Words to Describe the Subprime Crisis...

I think it's the best description I've seen about the current mortgage malaise from my favorite former member of the Bush cabinet, Paul O'Neil:

NYT: It’s so hard to understand how the subprime mortgage crisis has triggered a financial crisis of global proportions.

A: If you have 10 bottles of water, and one bottle had poison in it, and you didn’t know which one, you probably wouldn’t drink out of any of the 10 bottles; that’s basically what we’ve got there.

We're Top 10!

I guess it's not so bad here (maybe I'll stop trying to relocate). U.S. Census Bureau released the top ten growth metro areas from 7/06 to 7/07. We're seventh and the only Midwest location on the list. As for other large, Midwestern cities...get the net.

Congress, Competence and Combat Veterans

Did ya read how Congress included increased maximum mortgage limits in high-cost areas for Fannie Mae, Freddie Mac and FHA loans in the recently enacted stimulus package but did NOT include increased maximums for VA loans?

While the limits of the other three programs now extend to $729,750 in the highest-cost areas, including Washington -- at least through Dec. 31 -- VA loans remain capped at $417,000.

Hmmm...yeah we support the troops & actually read legislation we vote on.

Home-Sharing for Cost-Cutting

Saw this overview regarding increased use of home-sharing programs for seniors in particular. It's akin to renting out a room in your home but it seems many senior-oriented social service organizations help with screening and matching. Look there's even a national association.

Closing Real Estate in Kendall County??

Yeah...now get out to Yorkville and build a development. Here's the piece reporting Kendall as the nation's fastest growing county. I think I'm more surprised about the 2.8% growth rate in DuPage...its really become a mature, slow growth county quickly.

Paying a Broker MORE To Sell Your Home

We've written about this previously here but I saw another take on the issue here from BusinessWeek. From the piece...

Jim McCarty decided a year ago to give real estate agents an added incentive to guide buyers past the clutter of for-sale signs to his vacant four-bedroom house about 20 miles outside of Minneapolis. He agreed to pay his agent an 8% commission, which would be split (55%/45%) with the agent representing the buyer.

As long as you keep the listing time frame fairly short what's to lose??

A Phone Call From the Chicago Dept. of Revenue...

I thought I'd just mention with all this ragging on Chicago for the recent tax increases, I did get a personalized call from a Chicago Department of Revenue representative late last week informing me of the new tax and mentioning that they'd have a new transfer tax form up on there Website this week.

Here's the press release from the City and here's the new transfer tax form. Still the same old fill-in-the-boxes form. Note on the form they label the new tax the "CTA portion" of the tax...that just makes it all better. Kind of like the signs in county offices sort of disclaiming fee increases by saying the General Assembly passed this new law, yada yada yada.

Re-Opened Cook Board of Review Appeals

Yikes, I almost missed this one, but from March 17 - March 31st, the Cook County Board of Review announced that it will reopen both city and suburban townships for property tax appeals where the filing deadlines had passed. Here's the Board's press release.

The Final Shoe Drops in Chicago

The Chicago City Council took its final step regarding the increased Chicago City Transfer Tax with the new $3 per $1,000 increase being shifted to Sellers. So in final analysis Buyer's are still at the $7.50 per $1,000 transfer tax (no change) and Sellers have a brand stinkin' new $3 per $1,000 tax.

What's the impact?

I think short term, a negative impact on the City's real estate market and long term negligible. Generally I would applaud the tax shift to Seller (if there has to be one that's where I'd put it), however in the very near term I think it potentially stops people from selling with all the people underwater on their mortgages and all the "short sale" efforts going on.

Borrowers Hitting Refinance Snag

The Journal had an overview piece today regarding "new" difficulty that borrowers are facing when trying to refinance a primary mortgage if there's a second or home equity line also on the property.

In the latest sign of how the credit crunch is hurting even borrowers with good credit, some home-equity lenders are starting to slam the door on homeowners who want to refinance their primary mortgages.

In some cases, homeowners who in the past would have been easily approved for a mortgage refinancing are finding that they can't get their home-equity lender to give the go-ahead, which is required to complete the transaction. Others are being told by their home-equity lender that they need to reduce the size of their loan or line of credit.

Perhaps "Appraise Out" Will Again Have Meaning

Fannie and Freddie appear ready to modify their real estate appraisal practices...

FANNIE, FREDDIE OVERHAULING APPRAISAL PROCEDURES

NEW YORK (Bloomberg) – Fannie Mae and Freddie Mac, the biggest sources of financing for U.S. home loans, have reached an agreement with New York Attorney General Andrew Cuomo to buy mortgages only from lenders that adopt new standards intended to ensure independent home appraisals.

