"For Sale" Signs Often a Barrier to Refi

"Zillow" Mary had a good reminder article Monday about how one's ability to refinance a mortgage can often be hurt when the home has recently been listed for sale. There's nothing hard and fast on this or any firm time-lines but here's the key:

That's because...the mortgage business tends to presume that if you refinance your home after a failed attempt to sell, you still might try to sell it soon -- paying off the loan and thus erasing any profit the lender might have made.

The article suggests that lenders will often require a 3 to 12 month waiting period before they'd fund a refi. This is on par with some experiences we've had with some clients often related to selling property from a marital estate, then changing minds and trying to refi and buyout the former spouse.

"Ozone Man" and Buying Real Estate

Saw this piece about buying "green" houses. The article has many good tips but what stood out was the guidance that the pricing is nearly at a point where the "green" homes are the better value...

Five years ago, anyone who wanted to build an environmentally-friendly home could expect to pay a premium of 11% to 25%, depending on just how green they wanted to go. Now, they'd pay just 3% to 5%, says Jim Amorin, vice president for the Appraisal Institute, a professional trade organization. Those extra costs can easily be offset by the long-term savings on electric and other utility bills these homes offer. Just using an energy-efficient furnace or boiler could save you $570 annually, according to the Department of Energy.

Another selling point: While the average U.S. home lost 5.7% of its value in 2007, eco-friendly homes have held their value, even appreciating in price. Come sale time, a green property typically appraises for 10% to 15% higher than comparable conventional homes, depending on region and which upgrades were made, says Amorin.

A Statistical Anomaly??

Did anyone take a close look at the new home sales released Monday? Yeah they dropped 26.4% year over year, no surprise there. But if you look region by region here's the breakdown:

The drop, which marked the worst sales year on record, represented weakness in every part of the country except the Northeast, where sales posted a 1.6 percent advance. Sales declined by 32.2 percent in the West, 26.7 percent in the Midwest and 26.3 percent in the South.

I don't have any particular knowledge about those numbers just found it staggering that 3 regions dropped by over 25% and then 1 region actually increased.

Mortgage Brokers Beware

Anyone takin' a look at this Senate Bill 1167 recently signed by the Governor w/ an effective date of 6/1/08?? There are some pretty punitive penalties included for mortgage brokers.

Here's an overview from January's ISBA Bar Journal:

The law clarifies that brokers must verify that the borrower has the ability to repay the loan at the time it is made through proof and review of the borrower’s income, employment, and other financial records. Failure to meet these duties may result in the broker being personally responsible for the debt in the event of a default.

Brokers are also under a duty to represent the borrower’s best interests in good faith. They must seek the best loan for their borrower. All broker fees must be disclosed to the borrower in advance.

A number of loan formats and practices are proscribed. Brokers may not offer a loan with a pre-payment penalty unless another loan without one is also offered. Prepayment penalties are limited to no more than 3 percent if the loan is ended in the first year, 2 percent if ended in the second, and 1 percent in the third. They cannot be enforced in the event of a sale or if the dwelling is destroyed, such as by fire or storm.


Any changes in loan terms require timely notice to the borrower, “timely” being defined as within three days of notice to the broker from the end lender or within 24 hours of closing. The broker continues to have an obligation to the borrower to protect the borrower from damage such changes will cause. If there isn’t a cure, the broker must re-fund the amount the borrower is damaged.


In addition to potential liability in the event of a default for the debt, brokers are also subject to the enforcement of the other rights and obligations through actions under the Consumer Fraud and Deceptive Business Practices Act by both the Attorney General and by private actions. They are also subject to disciplinary actions by the Department of Financial and Professional Regulation (DFPR).

Ah, more regulation, that will surely help the real estate market.

Tenant Procedures Changed Regarding Foreclosures

The IL Code of Civil Procedure has been amended to allow foreclosure tenants who are current on their rent to retain possession of their property for a designated period. 735 ILCS 5/15-1701. Section 15-1701(h)(4) provides that, in a case of foreclosure where the tenant is current on his or her rent, any order of possession must allow the tenant to retain possession of the property for “120 days following the notice of the hearing on the supplemental petition...or...through the duration of his or her lease, whichever is shorter.”

This amendment shall apply only if the tenant continues to pay his or her rent in full during the 120 day period. Some fairly pro-tenant legislation in my view. Hopefully this will serve to clarify things for tenants in properties facing foreclosure. I wonder how many tenants will be showing up to court to be sure the new provisions are followed.

A Plug for a Chicago Real Estate Blawger

Just a quick note about a "newish" blawger and frequent commenter here: Attorney Michael Wasserman and the wasserblawg. I'm not sure what a "blawg" is but he's got some good info. over there.

Feeding the "Combine" - Part II

A follow-up to our recent post here regarding a proposed Chicago Transfer Tax increase. From the sounds of it the increase to $10.50 per $1,000 from $7.50 is a done deal with a city council vote set for February 6th. Hey I'm no economist, although I am a weekly reader of The Economist, but I never thought it was great to raise taxes heading into a recession.

