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Anyone out there interested in a Visa Check Card loaded with money? Did I mention that it is free? A gift, from the City of Chicago? Our fair City is offering checks of up to $200 to help offset the costs of higher property tax bills to qualifying homeowners. Here are the details: To be eligible, homeowners must have a principal residence in the City of Chicago, make $200,000 a year or less, and an increase in their 2008 property tax bill, when measured against the 2007 tax. The amount of "tax relief" is based on a combination of income level and the size of the your property tax increase. This chart breaks it down: Anyone who wants to apply for a taxpayer relief grant must Complete the application Attach a copy of his or her 2008 tax bill Attach a photocopy of a government-issued photo I.D. that shows the same home address. Relief checks will be distributed on a first-come, first-served basis, and applications will be taken until March 31, 2010. The City anticipa

If you use Adobe Acrobat programs, take a quick moment to fiddle with the settings and turn javascripts off. there seems to be a new virus going around..... ok, maybe its not a virus; it is being called an "exploit" and a "vulnerability," and i am not in a good position to know the differences or distinctions of any of them. What I do know is that pdf formated documents play a hugh role in the residential real estate process, and none of us really want (or can afford) to have to deal with this sort of thing. details here: ComputerWorld ZD Net Shadowserver Adobe's own "Product Security Incident Response Team " Seems easy enough to protect yourself from this one - at least until someone gets around to fixing the problem.

A new IRS bulletin , released just before Thanksgiving is offering new details that should clarify many of recurring questions about the First Time Homebuyers Tax Credit. The most important takeaway in that bulletin however is that anyone who closed on their purchase after November 6, intending to claim the tax credit better wait a couple-three weeks until the IRS releases a newly revised Form 5405. Critical details released last month: CO-OWNERSHIP SITUATIONS an otherwise qualifying unmarried individual who purchases a home together with someone who does not, can claim the full $8,000 credit. an otherwise qualifying son or daughter who purchases a home with parents who do not qualify can also claim the entire $8,000 credit. PURCHASE PRICE,INCOME, & AGE LIMITATIONS Single taxpayers earning up to $125,000 in "modified adjusted gross income" and joint filers earning up to $225,000 qualify for full tax credit benefits (up from $75,000/150,000). Singles filers with incomes

WHY EVERY CHICAGO PROPERTY OWNER OUGHT TO CHECK IT OUT Those property tax bills every Cook County owner received over the last week or two? Did you notice how they have that very detailed table that shows you "who gets what" from your tax dollars? Pretty detailed, right? Well maybe not so much, if your property is in one of the City's Tax Increment Financing districts (TIFs). TIFs cover nearly one third of the City now. TIF districts divert money from the regular property tax stream to help "combat blight" in those areas. For years, there has been no public accountability or accounting of its use. Property tax bills do not show any amount of directed being directed to the TIFs (nothing) . In reality, TIFs fund a budget nearly 1/6 as big as the "official" city budget. Some quirk in the law or other allows them to hide the numbers from us. A stunning Chicago Reader expose on TIF financing here . Among the many revelations - City funds will be used t

More than 2,300 new Illinois lawyers will be admitted to the bar today, nearly 1,900 more for the Chicago area. Welcome to the fraternity - make sure they show you the secret handshake. That swells our ranks to roughly 86,000 souls. Collectively, we only closed 76,800 or so home and condo sales in the first 9 months this year - which works out to fewer than one contract per counselor - ok - 2 per, if you allow for a buyer's lawyer and a seller's lawyer on each deal. I have been fortunate to work with a good many terrific buyers and wonderful sellers this year. There are obviously a great many lawyers to choose from. Thank you, for everyone's kind referrals, and Thank you to everyone who has referred a client or two along the way.

