Effective April 2011, the Federal Reserve Board will require mortgage brokers and lenders to adhere to new rules meant to protect consumers: 1. Lenders may only compensate mortgage brokers based on a fixed percentage of the loan amount. After April 2011, lenders cannot pay mortgage brokers based on the yield spread — in other words, broker compensation cannot be based on the interest rate charged to the consumer. This is meant to discourage mortgage brokers from charging higher interest rates to their clients in exchange for greater compensation from lenders. 2. Homebuyers will have to be notified up front of any balloon payments due when the loan term expires. 3. If the loan is an adjustable rate loan, the lender must disclose what the buyer could end up owing after rate increases. These new rules are meant to keep consumers from falling prey to unscrupulous lenders, and to give homebuyers… read more →
Well, sure, you can sue for anything. The real question is can you win the lawsuit? What your chances are of winning will really depend on your individual case, and your attorney will be able to assist you in determining, overall, the merits of your lawsuit. Recent case law, however, can serve as a guideline in how you argue your case. In Meyer v. Chicago Mechanical Services, Inc., (2010 Ill. App. LEXIS 203, 2nd District), the owner of a condominium hired the defendant to install an air conditioner in her unit. After mold accumulated in her unit, the condominium owner had to move out while repairs were made. The person living underneath her unit had to move out also. The two condominium owners sued the company that installed the air conditioner for damages based on the inconveniences associated with having to move out of their homes. However, they lost the… read more →
Up until now, in most situations, senior citizens who received a senior citizen’s exemption on their real estate taxed continued to receive it annually. However, a new law signed last week changes that. Effective fall of 2011, the senior citizen’s exemption in Cook County will not renew automatically. Rather, seniors age 65 and older will have to reapply on an annual basis. How do you apply for the senior exemption? You should receive your application in the mail, which you will have to complete and send back to the Cook County Assessor along with copies of your driver’s license and property tax bill. If, for some reason, you do not receive the form in the mail, you will have to contact the Cook County Assessor’s office to request a copy of the form. Approximately 280,000 seniors will be affected by this change. Last year, the savings received by seniors for… read more →
Many Cook County homeowners were worried that they would lose the 7% real estate tax cap this year (it was set to expire). Fortunately, over the weekend the governor signed a bill extending the tax cap. Without this bill, Cook County homeowners would have faced larger real estate tax bills in the coming years. The 7% cap allows homeowners to receive an increased exemption on their taxes, resulting in a lower tax bill overall. Because of the 7% cap, the assessed value of a home can be reduced by up to $20,000. Without the cap, the exemption could not be more than $6000. Over the last few years, homeowners have come to expect this reduction. If you add these expectations to dropping real estate values and the current economy, a sudden increase in real estate taxes would certainly be unwelcome!
Effective June 1, 2010, Fannie Mae and other investors have increased the requirements for a salable loan. Going forward: 1) Lenders are responsible for verifying the borrower’s social security number. 2) Lenders must obtain documentation from the borrower, confirming that the borrower intends to use the purchased residence as his primary residence. 3) On the day of closing, lenders must confirmt that the amount of debt borrower has, the borrower’s payment history, and the borrower’s credit score is reconciled with the information the borrower provided when applying. 4) Loans cannot be originated, underwritten, or serviced by companies or people that are on HUD’s Limited Denial of Participation List, or on the General Services Administration Excluded Party List. Keep in mind that this does not mean that a residential loan cannot be made if it does not meet these requirements. You can obtain a residential loan that does not meet these… read more →
Good news for those homebuyers who were eligible for the home buyer tax credit but could not close by June 30, 2010! If you were unable to close by the deadline, you now have until September 30, 2010 to close your real estate purchase. Because of the backlog of mortgages, Congress decided to extend the deadline for closing. Keep in mind, if you did not enter into a real estate contract by April 30, 2010, this extension will not help you. The extension is only for those who had a valid, binding real estate contract as of April 30, 2010. Also, you must be otherwise eligible for the tax credit. In order to qualify for the first-time buyers credit of up to $8,000, you must not have owned a home in the last three years. For the existing homebuyer credit of up to $6,500, you must have owned your home… read more →
Associations frequently want to know what they can do when a unit owner rents out their condominium unit to someone who constantly violates rules. Well, assuming the association has not banned rentals altogether, there are a few options available: 1) If the condominium documents allow it, the association can assess fines to the unit for the various rule violations. Unit owners will not want to pay fines for problems their tenants are creating. In this way, unit owners are encouraged to deal more proactively with their tenants. Hopefully the unit owners can convince their tenants to comply with the association’s rules, or if not, they can start the eviction process. 2) The condominium board can also terminate the lease. The Illinois Condominium Property Act allows condominium associations to terminate tenant leases, so long as the requirements of the Act are met (i.e. proper notice, eviction proceedings, etc.) If you have… read more →
Yes, you read right. It is possible to get a loan to buy a new home based on your stock portfolio. In other words, you may be able to get through the home-buying process without any appraisal of the home and other traditional mortgage paperwork. In order to get approved for this type of loan, you must have a reasonably high net worth and a significant stock portfolio. The stock will be your collateral, instead of your new home. Of course, the loan will still have to be underwritten based on which stocks you own. What’s the plus side of a loan based on your stock portfolio? Well, there are actually quite a few positives: 1) If you find the right lender, the processing time may be a lot faster than for a traditional home loan; this is especially helpful if you want to close early; 2) Credit scores are… read more →
It wasn’t too long ago that the Radon Disclosure became a requirement for every residential sale in Illinois. Now, the Radon Disclosure has been modified. What’s new? Well, 1) If you’re selling a condo or co-op on the third story or higher, you no longer need to provide a Radon Disclosure at all; 2) If you are a seller and your home previously had elevated radon levels which have since been mitigated, you will have space to disclose this on the Radon Disclosure; and 3) A new Radon Disclosure form is now available and should be used whenever a Radon Disclosure is necessary. There is a also a new Illinois Residential Real Property Disclosure form available! Again, this new form should be used in all Illinois residential transactions. There is one primary difference between the old disclosure and the new one — now the seller is required to disclose whether… read more →
Many first-time homebuyers turn to FHA loans these days. After all, FHA loans have lower down payment requirements, and first-time homebuyers don’t always have a lot of cash to put down. New FHA regulations, while making the business of lending a bit safer for the FHA, will certainly affect first-time homebuyers, who often have lower credit scores and less money. What is the FHA doing? Specifically, it’s making the following changes: 1) The up-front mortgage insurance premium (UFMIP) will be raised to 2.25%, up from 1.75%, effective April 5, 2010. 2) If the borrower’s credit score is 580 or below, the minimum down payment will be increased to 10% of the purchase price of the home. Note that if the borrower’s credit scroe is above 580, the current requirement of only a 3.5% down payment stands. 3) Sellers can only provide a maximum of 3% in closing cost credits. Previously… read more →