Closing Chicago Real Estate

Well, hopefully as we enter year 3 of the real estate malaise no one is signing up for 1-3 year ARMS or some of the interest-only products that devastated many home-buyers. But I’m still seeing plenty of folks buying homes who shouldn’t be.

Here’s a sad example that I’ve been dealing with lately…

Clients purchase a modest home earlier this year…just barely. Meaning, they barely have adequate funds to bring to closing. Well, several months post-closing I get a call about some flooding that they’re experiencing in the home’s basement (they did do an inspection). Sadly upon review it seems like the property Sellers were fraudulent and that a claim under the Residential Real Property Disclosure Act seems likely. Yet enforcement of legal rights usually requires a little upfront investment….RETAINER!

Perhaps more importantly, if you don’t have $5,000-$10,000 in an emergency fund to deal with something like flooding/plumbing, etc. you likely can’t afford to own that home.

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Comments (1) Jan 14 2010

Just a quick follow-up on our recent post about the chances for the first time homebuyer tax credit extension. NYTimes reports that the extension was discussed in the President’s meeting with Senate Majority Leader Reid and Speaker Pelosi yesterday…

Extending and possibly expanding the popular home-buyers credit, which is due to expire after November, is high among options for further stimulating the economy and creating jobs, Congressional aides said, though a White House official said it was only briefly mentioned on Wednesday in an Oval Office meeting between President Obama, Speaker Nancy Pelosi of California and Senator Harry Reid of Nevada, the Senate majority leader.

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Comments (0) Oct 08 2009

FHA delays implementation of new lending rules relating to condominium purchases. Saw this nugget changing the effective date to November 2, 2009 from October 1, 2009. Mike Wasserman had a good initial post on the rule changes. Short-term the delay likely helps some of the newer condo developments since the new rules require a higher percentage of units to be sold before the building is FHA elgible. Yet for the older buildings, I’m ready to kiss that right-of-first-refusal restriction goodbye.

Housing trouble down at Millikin in Decatur.  The small liberal arts school was charged with violating the Fair Housing Act for refusing to allow a blind student live in the dorms with her guide dog. It’s just an allegation at this point but I was suprised to see Millikin mentioned in a HUD press release.

Finally an interesting panoply of housng facts released by the Census Bureau regarding the state of U.S. housing…

Housing

• California homeowners with mortgages ($2,384) had the highest median housing costs in the nation. New Jersey had the second highest median housing cost ($2,360).  Hawaii ($2,265) and the District of Columbia ($2,218) followed, but were not significantly different from each other.  Rounding out the top six were Connecticut ($2,108) and Massachusetts ($2,105), which also were not significantly different from each other.
  

• Median selected monthly housing costs for homeowners with one or more mortgages, after adjusting for inflation, rose between 2007 and 2008 for nine states and declined for eight states. Five states that experienced increases were in the West (Hawaii, Montana, Utah, Washington, and Wyoming), three were in the Northeast (Connecticut, Maryland, and Pennsylvania), and one was in the South (Mississippi).
  

• Five states that experienced declines were in the South (Florida, North Carolina, South Carolina, Texas, and West Virginia) and three were in the Midwest (Michigan, Missouri, and Ohio). The average decrease in the median selected monthly housing costs for homeowners with mortgages in the United States was 0.3 percent between 2007 and 2008.
  

• The percent change in median home values decreased in the United States (-2.0 percent) and in 22 states between 2007 and 2008 – five in the Northeast (Massachusetts, Rhode Island, New Jersey, Connecticut, and New Hampshire); four in the South (Florida, Maryland, West Virginia, and Georgia); eight in the Midwest (Michigan, Minnesota, Ohio, Indiana, Missouri, Iowa, Wisconsin, and Illinois); and five in the West (Nevada, California, Arizona, Hawaii, and Washington). Although the rate of decline was not significantly different from each other, two states showed larger percentage declines than the other 48 states and the District of Columbia: Nevada (16.0 percent) and California (15.5 percent). Florida (8.6 percent) ranked third. (See: subject table S2506)
  

• States that experienced increases were Texas, Utah, Wyoming, Oregon, Pennsylvania, Tennessee, and North Carolina. Of those states, no one state had a rate of increase that was significantly higher than the other six.