Many are first time home buyers trying to squeak "under the wire" in hopes of closing contracts before November 30 th - the sunset date for the Federal First Time Home Buyer's Tax Credit. The impending deadline presents some unique challenges for Buyers and Sellers. That November 30th deadline comes smack dab at the end of the Thanksgiving day weekend. (What genious in Washington did that?) That means a host of closings are being scheduled for Friday the 27 th and Monday the 30 th the last two possible days to get closings done. Will the title companies and lenders cancel all holiday vacations and work at full capacity to get these closings done expeditiously, or will be have to sit for hours at the closing table while closers handle multiple simultaneous closings? Will loan officers and processors get files to the underwriters with time enough for review and to satisfy conditions before the inevitable holiday slowdown, or will some Buyers be disappointed when there

New Report Predicts How, & Where its Happening We may be done with the recession, but there is still a lot of pain left for the mortgage industry and for property values in distressed areas. A new report predicts increases in mortgage fraud ahead for states with high foreclosure rates. When fraud risks rise, increased foreclosure activites follow. Nevada has the highest mortgage fraud risk, California Arizona and Florida. Chicago notwithstanding, Illinois risks trail the national average. An abundance of distressed borrowers, oversupply of foreclosed properties, and relaxed lender valuation guidelines (??) all seem to be fueling new schemes. Most involve property valuation fraud. A trend towards undervaluing REO and short-sale properties is noted, but m ost often values are falsely overstated so that borrowers can extract more equity from properties. Increased reports of inflated appraisals continue "with a vengeance", ( the National risk index is up 25% in the

Cook County real estate professionals will soon need to follow new protocols and procedure in the reporting of property transfer taxes due in their client's transactions. The new EZ Dec system is said to be going live next week, and in the new year, it will become the only way to do so. Transfer taxes are assessed against just about every real estate transaction. The State, County, and City each levy a tax based on the sales price. In 2008, the City tax was famously increased to give a new revenue stream to the CTA. At present, we file three separate forms - one to pay each transfer tax. Frankly, the process is a collosal pain. The forms each ask for a whole lot of common information, but each form is (predicatbly enough) worse than the next. The County gets all the data it needs in a 2 page form. The State form runs 4 pages. The City's 7. Data idata input is sloppy, often inaccurate. I cannot even begin to speculate how cumbersome it is for the tax revenue agents to unsp

The Cook County Clerk's Office has released the 2008 annual property tax rates . The state has set out the equalization factors. Look forward to the County treasurer's letter soon folks. Property tax bills will be due December 1st. The Sun Times reports that, on average, Chicago landowners can expect to see a collective 6.04 %increase from last year. Across Cook County, property owners will pay 4.2% percent more. Property taxes are computed using four factors: A property's assessed value (look it up here .); The property tax rate (check it out here .); The state equalization factor of 2.9786 (aka the "multiplier") up 4.74 % from last year; and Applicable exemptions (described here ) Homeowners exemptions (available to anyone who lived in the property as their principal residence as of 1/1/08) can vary based on the property's location and any increase in assessed valuation over the three year assessment cycle, but the minimum homeowners exemption increase

At the same time that conventional lenders are starting to show interest in the Chicago condo market, FHA seems to be pulling back a little bit. On Friday, FHA announced plans that will tighten many lending standards, some outline below. This action is thought to be a pre - emptive effort as FHA will soon notify Congress that its capital reserve ration is dropping below 2% - the minimum threshold mandated in the legislature. Under the announced changes: Refinance loans will require tighter income & asset verifications and quality controls Appraisals will be required whenever a borrower wants to add closing costs to the transaction. Mortgage brokers will be prohibited from ordering appraisals, but will not be required to use appraisal management companies. (changes here are consistent with the Home Valuation Code of Conduct, or HVCC ). Appraisal reports will only be valid for 4 months, down from 6. There are a couple of less restrictive changes proposed too: Appraisals will be po

Some mortgage lenders are dipping their toes back into the Chicago condo market, a development that could re-ignite local sale transactions. In recent weeks, I have learned of at least two different programs targeting area home buyers who do not want to make large down payment. Mark Johnson at US Bank is offering a 97% LTV program. Vassili Sakkas at Wells Fargo recently turned me on to his company's new 95% loan products. Yes, you read that right. At least two lenders are offering conventional, low down payment loans to Chicago are home buyers. Chicago are condo buyers (and sellers) have faced a pretty tough challenge of late. The only game in town have been FHA guaranteed loans. The underwriting has been tough. Not all condominium buildings qualify for loans, let alone buyers. The return of conventional lending alternatives should re-engergize the market. At least it will offer Buyers some new choices. Please let me know if you hear of other lenders offering comparable product

Well, what else would you do if the volume of your business is down, and if the pricing scale for your product is tied to real estate sales prices , and the stockholders & financial rating services are upset that the dividends are being cut? Raise the rates! Chicago Title has announced another fee increases (The third in the last 15 months). The new fees go into effect October 1. I understand that Greater Illinois Title has announced a fee increase as well. Watch for the rest of the still viable title companies to follow suit soon. Compare title rates on my web site, here .