I wonder why they don't consider doing something on the seller's side rather than adding to the buyer's burden. Chicago's in a distinct minority in taxing buyer's.

When there's Water Leaking Through the Ceiling...

grab an umbrella. But what next? I'm talking about condos here. We get consistent calls regarding this sort of scenario: Condo unit gets damaged due to water leaking through the ceiling from the unit above it. Of course first you call your neighborhood real estate lawyer.

But then...

Under Section 9.1 of the IL Condo Property Act, owners are responsible for any damage that arises from the use or operation of their unit. If damage arises from the operation of the upstairs unit, that owner should be liable for costs to the lower unit owner.

So the first step is to contact the unit owner above you. It's her responsibility. Hopefully she has an insurance policy on her unit and they take care of it. If the person above you is a deadbeat, it is appropriate to contact your insurer for a payout. The difficulty here being you might face a rate increase and there's likely some amount of deductible you need to cover out-of-pocket. I've known people who have their insurer cover the damage but then sue the unit owner above in small claims for the $1,000 deductible.

And the Lawsuits Begin...

Saw this article over the weekend...it describes a lawsuit brought by a California couple against their real estate agent seemingly for breach of his fiduciary duty in allowing the couple to purchase a house that wasn't worth what they paid for it. It seems the suit originally included the mortgage broker and appraiser but they've both settled.

My questions would center around the role and expected skills/knowledge of a real estate agent. This isn't an appraiser. The Plaintiff sounds like a "peach" of a client and hey Defense lawyer why are you letting your client be interviewed for the article??

Seriously, an Energy Audit

The Weekend Journal had a piece here. Something to consider as the mercury broke the negative digits today in ChiTown. I mean I feel a draft here sitting next to the window in the library. Some guidance here from the Dept. of Energy.

Pay Your Property Taxes & Oh, and Never Trust...

the flunkies working at the desk of the government agencies when serious legal consequences are at stake.

Saw this property tax case reported recently from the First District Appellate Court. In 2000 the property owner failed to pay her property taxes and the property was put up for auction in April, 2002 at the Cook County annual tax sale. The redemption period (the date by which a property owner can pay the taxes w/ accumulated fees and interest and retain the property) was set to expire on February 24, 2005. So cutting to the chase...

On February 18, 2005 the property owner paid the county clerk in the amount stated on the estimate provided to her by the county clerk. However, the day before the redemption period ended the clerk's office called and told the property owner that she was some $20 short on her redemption payment. So the company that bought her back taxes obviously wanted the court to issue a tax deed. It did not!

The court said that the property owner was entitled to an "equitable redemption" and gave the property owner an additional 14 days to pay the delinquency which she then did. I surely wouldn't have been happy if I had bought those taxes. And ya know when courts start using the "E" word, equity/equitable, that there ain't too much statutory support for their position.

Buy your Second Home First?

Good or bad idea? There was an article over the weekend suggesting the above.

The gist of the piece was to get the cheaper home first and start building equity instead of waiting until you're reading to drop $400k in the Chicago area.

Will County Real Estate Trouble

There was a front page overview piece yesterday in the Sunday Trib. regarding the state of the real estate market in Will County. Too long to summarize but what that piece really emphasizes is how broad the down market's impact is. Because Will County continues to grow about as fast as anywhere in the county and the job growth is there too.

Feeding the "Combine"

Anyone notice w/ all the political grand standing related to this state transportation bill fight that one of the funding sources for the measure is an increase in Chicago's real estate transfer tax which those of you in the field know is an already fairly steep buyer's charge of $7.50 per $1,000. I think the proposed increase would be up to $10.50 per $1,000 although most of the media coverage doesn't give us the juicy real estate details we're interested in.

Association Trade Show

We've attended and presented at The Community Associations Institute Illinois Chapter annual conference and trade show in the past. It's coming up 1/19/08 in Rosemont.

The "HUB" for all things Radon

Well we're some 14 days into the effective date of The Illinois Radon Awareness Act. Recall you Sellers only have a duty to disclose if you have prior knowledge of unsafe levels of radon. Here's the IL Emergency Management Agency's Radon program with information on licensed "mitigation professionals." There's a disclosure form right in the Act and the new law applies only to RESIDENTIAL property. The Act doesn't discuss things like remedies or a statute of limitations at all.

Failure to Pay Use/Occupancy is NOT Grounds for Order of Possession...

Interesting landlord/tenant matter recently out of the First District:

1st Dist. Circle Management, LLC. v. Olivier, No. 1-07-0621 (December 28, 2007) 3rd div. Reversed Trial court erred when it granted plaintiff, landlord, possession of apartment occupied by defendant for failure to pay the use and occupancy order during the pendency of plaintiff's forcible entry and detainer action. Although trial court had statutory authority to enter use and occupancy order, it could not circumvent protection of Act by granting possession when parties agreed that the defendant's failure to pay was not willful; and without considering the merits of plaintiff's claim for possession. Possession order was not a proper contempt sanction or exercise of the court's inherent authority.

