Am will no longer accept third party title insurance company checks either. In other words, Buyers who intend to use the proceeds of a sale to close their next purchase at First American better have a lawyer (or realtor) who is hip to the new requireme…


Title Companies are changing the way some Buyers are going to need to bring purchase money funds to closing. If these changes are rigidly enforce, the transition is likely to be a rough one and anyone with a purchase or sale closing coming up in the near term should expect a greater likelihood of delays / aggravation.  

The long standing "best practice" for having Buyers bring funds to a closing table has been to instruct them  to bring cashiers' checks to a closing table made payable to themselves.

Until now, it has  just  the way things have been done my whole career.

Back in June, I reported seeing a notice from one of the local Chicago Title offices indicating that CT would require all checks be made payable directly to the title company. At that time, only one or two offices were actually requiring this, and everything was business as usual.

Closing bays at Chicago Title's flagship offices  in Chicago now sport notices that CT will no longer accept such 3rd party…

Help Nice Cream get back in business

Think for a moment about the pure ecstasy of that sweet first lick of ice cream on a hot summer day.
Client Kris Swanberg needs your help.
Kris is the brains and brawn behind Nice Cream, the reigning champion of Chicago-based artisanal frozen dairy confections. No offense to the late great Kid Millions (i miss you guys a lot). This is the good stuff.
Stoopid state regulators are shutting her down for not having a "dairy" license - insisting (suggesting) she is committing for the high crime of using REAL strawberries instead of syrup;
PLEASE support Kris & Nice Cream: - Save Chicago Ice Cream!" via @eventbrite
Nice Cream works to get back in business


Big news today from Washington, for sellers who would consider offering financing to potential buyers and for
lucky souls who's parents or other benevolent freinds or family might consider financing their real estate purchases - HUD announced rules that may actually let you execute on your plans.

Shockingly, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or SAFE Act seems to have outlawed these sorts of financing tools. The SAFE Act established  minimum standards for state 
licensing of residential mortgage loan originators in order to increase uniformity, improve 
accountability of loan originators, combat fraud, and enhance consumer protections. but in enacting restrictions on their qualifications and authority, the law included everyone in the universe who made, or wanted to make, mortgage loans.

 The SAFE Act defines “loan originator” to mean “an individual who takes a residential mortgage loan application; and offers or negotiates the terms of a residential …

This is what the 'Next wave' of mortgage fraud looks like

I do not really know why I am so fascinated by mortgage fraud, but I just am. Here is a fascinating description of the level of sophistication and determination of the fraudsters.
Next time you - or your client - or your client's buyer complains about all the paperwork they need to submit to document their loan applications, consider how much tougher it must be when you are making the stuff up as you go along...
'Next wave' of mortgage fraud strikes |

BUYER BEWARE: the Mortgage Loan Handoff Rip-off Scam is Back

There are about as many ways to scam the unwary real estate consumer as their are stars in the sky, or so it seems. This one is an oldy, but a goody: the mortgage hand-off scam.
The con is a pretty simple one:
send an official looking notice to a hapless homeowner (typically, but not always, an unsophisticated new buyer).
Tell the owner that his mortgage has been sold to Mega Mortgage Financial Security, Co. and direct all future payments to the scammer's post office box.
Collect a couple-three payments and move on before the real lender starts calling on the homeowner to find out why he stopped paying on the loan.
A more detailed report here, from the Chicago Tribune: Beware the hand-off rip-off scheme
I have been warning home buyers about this particular fraud for years now. I hope and trust that …


The old standard operating procedure for Chicago area residential closings may be changing a bit, based on an announcement I recently received from  Chicago Title.

Outbound emails from CT's REO unit in Carrol Stream now advise recipients that the title company will no longer accept third party checks at closings. Apparently, company auditors  want all funds to be made payable directly to the title company. The new rule is effective May 1, 2011, but I am told that Carrol Stream is implementing a  "soft" introduction of the new rules  to allow time for word to get out of the change.

The rule of thumb for as long as  I have been handling Chicago area real estate closings has been that any funds a Buyer (or Seller) would bring to the closing table would be in the form of a wire transfer or a cashiers/certified check made payable to that Buyer (or Seller). Once the parties were satisfied with all of the closing documents and settlement figures, the Buyer would endorse that c…

REALTOR ALERT - International Scammers Have You In Their Sights

I previously posted about this last September. It appears that the problem persists, and is worsening:

Last week, WalletPop reported:

The Internet Crime Complaint Center's latest scam alert includes a counterfeit check scheme targeting real estate professionals.

Alerts by theIC3, a partnership between theFBIand theNational White Collar Crime Center(NW3C), reflect recent cyber-crime trends and new takes on existing scams. Here's a summary of the new threat:

Counterfeit Check Scam Targets Realtors and Real Estate Attorneys

The IC3 says it's received complaints about counterfeit check scams for years, which typically involve criminals convincing unsuspecting victims to cash checks or money orders and then wire them a portion of the funds overseas. Only after wiring the funds do the victims learn the check was fake -- leaving them holding the bag for the full amount.