Back in June, HUD issued FHA Mortgage Letter 09-19, announcing several dramatic changes to mortgage loan guidelines effecting condominiums. For the first time, FHA direct endorsement lenders will be able to approve condominium projects in whole, rather than on an ad hoc or "spot approval" basis. Those changes are all ON HOLD for at least 30 days. The Federal Housing Administration is delaying the Oct. 1 effective date of its new condominium policies while it finalizes several modifications. "We'll be issuing new guidance soon, with several modifications to the policy described in Mortgagee Letter 09-19," a HUD spokesman said, with a November 2 effective date.

The slow real estate markets continue to wreak havoc on title insurance companies. Fitch Ratings, has downgraded the financial strength rating of Stewart Title Guaranty Co., from "A-" to "BBB+" and the default rating from "BBB" to "BBB-." Separately, Fitch also downgraded First American's default rating from from "BBB" to "BBB-" and the senior unsecured debt rating from "BBB-" to "BB+". WHY THIS MATTERS : Title insurance is only as sound as the company that provides it. A policy is of little good to a homeowner if the title insurer is insolvent and cannot pay claims. Thus, a careful Buyer wants to make sure that the title insurance issued will come from a strong, secure entity. In Chicago, Sellers select the title company and purchase the title insurance that protects Buyers. That decision is almost always left to the Seller's attorney who, more often than not, recommends an insurance company that

Sitting around the closing tables (business may be slow, but i do close every now and then) I have been noticing far fewer buyers using mortgage brokers to close their loans lately... and far fewer brokers still in business. Consolidation and tough, tough market changes are taking a toll on that segment of the money lending industry. How bad is it? Check out this report from National Mortgage News: The dollar amount of mortgages funded through loan brokers hit a new low in the second quarter in terms of market share — just 14.9% of all originations. Wholesale lenders tabled funded just $87 billion in loans in Q2, out of a total origination pie of $583 billion. Loan brokers' dominance of mortgage lending peaked in the fourth quarter of 2007 just shy of 30% Business volume cut in half over the last 18 months? yikes! On the bright side, the brokers who are surviving seem to be doing very nice loans for my clients. The processing times seem to be running shorter than the retail lenders

Like most all of you (I imagine) I have been spending every waking hour by the front door, staring at the mailbox, waiting for the letter carrier person to deliver my 2008 2nd Installment Property Tax bill. OK, maybe not. For the 16th year of the last 17 (by my count, anyway) tax bills will be delivered late. No word from anyone I've spoke with on when to expect them. But let us leave that sleeping dog lie for a moment. Lets look forward to next year's property taxes... and to pieces of legislation still pending action NEWLY ENACTED: Two weeks ago, Governor Quinn signed SB2125 into law. Beginning in 2010, the 1st installment of property tax bills in Cook County will be computed at 55% of the total of each tax bill for the preceding year (up from 50%) The purpose of the bill is to reduce payment pressure on taxpayers when actual tax numbers are calculated and reflected in the second bill. Counties with 3 million or more residents (i.e., Cook) can also now change their tax cy

Chicago area real estate contract live or die depending on the results of mortgage lender appraisal reports. If the property value does not justify the loan, the contract is going nowhere. As the market defalted over the last two years, many of my clients saw contracts collapse based on low appraisals. A great many Chicago area Realtors , bloggers and other real estate pundits were quick to place blame for low property valuations on the Home Valuation Code of Conduct that became effective this past May. Frankly, the low appraisals were already a problem long before HVCC went into effect. For all the uproar, I am seeing a rather interesting (positive) trend of late. More on that in a moment. First a quick recap. The HVCC is not so much law, as it is the result of an agreed settlement entered into by Fannie Mae, Freddie Mac, and the office of the New York State Attorney General. The idea was to stem the tide of appraisal fraud and abuse by changing the way that lenders select their

Have you tried to modify a client's mortgage loan, negotiate a short sale or tried to discuss a file in process with an underwriter recently? If not, this video pretty much sums up what the experience is feeling like. Ok, the dialogue is in russian, but watch it anyway..... You'll get it.

