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from Local Attorney, Michael H. Wasserman

Tuesday, January 31, 2012

Coming Soon: Cook County Property Tax Bills

The tax man cometh. Cook County first installment property tax bills should be hitting mail boxes everywhere this week. The bills will be due and payable by March 1st.

Taxpayers are reminded that the first installment bills are being sent out now, even though the County does not know how much is actually owed. These are "estimated" bills. For now, bills are simply computed based on a percentage of last year's tariff. A law change enacted in 2009 raised the estimated amount due from 50% to 55%.  The final reckoning will not be announced until later this fall.


In theory, those final bills will be mailed out at the beginning of August and will be due September 3rd. The actual due dates may be (and typically are) much later. Our County is notorious for tardy tax bills. Last year's final installments were due in November. Bills paid in 2010 were so late that they were not due until December!  The Second Installment due dates vary because they are computed based on the delivery of various sets of data by several state and county agencies, and a delay anywhere along the line impacts the County’s ability to tally up our bills. Cook County Board President Toni Preckwinkle vows that  she is working hard to ensure that they will be mailed out on time this year.

Property taxes in Illinois are paid one year in arrears. That is to say, the bills we will pay in 2012 are actually 2011 taxes.

Oh, and just in case you are ready to wag a finger at politicians because your bill is too high, keep this in mind - Property taxes are imposed by local government taxing districts only, The state has not assessed a real estate tax of its own since 1932. 


Thursday, January 26, 2012

MORTGAGE LOAN DEFICIENCIES



Homeowners are not always "out of the woods" once their home is lost to foreclosure or sold by "short sale."  Foreclosures and short sales remove  the mortgage lien from a property, but do not eliminate the debt described in the note or loan agreement, or it's promise to repay the debt in full. That remaining balance due is the "deficiency." Contrary to public perception, banks are not only allowing short sales and completing foreclosures,  but they are still looking to borrowers to satisfy deficiencies well after closing.


The Illinois Appellate Court has started the new year with a "win" for mortgage lenders. The Court confirmed  a bank's right to pursue it's borrower for everything that was due and owing, over and above the recovery from a foreclosure sale. Banks can be awarded deficiency judgments as long as borrowers are given proper notice of the fact that they were being sued.   This case held specifically that even a notice (summons) handed to another member of the household - also mailed to too - was a proper notice of the foreclosure lawsuit.


Deficiency judgments go on your permanent record. Unpaid judgments stay there forever. In the short term, they can influence credit scores and employment applications or prospects. More importantly, and over the long term, they can be enforced by wage deductions or asset forfeitures (garnishments). Following proper procedures, a bank can enforce for up to 27 years

Home owners using short sales to escape their mortgages may also see long term after-effects of their efforts. Many short sale lenders are asking their sellers to either pay additional money out of pocket at closings, to sign new promissory notes agreeing to make further repayments over time, or are simply refusing to waive the right to pursue deficiencies in the future.  Second lien holders in particular are very insistent on retaining the right to repayment.

The best way to avoid deficiency complications is to try to get the lenders to waive them, Many will. Often times however, home owners have little choice but to sign loan re-affirmations or modifications. Doing so may be necessary to accomplish the much more important goal of ending the mortgage loan and cutting off liability.   Even still, there are several known and effective strategies that people facing deficiencies can employ to mitigate their losses. Legal counsel can and should be able to explore these with debtors and help craft courses of action best suited to the circumstances.

A final problem - there may also be income tax consequences to borrowers where lenders waive a debt/deficiency. Debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Debt Relief Act of 2007 gives some protection to people who have lost their homes to foreclosure, but this relief is schedule to expire this year. Always best to consult your own tax consultant to evaluate these consequences.

Tuesday, January 24, 2012

Home Buyers Assistance for Iraq/Afghanistan War Vets

There are a lot of great ways for real estate agents and mortgage lenders to add value to the service they give their clients. Certainly knowing ways to save clients money are always helpful.  Knowing the lenders and loan programs that do so help too.  These are, of course, the same reasons it makes sense for Buyers & Sellers to work with the best professionals they can find for their real estate deals too..

Here is a good one: First Advantage Mortgage has a new program benefiting members of the armed forces who have served in Iraq and Afghanistan. Qualifying borrowers are eligible to receive $10,000 in assistance towards the purchase price and/or closing costs on their next home. (Hat tip Bob Brandle)

These funds are available to all veterans using conventional, FHA and VA financing. Buyers on active duty or in the reserves are only eligible for first time home purchases.