Frankly I'm suprised at how infrequently "use and occupancy" stuff comes up with us. We handle 5/10 Forcibles each week. I think it's more rare in the suburban Cook County courts where much of our landlord work happens. We typically are going to plead for ongoing rent and assume you get any rent that accrues prior up to trial in a final judgment. A Motion for Use and Occupancy is appropriate if the case is going to drag on a while.

To me the difficult question is like in this case, okay the tenant was ordered to pay U/O but now she's insolvent and can't pay. So you can't find that tenant in contempt of court because the violation of the order isn't wilful. I think as soon as you saw tenant not paying you go in on some motion to force a hearing/trial on the underlying Forcible pleading where you're seeking possession.

One Stop Shop for Property Management

Rentingyourhome.com...advertised as a one stop shop for property management and landlords.

Real Estate Marketing Blog

Saw this blog referenced in the Times today: Future of Real Estate Marketing.

Second Half of '08 Looks Good for Real Estate...

Yeah and those polls showing Obama up by double digits in N.H. were pretty reliable too...

But that's what NAR says here. I did have more closings in December than November, for the record. What's strange is that if you read NAR's release the facts are fairly dire. First, signed contracts actually declined month-to-month. Further, it acknowledges that mortgage and unemployment rates are rising and GDP growth is slowing.

I think after January '09 is when things get hopping again.

What's In/Out for '08 from Mark Nash...

here it is...a pet shower? Yikes!

Auction Finder

National search engine for real estate auctions: http://www.naarealestateauctions.com/

Now if you're buying the Sears Tower...

Then this might be of interest to you:

FEDERAL GOVERNMENT EXTENDS TERRORISM INSURANCE ACT
WASHINGTON (realtor.org) – President Bush last week signed a law extending the Terrorism Risk Insurance Revision Extension Act (TRIA) for seven years.

The terrorism insurance program covers both foreign and domestic acts of terrorism, and it retains a $100 million "trigger level" for damages at which point federal assistance kicks in. It also establishes a blue ribbon commission tasked with recommending a long-term private market solution.

"TRIA reauthorization will strengthen the economic security of the commercial real estate market by reducing the uncertainty of terrorism coverage availability and by covering many forms of terrorist activity," said Richard Gaylord, president of the National Association of Realtors.

The program was initiated after the 9/11 terrorist attacks.

New Real Estate Resource from Crain's...

Saw this little nugget in the Crain's Chicago Business hardcopy: Chicago Real Estate Daily. It looks like it offers a free daily e-mail too.

Deed In Lieu and Right of Setoff

Interesting bankruptcy case touching on some fairly common residential real estate issues in In re Johnson (371 BR 336).

The opinion starts with facts that seem rather unremarkable, the Johnson's got behind on mortgage loan payments and negotiated a deed in lieu of foreclosure with the bank...i.e. they conveyed the property to the bank to avoid a foreclosure suit. Fairly common event. The case got interesting when the Johnson's attempted to get some $10k from an interest reserve account back from the bank. The bank refused.

After trial the bankruptcy court found that the bank had a common law and contractual "right of setoff." Some interesting drafting issues and reminders to be careful in areas that we think of as sort of "no brainers."

PMI Tax Deduction Extended to 2010

The above which was to only be good for 2007 loan closings was extended for three years.

HUD's Rehab Loans: If You Can't Sell, Remodel!

Read a little nugget about FHA's 203(k) loan program. The program allows for remodeling funds to be advanced up to $275k. The amount advanced is based on the value of the upgraded home.

The Trib. covered the program recently.

Protect Yourself from Mortgage Fraud on YouTube

Now I must admit I prefer watching old sport clips like the '86 Masters on YouTube. But there's nothing wrong with Freddie Mac using the medium for educating consumers about mortgage fraud.

Borrower Outreach with Da Mayor

The City of Chicago is sponsoring various Borrower Outreach programs early in '08 for homeowners with mortgage trouble.

The goal of Borrower Outreach Days is to connect Chicago residents with resources designed to help prevent foreclosure. Services include:

*Loan work-out sessions with lenders and counseling agencies
*Access to free legal assistance on foreclosure issues
*Information about mortgage refinance options
*Information about the City's financial literacy programs

Mortgage Fee Website

Here's a new Website promising to help consumers get better disclosure for mortgage-related fees: Fee Disclosure. The NYTimes had a piece as well.

My New Years Eve Present: Fastest Closing of the Year

So a happy end of the year for us here. I had my final residential real estate closing of the year on Monday, December 31, 2007 down at Mercury Title in the Loop. A nice 45 minute job and go crack the bubbly. Now lets just hope they get that garage finished.