I had the good fortune this afternoon to be retained in another Chicago condominium purchase. After an introductory phone conversation, I asked the client to forward his contract for review. Much to my surprise (and delight) I immediately recognized that the newest local form contract is finally in circulation. Ladies & Gentlemen of the real estate community, I give you "Multi-Board Residential Real Estate Contract 5.0. A more complete exploration of the Multi-Board 5.0 form will follow in another post or two. I know that a lot of realtors do not like the form for its shear heft (14 pages compared to the Chicago Board's 4 pager), but I like this one and encourage everyone to at least give some consideration to "trading up" These two features alone make it the best available contract for local transactions: A new font and larger type make this one emminently more readable, even if faxed 3, 4, or 7 times back and forth during negotiations. The electronic form (5.0e

Its Official - The Governor signed off on PA-96-0232 this week. Illinois homeowners are now required to give a 23rd disclosure to prospective purchasers to comply with the Real Property Disclosure laws; knowledge of the property's past use for the manufacture of methamphetamines.

This programs, as reported may be "just the trick" for some distressed homeowners. Turns 30% of an existing mortgage loan balance into an interest free 2nd loan, not repayable until (if ever) the remaining 70% is paid off. the catch? (you knew there was one, didn't you?) the program is available only to borrowers who's loans are guaranteed by the fha. lets put that in perspective for a moment. in 2006, less than 4% of all home loans in the us were FHA backed. In 1990, they wrote 19% of all loans. FHA Loans: New Refinance Option for FHA Borrowers Allows Second Interest-Free FHA Loan | ThinkGlink Posted using ShareThis

The rules of the game change today as new federal regulations governing "Good Faith" Estimates of closing costs ( GFEs ) and Truth in Lending Disclosures ( TILs ) go into effect. TIL statements disclose a loan's APR - a measure of the effective interest rate after taking certain closing costs into account. The days of quick mortgage-financed closings are gone. Period. End of Paragraph. Simply put, the fastest anyone is going to possibly be able to close is 7 business days after the lender delivers its GFE and TIL. That assumes everything goes flawlessly in the mortgage approval process. If there was a significant mis -statement of closing costs that results in a 1/4 % change in the APR before closing, new disclosures must be given and a new 3 business day waiting period must follow. These regulations are likely to wreck havoc with closing schedules for the foreseeable future - at least until mortgage lenders and title companies adopt new work flows. Preliminary GFEs an

Good news for Buyers willing to purchase a foreclosure property. Not so much for anyone else who wants to sell a home. Someone at Freddie Mac must to be watching a lot of late night television infomercials. The nations #2 mortgage finance company is offering comprehensive two year home warranties and will pay up to 3.5% of the purchase price to qualified buyers of their HomeSteps foreclosures. The " Smart Buy " sales promotion is intended to help the mortgage giant unload a larger share of its growing portfolio of repossessed homes. It is no secret that glut of foreclosed homes is weighing on Freddie Mac, just the same as other financial institutions. Freddie had 29,145 homes in its "real estate owned" portfolio as of March 31st, more than double that at the end of 2007. The costs have deepened the company's losses, which have forced it to draw $51.7 billion in government support. Foreclosure inventory is costly to maintain and difficult to unload. So, what do

Real estate brokers charge fees for their services. That seems only fair. Traditionally, commissions are based on an agreed percentage of a property's sale price. More recently, some brokers have adopted flat fee commission protocols. Over the last several years, a growing number of local real estate brokers have begun to add fixed administrative brokerage charges to their sale-price based commissions. The admin charge is supposed to cover office overhead or related expenses. The fee amounts seem to vary from office to office. To the best of my knowledge and understanding, they are not shared with sales agents, but are retained by the office. A recent court decision handed down by a Federal District Court in Alabama, Busby v. JRHBW Realty , calls the legality of such fees into question. The 11 th Federal Circuit has ruled that such charges violate the Real Estate Settlement Practices Act because the brokerages that impose the fees do not provide any additional services to the cons