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Comments (3) Oct 01 2009

I haven’t.

I see a bit of smoke coming from the White House and it seems tons of ‘loan modification’ law firms have popped-up but I have not seen a loan modified. And I’ve worked with several people in attempting to do this but the banks won’t do it. Here’s another piece describing the lack of help available. Great quote from Treasury Department spokeswoman about non-success:

A Treasury spokeswoman, Jenni Engebretsen, confirmed that homeowners like Ms. Ulery — current on their mortgages yet grappling with a hardship like unemployment — were eligible for loan modifications under the program. She said mortgage servicers had offered to modify more than 100,000 loans since the department announced the program.

But how many loans have been modified? Ms. Engebretsen declined to say, noting that the Treasury was working with mortgage companies to “fine-tune reporting systems.”

So how many loans have been modified?  My answer, virtually none.

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Comments (9) Jun 03 2009

A little slow on this…going through a pile of my ‘blog clippings.’ But a significant jump to $625,000 from $417,000 on reverse mortgages that allow seniors over 62 to borrow against the equity in their home. An easy planning tool for cash-strapped seniors. Here’s HUD’s release:

FHA’s reverse mortgage product known as the Home Equity Conversion Mortgage (HECM) will have a new national mortgage limit of $625,500, up from the previous limit of high of $417,000. Reverse mortgages allow homeowners age 62 and older to borrow against the value of their homes without selling them or having to make any monthly repayments. Homeowners can select a lump-sum payment, monthly payments or tap into a line of credit. No repayment is required as long as a homeowner lives in a home with a reverse mortgage. The reverse mortgage is repaid, with interest, when a homeowner sells the home or dies.

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Comments (0) May 15 2009

And let me say it again…MakingHomeAffordable.gov!

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Comments (0) Apr 17 2009

That’s the headline here with a thorough analysis that not only answers the above but included a great overview that really answers the question:  How should you shop for a home mortgage??

The full piece is a must read to better understand how to navigate the mortgage shopping process.

Remember…

Mortgage brokers work for themselves, not for you. They do not provide a personal shopping service and may compare only a handful of lenders on your behalf. If you want to be sure you’re getting the best rate and the lowest costs, the only way to come close to succeeding is to hunt extensively on your own…

Cost?

A study for the Department of Housing and Urban Development published last year examined 7,560 30-year, fixed-rate Federal Housing Administration loans that closed in the middle of 2001. It found that when mortgage brokers were involved, borrowers paid about $300 to $425 more in fees than when consumers worked directly with lenders, other loan characteristics being equal.

Shop around…

Start with a credit union or two. Hit a few community banks. Then try a few big national banks nearby. Give your investment firm a shout and the bank that has your checking account, since they may offer you a deal. And if you’re refinancing, don’t forget your current lender.

Next, call a few mortgage brokers recommended by people you trust. Talking to more than one isn’t a breach of etiquette.

Two questions:

First, ask if they’ll guarantee the rate and costs in the good faith estimate they give you when you apply with a lender. “Good faith estimates are nothing but a sham,” said Mr. Stoffer, who has tried to fix what he sees as an industrywide problem by sticking to his own projections on the costs of the loan. “If I’m wrong on my good faith estimate, then I pay you. We should all have something binding upfront so people can shop.”

Second, ask if they’ll sign a piece of paper agreeing to work solely in your best interest. The legal word for this is “fiduciary, and Senator Charles E. Schumer has been trying to force this standard upon mortgage brokers for a couple of years. Representative Miller agreed that this would be ideal but that it was probably not politically realistic.

Bottom line, get the best deal you can wherever you can. I think that’s where people erred…they thought Mr. Broker was looking at like every lender and then you chose the best deal. Not true.

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Comments (3) Apr 09 2009

With prices dropping and the government offering incentives to home buyers, is now a good time to leap into ownership?

That depends on you and your finances. Take Kiplinger’s ten-question quiz to see if you know the rules to smart home buying in any real estate market — and find out if you’re ready to make this commitment:

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Comments (0) Mar 13 2009