the wasserblawg

Way back in March , I posted some comments on the foreclosure troubles at the Sterling Private Residences , a near-north high rise apartment building that American Invsco converted to condominiums. Today Crains gives statistics to something I "knew" and reported anectdotably back then: the foreclosure problem extends to many of its other conversion projects as well. According to the story , eight of American Invsco's downtown towers have accounted for 57.7 percent of all foreclosure cases brought against original buyers in all 76 downtown condo projects of 175 units or more since 2001. ( Invsco accounted for 12 percent of the homes sold in big downtown projects over the same period of time.) Crains picks up on the same issue I did in this Spring (and back when clients were showing me contracts to review): "Why do American Invsco buildings lead downtown Chicago in foreclosure cases? One explanation may be the role of investors, buyers who intend to flip or rent...

Most every Buyer I represent in a home purchase needs a mortgage financing contingency as part of their contract. That is the weasel clause that lets a Buyer escape out if he cannot get the necessary financing. Mortgage lenders use a variety of factors to decide if they are going to lend that money, one of which being the property's appraised value: "is there enough value in the home to justify (secure) the loan"? If the value isn't there, the loan will not be approved, if the loan is not approved, the Buyer invokes the contingency. if the Buyer invokes the contingency, the deal is (almost always) canceled. Back in February , I posted comments on a presentation made to the Illinois Real Estate Lawyers Association regarding mortgage appraisals in the current market. The presenter described the tighter standards lenders were imposing on their appraisers to try to guard against lending too much money against properties located in areas suffering declining market values...

It stands to reason that most all of the professionals involved in a real estate transaction have a vested interest in seeing the deal through to a closing. From a distance, we lawyers "could" be included in this camp, understandably so. My buyers hire me (and many real estate agents refer them to me) because they want to buy. Sellers hire me because they want to sell. No one wants the deal to collapse. But the truth runs a bit deeper, as my first loyalties run to my client, and a large part of my job is to try to keep my clients out of trouble. From time to time, my review of a contract leads me to an unfortunate, but inevitable conclusion: the deal stinks. In those instances, I try hard to talk my clients out of going forward on their contracts; "off the ledge," if you will. Some listen, some don't. At least I try. I was reminded of all this earlier this week while reading about the problems at the Sterling Private Residences . Turns out that there is a ra...