Remember HUD Secretary Shaun Donovan's proclamation back in May? "We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment". I blawged about it here . I've represented a dozen or so first time home buyers in Chicago area closings since then. I've seen many more first time buyers while representing sellers, too. Still waiting to see someone who is actually use the tax credit at the closing table. Noone in Illinois seems to have figured out how to implement the FHA's proposal. Not so for Massechusets. The Commonwealth's MassHousing loan program , announced yesterday, is one of the only programs accross the nation that actually monetizes the tax credit (allows Buyers to use the tax credit at closing, rather than wait for a benefit when they file their federal income tax returns). Those cream pie eating, red hose wearing, celtic loving types better act quick

The FBI released it's annual report on mortgage fraud earlier this week. Virtually all law enforcement and industry statistics show an upswing in mortgage fraud activity. The Mortgage Bankers Association released the National Delinquency Survey last week, reporting that the increase in foreclosure rates between quarters has reached its highest point since 1972 (when the records were first kept). The increase in foreclosures on first time mortgages increased by 36% between the first quarter 2008 and first quarter 2009. Little wonder why lenders are scrutinizing loan applications with an even finer toothed comb. Nor should it come as any surprise that lending guidelines are getting even tighter than they already are. Fannie Mae recently announced several new underwriting / eligibility guidelines that will become effective September 1st. Some key changes all Chicago area home buyers (and their agents) need to know: Buyers wishing to purchase owner occupied 2 flats will need to mak

It is getting harder and harder to satisfy mortgage loan underwriters these days. Ask anyone who makes a living helping Chicago area home Buyers or Sellers close their real estate contracts. Tight mortgage lending guidelines are requiring Buyers to document every last nickel of income and savings, the sources of those funds. New appraisal rules are insulating property appraisers from real estate agents and loan officers. Lenders are requiring specific (and increasingly careful) examination of chains of the transfer of title ownership. There is a lot more paperwork being required. Its taking Longer. Frankly, it is a pain in the kishkes trying to manage the process and keep deals together as a loan application winds its way through the lending pipeline. I hear a lot of grousing from Buyers, Sellers & Real Estate Agents. (OK, I grouse about it too) But then, Tuesday's FBI report on Mortgage Frau d reminds us all why we are working so much harder. Our present day (would be) borrow

Some Chicago area Condo Sellers are facing newly increased closing costs and timing hassles, as one of the largest local property managers has instituted new charges and procedures to issue out closing related paperwork. Wolin-Levin, Inc. recently implemented a new web-based facility to generate paperwork needed in connection with condo sales and leases. My review of the new product, and the undesirable effects it will have on condo transactions follows. Condominium Managers & Disclosure Requirements Condominium Buyers should do at least some due diligence investigation of the Association's over-all financial condition. No one wants to buy a new condominium and then learn about the $20,000 special assessment that they have to pay the month following. Illinois law allows for this. If a Buyer asks, the Seller must produce information, such as the organisational documents (Declaration and By-Laws) and financial records (Budgets and Financial Statements). The association must al

Peter H. Berge at Minnesota CLE reports today that "At least in Minnesota, it is now unethical for solo practitioners to use "& Associates" in the law firm name. The Minnesota Lawyers Board of Professional Responsibility just adopted that rule in its new Opinion 20 . The stated reason for the rule is that Rule 7.1 prohibits false and misleading statements and Rule 7.5(a) shall not use a firm name or letterhead that is in violation of Rule 7.1. Using the term "& Associates" in a firm name, the LBPR reasoned, is misleading if there are not more than two licenses attorneys in the firm. While recognizing that "Associates" has other meanings in general use, the term has come to have a specific meaning in the custom of law firms. Needless to say, there has been consternation among some solo practitioners. Many solos feel they are being unfairly picked on; that if large law firms could continue to use the names of dead partners they s

I've reported from time to time over the past year about Title Insurance Companies that have closed up shop; fallout from the overall collapse of the real estate markets. Title Insurance provides critically important protection for property owners. Savvy Buyers insist that sellers provide a policy of insurance as part of every purchase transaction. It affords indemnity insurance against financial loss from defects in title to real property. It protects an owner's financial interest in real property against loss due to title defects, liens or other matters. The insurer will defend against lawsuits attacking the title. or reimburse the insured for actual monetary losses incurred, up to the dollar limit of the insurance policy. Problem is, what happens when the title insurance company shutters its doors? Contracts that are "in process" grind to a halt. Mortgage payoff checks or other checks issued from closings that are "in the mail" or otherwise un-cashed m

