A recent court decision, YPI 180 N. LaSalle Owner, LLC v. 180 N. LaSalle II, LLC (342 Ill. Dec. 879, 2010), reiterates the importance of the mortgage contingency clause in real estate transactions, whether large or small. In that case, the Buyer put down $6,000,000 in earnest money towards the purchase of a commercial property with a contract sales price of $124,000,000. The Buyer had arranged for financing from an Irish bank, who later pulled out of the transaction citing Irish and global economic issues beyond the bank’s control. When the Buyer was unable to procure financing elsewhere, the Seller kept the earnest money. Mortgage contingencies and earnest money are closely intertwined. If a Buyer fails to timely notify the Seller of financing issues, then according to a typical mortgage continency clause, the Buyer may forfeit the earnest money. When the buyers in the YPI 180 N. LaSalle Owner case did not receive their earnest money back, they filed suit, claiming… read more →
Las Vegas and Chicago are too very different cities in many ways. But they do share one thing. They have the highest foreclosure rates nationwide. Specifically, the Las Vegas Area reported the most foreclosures last year. According to RealtyTrac, Inc., one out of every nine homes in Las Vegas received a foreclosure notice last year. Chicago ranked second, with one out of every twenty-seven homes in the Chicago area receiving a foreclosure notice. In total, there were 138,913 foreclosure or foreclosure-related filings in 2010 in Chicago. This in an increase of over 16% from 2009. In case you’re interested to see where we fall, the third, fourth and fifth highest foreclosure rates were in Detroit, Miami and Atlanta, in that order. What can distressed Chicago homeowners do to avoid foreclosure? They can try to complete a loan modification to bring their loan back to a point where they can avoid… read more →
So you’ve been looking and looking for that perfect condominium in Chicago, and you’ve finally found it. It’s got everything you ever wanted — a great location, beautiful view, spacious bedrooms, a new kitchen. . .But wait, it’s not a condo. It’s a co-op. A what? A co-op? What’s a co-op? In some parts of the country (New York City, for example), co-ops are fairly common. But in Chicago, most residential buildings consist of either apartments or condominiums. Co-ops are few, and sometimes, far between. Don’t be surprised by the terminology. If your dream home happens to be a co-op, here’s what you need to know to get you started: Co-op is short for “cooperative”; in this case, it’s specifically a “housing cooperative”. A housing cooperative is essentially a corporation (or other entity) formed to to own the building. In some ways, it is a corporation like any other. The… read more →
In response to the declining housing market in 2008, Fannie Mae created a new mortgage fee: the adverse market delivery charge. The adverse market delivery charge was intended to discourage borrowers with lower credit scores by charging them an additional fee to secure a loan. Borrowers with high credit scores, of 740 and above, were not subject to the fee and paid the lowest interest rates. Borrowers with good credit scores (i.e. between 720 nad 739) paid a fee also, but it was a smaller fee and it only applied to loans that were for sums between 75.01% and 80% of a home’s value. Effective April 1, 2011, however, Fannie Mae will charge the adverse market delivery charge to everyone, even borrowers with exceptional credit scores (i.e. over 740). Of course, borrowers with the best credit scores will pay the smallest fee. Borrowers with lower credit scores (i.e. below 620),… read more →
The Good Funds Act took effect January 1, 2010, bringing with it one primary change as to how closings are conducted: If the Buyer needs more than $50,000 to close the transaction, he is required to have the funds wired. Prior to January 1, 2010, buyers usually brought in cashier’s checks. One year later, the Good Funds Act has changed. Here’s how: 1. If a buyer wires funds into closing, and then finds out he needs more than expected, title company can accept cashier’s checks, and subject to their individual policies, personal checks. 2. Earnest money is no longer part of a buyer’s bottom line. It remains to be seen whether these changes have any significant effects!
The Home Affordable Foreclosure Alternatives (HAFA) program debuted last spring to much hype in real estate circles. For homeowners who could not qualify for a loan modification under the Home Affordable Modification Program (HAMP), HAFA could help with other options, such as short sales. Now, ten months later, only 661 short sales qualified under HAFA. The program is far from a success and has hardly lived up to it’s name: “foreclosure alternatives”. Indeed, if a homebuyer doesn’t qualify for a modification under HAMP or a short sale under HAFA, he could be foreclosed anyway. The Treasury Department is trying to loosen HAFA’s strict requirements as follows: 1. Banks no longer have to verify that the borrower’s monthly mortgage expense is less than one-third of the Borrower’s income. 2. If a borrower requests consideration under HAFA and it is approved, the bank must provide a short sale agreement within 30 days.… read more →
Good news for veterans facing foreclosure! Effective January 1, 2011, if you are a veteran and a defendant in a foreclosure suit, you have the right to request a 90-day stay of the foreclosure proceedings. In order to qualify for the 90-day stay, you must have been deployed at some point in the 12 months preceding the foreclosure suit. Moreover, your deployment must have been for combat or for a combat-support posting. So long as you meet those requirements, the court must grant you a 90-day stay. Any other rights you have as a veteran will not be affected. With any luck, 90 days may be enough to get you back on track with your mortgage payments or work out a loan modification!
It is widespread knowledge that foreclosures have become increasingly rampant. More and more homeowners are fighting to keep their homes. As various loan modification and loan assistance programs emerge, mortgage and foreclosure counseling is often a prerequisite to qualify. To defray the costs associated with counseling, the Illinois legislature recently passed a bill that requires the plaintiffs in all foreclosure suits to pay an additional $50 fee. The resulting funds collected will be applied for the benefit of counseling programs. Some homeowners are unable to keep their homes no matter how hard they try. Once these homes are vacated, they often become targets of crime. Other times, they begin to look neglected and rundown. Water and sewer bills aren’t paid. More and more cities and towns in Illinois need funding to assist in the costs associated with foreclosed and vacated homes. The legislature recently enacted a law requiring the purchaser… read more →
Effective this last summer, the Illinois Housing Development Authority was granted the right to assist qualified Illinois homeowners with their mortgage payments. Under the Illinois Homeowners Emergency Assistance Program, the Illinois Housing Development Authority may grant up to three mortgage payments to qualified homeowners in need. The mortgage payments are for first lienholders only. This means that if you are looking for mortgage assistance towards secondary financing or a home equity line on your home, you are not eligible. Payments will be made directly to your lender, and cannot exceed $6000 or three of your regular mortgage payments, whichever is less. Funds can be applied towards principal, interest, taxes, and mortgage insurance. However, funds for this program are limited to a total of $3,000,000, and the program is only available until December 31, 2010. So how do you qualify? Well, you must meet a number of criteria, such as: 1)… read more →
When filing a foreclosure suit against a deceased borrower, banks have generally filed in rem actions; in other words, banks have assumed that the foreclosure suit is based on the parcel of real estate for which mortgage payments have not been made. As a result, many banks have obtained default judgments against deceased borrowers, simply because the mortgagor is deceased and was thus never served. In ABN-AMRO Mortgage Group, Inc. v. McGawhan, No. 107954 2010 WL 2222123 (Ill. Sup. Ct.), the Illinois Supreme Court rendered a decision that changed how banks must file foreclosure suits. The court determined that a foreclosure suit should not be an in rem proceeding. Rather, it should be a quasi in rem proceeding. In other words, the suit must be brought against an actual person, not just a piece of land. In lieu of the deceased, the deceased’s personal representative must be named. If the… read more →