The $10,000 grants are actually second mortgages (so do understand that there may be some additional closing costs too), but - as is typical of targeted programs of this sort - the loan is forgivable over a period of time. In this case, the loan need not be repaid if the borrower owns the home for more than two years and who are not otherwise in default on their mortgages.

Don't forget that Vets are also eligible for a Returning Veterans' Homestead Exemption - providing qualifying Veterans a one-time $5,000 reduction to their home's equalized assessed value (EAV)  upon their return home, and a Disabled Veterans' Standard Homestead Exemption that provides a reduction in a property's EAV to qualifying property owned by Veterans with service-connected disabilities as certified by the U.S. Department of Veterans' Affairs.  

Do YOU know of any other home buyer assistance for military personnel?  (other targeted loan assistance programs?) If you do, please let me know.

Thursday, January 19, 2012

FEES INCREASE at COOK COUNTY RECORDER

The Cook County Recorder of Deeds has announced a $2.25 fee increase for all document recording effective January 15th, 2012. Recording a standard two page deed will now cost $52.50, up from $50.00. The fees for longer documents increase based on the number of pages the document contains.

The Recorder's office maintains the County's official public registry of  real estate ownership, and record of persons (other than the owner) that may have rights over that property. The record helps owners prove their ownership rights. It helps mortgage lenders, judgment creditors, contractors and others assert their lien interests against those properties, and helps the rest of us research and investigate land transfers and sale histories.

Buyers who use mortgages to purchase Chicago area property typically pay for the recording of  two documents with each closing - the Deed and the Mortgage. Sellers pay to record a Release of each existing Mortgage that is being paid-off as a part of the transaction.

Readers are reminded that Fidelity family of title companies recently announced that it was abandoning the practice of collecting the precise recording fees from Buyers and Sellers in favor of a flat fee based on the average of all recording fees without regard for the number of pages in a document. As a result (at least for the time being), Buyers and Sellers will not see any change in their closing costs.        

Tuesday, January 17, 2012

Chicago Abandoned & Vacant Buildings

We all know that the three most important factors in determining the desirability of a property are location, location, and location. As such, sharp Chicago area home buyers and the real estate professionals who advise them, are discovering - and embracing - Derek Eder's Vacant and Abandoned building finder tool.

Built on data from Chicago's 311 reporting service, this site shows detailed information about known "problem" properties on an easily navigated google map overlay. Mr. Eder built this as part of the Apps for Metro Chicago contest. This app was an AM4C community winner.

At best, abandoned buildings pose a visual blight on their neighborhoods. Unoccupied, they detract from the economic and social vitality to their surrounds.  At worst, they abandoned buildings can pose severe safety hazards, criminal and structural. Woodstock Institute research shows that vacate and foreclosed homes contribute to declines in neighboring property values and increases in violent crime.


Savvy owners of  such properties can  exacerbate the toll unoccupied properties exact on the community by asking the County Assessor to lower  property valuations so as to reduce that owners taxes (forcing the rest of us to to  pay more).   The Chicago of Chicago says it spent $15 million last year alone dealing with more than 2300 vacant buildings – most of that to demolish or board them up. Woodstock Institute places that figure at $36 million.

There are however some limitations to the data set used, as the City has only compiled data from January, 2010. The limited pool of information makes it a bit hard to place the data into any sort of historical context. (Is  neighborhood property abandonment  "getting better" or "getting worse." One this is certain - the devastation wreaked by the housing market crash is pretty shocking.  (The site designer's conclusion that there are more such buildings in poorer neighborhoods than in more affluent areas, may not quite as revealing.

It will be interesting to see how recent changes to the City's vacant building registration law effects the data this web site generates. Last July, the  City Council extended  registration and maintenance obligation imposed on property owners to the mortgage lenders that also have interest in empty / unused properties.  (Owners  have been obligated to register and maintain properties that are vacant for more than 30 days since 2008),  The hope is that lenders will take over routine maintenance  when the owner borrowers give up.

Now, owners of six or more properties, including lenders,  must cut grass; shovel snow, board-up entrances, post their contact information on signs in front of these lots, and post security guards at night,  and respond to complaints relating to the building;

Vacant and abandoned buildings can and should be reported to the City by calling 311 or by reporting online.  When the City receives a report an inspector will investigate to determine whether or not the building is secured (or, as necessary, registered) and will issue violation notices to the owner.

More information is also available at the City of Chicago's vacant and abandoned buildings web page

Thursday, January 12, 2012

ATTENTION CHICAGO CONDO OWNERS - TIME SENSITIVE CHANGES TO THE CITY's TRASH REBATE PROGRAM


Our great City of Chicago offers many many benefits to citizens. One of the less glamorous, albeit greatly appreciated services is garbage pick-up - at least for single family homes and small multi-unit buildings.