A big hat-tip to Wells Fargo Mortgage Consultant Martha VanBendegom for sharing information with me, so that I can share it with you. Everyone knows that a Buyer and Seller set out the terms of their real estate deal by writing and signing a contract. All agreed terms get spelled out, including the sales price and the closing date. The parties set the closing date in the contract. It gets written in stone, so to speak, no? Well, more written in sand than stone. Sand on a shoreline smacked over and over again by pounding waves of mortgage rules and procedures. Waves that erode the shoreline of that contract, and that will all but wipe those closing dates clean off the beach. Regulations spawned by the Federal Housing and Economic Recovery Act of 2008 go into effect at the end of July. The new regulations, coupled with Fannie Mae & Freddie Macs recent implementation of the Home Valuation Code of Conduct are going to take that "false illusion" of a fixed, certain, closing d

If these stories were not true, they would likely be pretty amusing. This one is true. Not at all funny. My client wants to sell his home. The Buyer's loan is approved. The Seller has moved out. Just need one last piece of paper: a payoff statement from the mortgage holder so that we can repay the loan and so the bank will release its lien against the property. (Yes, my client and I are dealing with one of the national lenders). Most often, asking for a payoff letter a simple enough proposition. Call the bank's super-computer; key in some identification information and a fax number; voila: a computer generated payoff statement arrives in my fax in-box. Not so here. The property is in foreclosure. Things go a bit differently. Gotta go through the foreclosure attorneys (which we have). Gotta send in a written request (which we have). Gotta have the borrowers written authorization (we have). The process takes a bit longer. Started two weeks ago for goodness sake. Understand, we c

Every Chicago are real estate closing I participate in has some sort of allocation of property taxes between the buyer and seller; the tax pro-ration. Calculating the pro-rations amount is based, in part, on the day of the year on which the closing takes place. So, as a lawyer who helps clients buy and sell their homes, I refer frequently to the "day of year" counter on my title-company issued desk blotter monthly calender. Which is why I am so very aware of the fast approaching chronological mid-point of the year. So, how are we doing in residential real estate? The Illinois Association of Realtor's monthly activity report came out again this week. Analysts who sifted through the data were able to find a few shiny nuggets of good news, but things still are not quite trending the way we might hope they would be. 422 fewer condos sold in Chicago, (1,053 fewer total residences sold in the metro area) May 2009 compared to May 2008. Drops of 27.5% and 18.7% respectively. Pu

Stop me if you have heard this one before. FHA financing has become more prevalent in the market over the last two years as Fannie Mae and Freddie Mac tightened the reigns on low down payment condo loans. More and more condo deals (at least the ones I am seeing) are being financed by FHA backed loans - they are still guaranteeing loans for up to 97% of a purchase price. That may change soon in the wake of FHA's Mortgage Letter 09-19, issued earlier this week. Lending guidelines for condominiums are changing. again. Basically, FHA requires that both the borrower and the property must satisfy lending guidelines. Condo approvals come in three different flavors: The Condominium is already on HUD's approved list; The developer or association apply for an approval of the entire building/project (to get on that list) - a "blanket" approval; or, The specific unit is approved on an ad hoc basis - a "spot" approval. Spot approvals require certain specified requi

Back in March , I wrote about HB 0155 . The bill would effectively prohibit a condominium from exercising a right of first refusal to bar a potential buyer from purchasing a unit because that buyer wants to finance the deal with an FHA loan. That bill, slightly amended, has passed out of the State House & Senate and awaits the Governor's signature or veto (more on that below). Many Condo Declarations contain a broad rights of first refusal over sale contracts. FHA lending guidelines prohibit them, that is to say, they will not lend to buyers wishing to purchase into associations that restrict sales in this manner. (Don't get me started on the "logic" behind the guideline - I have only seen the right actually exercised once in the last 10 years). This new law would simply tell Condo Associations - hey, don't even think of exercising that right you aren't going to use anyway. So if we ban Associations from asserting the right of first refusal, does that mea