On March 4, 2009, the Treasury Department issued new guidelines and created the Making Homes Affordable Initiative, part of which includes a program to modify loans, called the Home Affordable Modification Program. If your lender can service your loan under the Home Affordable Modification Program, you may be able to reduce your monthly payment to 31% of your gross monthly income for five years. Additionally, if you make all payments on time during each of those five years, you may receive $1000 principal reduction per year. Approximately four million qualifying homeowners will be able to take advantage of this plan. Are you one of them? To qualify, you must meet the following criteria: 1. The home must be your primary residence.2. The principal balance on your home must not be greater than $729,500.3. You must have obtained the loan prior to January 1, 2009.4. You can only modify your loan… read more →
If you are a cash-strapped homeowner with a loan from CitiMortgage, there may be help on the horizon for you. As more and more homeowners are trying to modify the terms of their loans in an attempt to avoid foreclosure, CitiMortgage announced a plan last week that may help. Under CitiMortgage’s new plan, dubbed the Homeowner Unemployment Assist program, some homeowners will be able to reduce their monthly mortgage payment to about $500 a month. To qualify, you must meet the following basic criteria: 1) You must be unemployed; 2) The primary mortgage on your home must be both owned by and serviced by CitiMortgage; and 3) The home must be your primary residence. In order to determine what other criteria may apply in your situation, you or your attorney should call CitiMortgage to discuss the possibility of a loan modification with them. You may be eligible for assistance, even… read more →
The Stimulus Plan encourages homeowners to make energy-efficient home improvements by providing a sizeable tax credit to benefit homeowners that do. Congress has allocated approximately $4 billion for the tax credit, in the hope that it will not only stimulate spending by homeowners, but that it will encourage owners of existing homes to make improvements in a responsible way which conserve energy use. A recent study conducted in California showed that 70 percent of greenhouse-gas emissions coming from single-family properties come from homes built before 1983. According to that study, new homes are fairly energy-efficient, but existing homes — particularly older homes — could benefit a great deal from the use of energy-efficient materials and appliances. If you need certain specific home improvements and can afford them, now is a great time to do them. Which home improvements are eligible for the tax credit? Well, if you install energy-efficient windows… read more →
The new stimulus plan, passed just last week, provides an incredible tax incentive to first-time homebuyers if they purchase a home between January 1, 2009 and November 30, 2009. First-time homebuyers can claim a credit of 10% of the value of their home or $8,000, whichever is less, on either their 2008 or 2009 tax return. In other words, if you’ve already bought your first home in the beginning of 2009, you can claim the tax refund on your 2008 taxes; you don’t even have to wait until next year. If you’ve already filed your 2008 taxes and want to claim the credit now, you can file an amended return. Moreover, the definition of “first-time homebuyer” has been relaxed. For the purposes of the stimulus plan, a “first-time” homebuyer is anyone who has not owned a home in the past three years. If you qualify as a first-time homebuyer and… read more →
During the course of a residential closing transaction, the question inevitably comes up: What about the real estate taxes? Well, during the attorney review process, your attorney and the other attorney will typically reach a resolution of what to do with the real estate taxes. It’s helpful, however, if the buyer and seller understand how and when real estate taxes in Illinois are billed first, so that they can better understand how and why taxes are prorated at closing. For the basics on how Illinois real estate taxes are billed, please click here. Once you’re familiar with the process, you can understand the following better: In the vast majority of residential sales contracts in Illinois, taxes that have already accrued, but are not yet billed, are credited by the seller to the purchaser at closing. This credit is typically, though not always, final. In certain circumstances, a tax reproration agreement… read more →
During the course of a real estate purchase or sale transaction, the parties’ attorneys will work to make sure that a fair tax credit is provided to minimize the burden of real estate taxes on both parties in the transaction. While other methods are used as well, in some instances, a real estate tax reproration agreement is the best option available. Tax reproration agreements are almost universally used in large commercial transactions (though not always in smaller commercial transactions), and are also often used in new residential construction. They are also used in residential resale transactions when an accurate tax credit cannot be determined at the time of closing, which could happen for any number of reasons. So what is a real estate tax reproration agreement? Basically, it is an agreement between the parties to reprorate the tax bills when they become available in the future. Such agreements come in… read more →
In the last couple of days, most Cook County property owners have received their 2008 First Installment Tax Bill. During the course of a closing transaction, I inevitably have to explain how and when real estate taxes are billed in Illinois. Here’s a primer: Taxes in Illinois are billed and become due approximately one year after they accrue. In other words, the taxes for January 1, 2007 – June 30, 2007 became due in the first half of 2008. Likewise, taxes for July 1, 2007 – December 31, 2007 became due in the second half of 2008. Similarly, taxes for the first half of 2008 will become due in early 2009, and taxes for the second half of 2008 will become due in the second half of 2009. Most Illinois counties, including the collar counties (Lake County, DuPage County, McHenry County, and Will County), follow a fairly straightforward system. They… read more →
In order to make HUD-1 closing statements more transparent for the parties involved, the Department of Housing and Urban Development (HUD) has made a number of changes that will take effect on January 1, 2010. HUD has tried to protect consumers, particularly buyers, during the course of dealing with their lenders and at the closing table. Here are some of the changes: 1) Mortgage brokers will need to calculate their commissions from their lenders (known as yield-spread premiums) as part of the loan origination fee. HUD hopes that by integrating the yield-spread premium into the origination fee, brokers will be less likely to place their customers into loans at the high end of the interest-rate spread. 2) Lenders will have to complete a new good faith estimate form, which will be three pages long as opposed to the current two-page form. 3) Origination fees and transfer taxes on the HUD-1… read more →
Many lenders will work with homeowners who are unable to pay their monthly mortgage. If you are having difficulty making your mortgage payment, you might want to consider trying to get a loan modification. Modifications come in many forms — you might get a temporary or permanent payment reduction, an interest rate reduction, temporary abatement, extension of the payment period, or some sort of mixture of these options. However, the bottom line is that help may be available to you; most importantly, you may be able to keep your home. Of course, getting your lender to negotiate their loan with you is not easy. Many lenders won’t discuss the matter with you until you’ve missed a number of monthly payments. You may not want to get yourself in that situation for any number of reasons — it will affect your credit, you feel it will tarnish your name, you are… read more →
In today’s real estate market, more and more contracts tend to fall apart, often because the buyer is unable to procure a mortgage on satisfactory terms, if at all. As the lending market gets tougher, I hear the following questions a lot from buyers: “Is my earnest money protected? Can I get my earnest money back?” I also hear the inverse from Sellers: “Can I keep the earnest money?” A standard real estate contract will set forth various contingencies that the parties must meet in order to close. One of these contingencies is the mortgage contingency. For a detailed explanation of what a mortgage contingency clause is, click here. To see how the mortgage contingency affects your earnest money, keep reading! If the buyer is unable to procure a mortgage commitment stating that the lender’s various conditions have been met, and the buyer thus does not have a loan, then… read more →