The recognized that condominium owners were paying for this service through their taxes, without realizing any benefit. The result, a rebate program to qualifying Condominium Associations to offset some of the costs of waste disposal. 
  
The most recent City budget and recent changes to the municipal ordinance make some very important, and time sensitive changes:

  • An association can only file for the rebate for the 2011 operating year. Applications for prior years are not being accepted.   If your association did not apply for rebates for prior years, you will not be able to do so for 2011 or future years (lets call this one the "you snooze, you lose" provision). 
  • The rebate for 2011 will be limited to a total of $75 per owner-occupied residential unit. (the operative words here being owner-occupied - no rebates for rental units!)
  • Applications for the 2011 refuse rebate MUST be in our office by January 31, 2012 to be considered, no exceptions. (a new, strict, filing deadline).
  • The 2012 rebates will drop to $50 per qualifying unit., then down to $25 for 2013, 2014 and 2015. 
  • Applications for future years will need to be on file before the January City Council meetings (whenever they are scheduled). The City is urging that application need to be filed at least two weeks prior to that meeting date.
The Finance Committee is still processing 2008 and 2009 remittances, and will then move on to process 2010 and 2011 applications.
Applications need to include the following:
  • Claim form (download here
  • Association board form of resolution authorizing someone to submit the application for the rebate. The resolution should be signed by the Board President and one other person.
  • A copy of the arrangement/contract for 2011 salvage collection services
  • Supporting documentation of the total refuse collection expenses for 2011 - copies of invoices or a statement from the contractor will be sufficient
  • If not on file with former year applications, the recycling certification form (download here)
  • Both the Claim form and the Recycling form must be notarized and delivered to your local alderman. 

Tuesday, January 10, 2012

JANUARY is RADON AWARENESS MONTH

Show of hands, how many of you can name  the second leading cause of lung cancer in the United States?

OK, the headline was the give-away, but that would be Radon Gas.

Radon is released by the decay of uranium, a naturally-occurring ore found in our soil. When released, Radon can seep through cracks in basements and foundations into our homes.

According to the U.S. EPA, one in every 15 homes in the United States have radon levels that exceed the recommended radon action level. In Illinois between 2003 and 2007, 42% of homes tested for radon gas had levels above the EPA radon action level. It is believed that Radon is responsible for an estimated 20,000 deaths per year in America.

Unlike tobacco usage where you pretty much know how carcinogens are introduced into the body, Radon is a much more insidious health problem - it is an odorless, colorless and tasteless gas. It is a naturally occurring phenomenon. You will never know you are being exposed to it, unless you specifically test the home you live in.

Illinois home sellers have been obligated to disclose test results and known radon hazards to prospective buyers for more than three years now.

Illinois Schools and Day Care Centers have been supposed to test for radon hazards too, based on recommendations in an amendment to the Illinois School Code that became effective in 2010.

Now, effective January 1, 2012, Illinois residential landlords are also going to be required to disclose test results and known hazards to tenants renting dwelling units below the third story above ground level.

A STRONG CAUTION FOR BUYERS & RENTERS - You must understand that the Radon Awareness law ONLY requires a disclosure of unsafe test results and known radon issues. The law DOES NOT mandate testing OR remediation.  

Fortunately, Home buyers can (and in my opinion) should give strong consideration to radon testing as a part of any professional home inspection. Tenants, particularly with young children, may wish to test before signing a lease. Test kits can be purchased at most hardware or home improvement stores. They are simple to use and relatively inexpensive.

If a  home or apartment has unsafe levels of radon, there are radon reduction systems that are effective and not too terribly costly. Quite often a seller can and will absorb the cost of remediation.

I am often asked whether or not Radon testing is worth while. It certainly adds to the cost of "due diligence" investigation for home buyers. Money is tight enough and closings are plenty expensive already, before adding in "optional" tests.

Well, certainly the health benefits cannot be over-stated. Of course you want to be healthy in the home you intend to live in. We all do. Check out these statistics from  the Illinois Emergency Management Agency (IEMA) Radon Program for homes tested for Radon between 2003 and 2007:

COUNTY Pct. Of Homes Tested Pct. Of Homes with High Radon Levels
Cook                   0.40 %                                 25.50 %
DuPage                   4.40 %                                 39.50 %
Kane                          5.20 %                                 43.60 %
Will                           4.10 %                                 41.10 %

More than one quarter of all homes tested in Cook County during this five year period had Radon problems. more than one third of all homes in the "collar" counties did too.


Is testing worth the cost?  Boy I sure think so.