The latest variation on this scam targets realtors and real estate attorneys, who are being contacted by overseas fr…

‘Sweet Home Chicago’ affordable housing ordinance passes

WBEZ Reports: ‘Sweet Home Chicago’ affordable housing ordinance passes
In one of his final legislative acts, Mayor Richard Daley compromised with the Chicago City Council on an ordinance to fund affordable housing.It took nearly two years of stalling, back and forth negotiations and political maneuvering.But now some tax money is available to developers to buy and rehab vacant Chicago homes or apartment rentals. The money comes from a pot known as tax increment financing – or TIFS.Ald. Walter Burnett worked with the neighborhood coalition known as Sweet Home Chicago to get the measure passed. Advocates see it as a way to mitigate the foreclosure crisis."People need some relief and they need some help. And this is a good step in the right direction. We pray that the next administration -- that it won’t take as long or be as hard," Burnett said.The ordinance allows developers to receive up to 50 percent of the cost of purchase and rehab of multi-family rental buildings if more …

PLM title follow up - when title companies go bad -

The late great PLM Title closed under mysterious circumstances  nearly three years ago. I previously blogged about this here and here.  As reported  in yesterday's Morning Herald, a mystery no more.  That ugly saga represented one of every real estate lawyers worst nightmare scenarios. The evil doers apparently took funds from closings that were supposed to be used to pay-off old mortgages for their own use. Those unpaid mortgages hampered many otherwise innocent buyers and sellers.

Could this happen again? Sure, I suppose so. Fortunately however, Illinois  home buyers and sellers are now protected by a recent change to the Illinois Title Insurance Act that requires mandatory closing protection letters. Every title insurance agent's underwriter must now assure the buyer, new mortgage lender, and seller that no loss will be suffered as the result of a dishonest title agent. Of course, buyers and sellers are paying new fees for that protection, but lest we gripe about those new …

Cook County Property Taxes - (stuff they dont want you to know)

A last minute reminder that 2010 1st Installment Cook County property tax bills are due tomorrow, April 1st. Starting Saturday, delinquent taxpayers will have to pay a 1.5% late charge for each month they are late.

Of all the nuances in my work helping buyers and seller close their real estate transactions, few facets of the process cause as much confusion as Cook County property taxes. There are a great many reasons for this, but on the bottom line, it is just darn messed up.

The property tax system pits citizen tax payers against citizen consumers of governmental services. We want the good services and benefits our State, County, and City...but we would like them a whole lot better if someone else would pay for them.

Carrie Porter over at the Morton Grove Patch is running a week long series on the Cook County property tax system. I highly recommend taking a look at her reports:

A video explaining the basic computation of property tax billsA look at the extra burden our tax system pl…


Lets see how City Council reacts on this one, but the Mayor introduced a pretty interesting little ordinance that might be a real boon to first time area home buyers willing to buy and rehabilitate some bank-owned properties.

Progress Illinois reports that the mayor's bill, introduced on March 9:

"seeks to tackle the growing problem of vacant homes that are blighting neighborhoods across Chicago, and in particular in minority communities.
Called the Vacant Building TIF Purchase and Rehabilitation Ordinance, the bill (PDF) proposes allowing residents with a household income no greater than 100 percent of the regional median income to apply for a tax increment financing (TIF) grant that would pay for up to 25 percent of the cost of purchasing and rehabilitating an empty residential property. Single-family empty homes or units in condo and cooperative buildings with four units or fewer are eligible. The empty homes must be located in a TIF district and must be in need of at least…


Local buyers hoping to finance their home purchases with a loan from a parent or other family member are going to need to change their plans. Quickly. Sellers offering financing to prospective buyers too.  As of January 1st, 2011, ONLY Illinois mortgage licensees, regulated/licensed banks, savings & loans, credit unions, insurance companies, and the like can make residential mortgages for gain or profit..

Non-interest bearing mortgage loans are still allowed.

The new rule was enacted to implement a Federal law intended to enhance consumer protection and reduce fraud in the mortgage industry. That protection it seems, comes at a cost. Consumers have no choice now. Licensed mortgage lenders are the only game in town. At least for residential transaction.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), was passed on July 30, 2008.  The federal obligated each of the 50 states to enact their own laws requiring licensure of mortgage loan …

REALTOR® Magazine-Daily News-Addicts Snatch Drugs From Homes for Sale

I have not heard of this from friends or colleagues, have you? Hard to argue with the general advice though:
Addicts Snatch Drugs From Homes for Sale
Addicts are posing as home buyers and cleaning out medicine cabinets in homes for sale, according to recent police reports.

"It's commonplace – more common than you think," Detective Dennis Luken, vice president for the Ohio chapter of the National Association of Drug Diversion Investigators, told the Cleveland Plain Dealer. "It's everywhere."

In one recent case, a man showed up to an open house and while the real estate agent was distracted with other customers he went through the home owner’s medicine cabinet. The agent overheard the man going through the drawers, and he was later questioned by police officers. He admitted that he went to the house looking for pain pills and that he learned the trick from peers at a drug treatment program.

Authorities say some criminals also copy information off the home owner&…


With the new year upon us, the “Good Funds” section of the Title Insurance Act is now one full year old. Illinois home buyers (and the professionals that represent them) are the beneficiaries of a bit of a "birthday present" from our friends down in Springfield - an amendment that addresses the three biggest issues that were complicating closings over the last 12 months. The good funds rule regulates the way anyone bringing money to a closing can deliver it to the closing agent. Basically, funds in excess of $50,000 must be sent by wire transfer. Funds less than $50,000 can be delivered by wire or cashiers, certified, or (approved) title company check. 

As amended, 

•        Earnest money held by a real estate broker or attorney is no longer aggregated with the buyer’s bottom line. As long as those funds are less than $50,000, title companies can now accept a realtor's or attorney's check drawn on a trust account. Note: this is not a slam dunk - the title company must …