The new rules announced yesterday prohibit mortgage brokers from using in-house staff to do valuations for any home loans the government-chartered companies purchase. Lenders will also be barred from using appraisal management firms they own or control.

"We believe the appraisals were often fraudulent because there were conflicts of interest and pressure on the appraisers," Cuomo said.

Mortgage lenders that own appraisal companies include Countrywide Financial Corp., the nation's largest home-loan originator.

Playing Lowball

An interesting piece entitled, "How to play lowball and keep everyone happy."

ANOTHER County Fee/Tax Increase

Saw this over at the wasserblawg regarding Cook County Recorder fee increases effective this past Monday. Essentially a $12 increase per recording...that's like a 30% jump on the typical deed.

Should I Buy or Should I Rent...

Should I stay or should I go now...

Or as a recent piece asked, Should you buy or should you hold off? This piece had a great 10+ point checklist regarding whether or not to take the dive back into the "water" of the residential real estate market. My "feel," wait a year. The Chicagoland housing market is still soft and more importantly the economy's in recession.

But to give the counter-argument briefly, we had a closing last week where the interest rate was like 4.8%.

The Sloppiest of 500...Follow-Up

I guess I don't really have it that bad. I was reading a little blurb from the great Gary R. Gehlbach in the February ISBA Real Property Section Council Newsletter (password protected) about "The absent buyers."

The absent buyers

Hopefully this isn’t a growing trend, but twice in the last month I have appeared at a closing representing the seller, but neither the buyer nor anyone with power of attorney for the buyer was present or intended to be. In both cases the buyer’s money had been timely wired, and in both cases the real estate broker was there. Neither the buyers nor their representatives (in one of these cases, the buyer was using an attorney, but in Pennsylvania, not licensed to practice in Illinois) understood that either the buyer or a duly authorized agent would be required to sign the Settlement Statement and other documents. One of these closings was thus delayed over a weekend to allow the buyer to sign documents that were sent via overnight courier to him. The other closing was delayed for several hours.

In neither case, even though I have closed thousands and thousands of real estate transactions, did it occur to me to make sure that the buyer or an authorized agent was available to sign documents, or perhaps needed to do so in advance of the closing. I assumed that everyone knew this (I guess that’s what happens when one “assumes”).

The Sloppiest of 500...Follow-Up

I guess I don't really have it that bad. I was reading a little blurb from the great Gary R. Gehlbach in the February ISBA Real Property Section Council Newsletter (password protected) about "The absent buyers."

The absent buyers

Hopefully this isn’t a growing trend, but twice in the last month I have appeared at a closing representing the seller, but neither the buyer nor anyone with power of attorney for the buyer was present or intended to be. In both cases the buyer’s money had been timely wired, and in both cases the real estate broker was there. Neither the buyers nor their representatives (in one of these cases, the buyer was using an attorney, but in Pennsylvania, not licensed to practice in Illinois) understood that either the buyer or a duly authorized agent would be required to sign the Settlement Statement and other documents. One of these closings was thus delayed over a weekend to allow the buyer to sign documents that were sent via overnight courier to him. The other closing was delayed for several hours.

In neither case, even though I have closed thousands and thousands of real estate transactions, did it occur to me to make sure that the buyer or an authorized agent was available to sign documents, or perhaps needed to do so in advance of the closing. I assumed that everyone knew this (I guess that’s what happens when one “assumes”).

Dick Cheney and this Blog

Or real estate in general (i.e. the subject of this blog). Saw this nugget on my favorite political satire blog, Wonkette, regarding Cheney's pending retirement home in McLean, VA...right next to the CIA in Langley, VA. How fitting...

The Sloppiest of 500

Yeah, the SLOPPIEST closing in the approximately 500 transactions that I've been involved with as a practicing attorney...I guess as the market slows the depth of talent diminishes.

So this is what happened last week...

I was expecting a ho-hum closing, I had gotten involved in the deal late. I had the purchaser from a developer so the contract had been signed more than a year ago and just the last couple weeks I got involved with some last minute issues and then to attend the closing.

First, no Seller's attorney at closing and Seller's attorney wasn't even reachable by e-mail or cell phone. When you have a developer who's selling a high volume of units, it's not uncommon for Seller's attorney not to appear at closing. But, problems still come up and to be unreachable is just ridiculous and tacky.

Second, some half of Seller's documents including such unimportant ones as THE DEED were wrong. The grantee and legal description were not for the unit at issue.

Third, Seller's attorney DID NOT have various documents such as the property's warranty and the Affidavit of Title.

Well, I guess these developers in a slowing real estate market have to cut somewhere...I'm just not sure your legal counsel is the first place to cut.