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301 Greenview Drive, Crystal Lake, IL 60014

773.818.9054 office/cell
866.381.4238 efax

Check out my interview, Expert Advice on Buying a Foreclosed Home on Illinois Homes, one of the top sites for Illinois homes for sale, including Wheaton, IL real estate. Illinois Homes also services Michigan homes for sale and Pennsylvania homes for sale.

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Tuesday, June 30, 2009

Right of First Refusal Continues to be an Issue for Condominium Associations, Buyers and Sellers

I recently had a client who was attempting to short sale his property in order to avoid foreclosure. He had a ready, willing and able buyer. He had short sale approval from the bank. But, the buyer was attempting to do an FHA loan, and his Association had the right of first refusal. The buyer and my client spent two months trying to convince the Association to file the documents to get rid of the right of first refusal. The Buyer's attorney even drafted the Amendment free of charge. But the Association could not muster up the votes to pass the Amendment, and the deal fell apart. My client will lose his property in foreclosure as a result.

So what happens if you are one of the parties involved in a deal like this? It's difficult to justify retaining a right of first refusal in an Association that they are likely never to exercise.

First of all, to exercise the right of first refusal, the board of directors must first choose to purchase the available Unit at the price offered by the Seller. Then it must obtain anywhere from two-thirds to three-fourths of the unit ownership. If the Unit Owners approve, then the Board must either pay cash for the property, or obtain financing to purchase. Given the process that it takes, Associations very rarely ever exercise the right of first refusal.

I have not experienced it first hand in my practice, but I do know of some larger high rises who have exercised it in the past. The instances that I know of were to avoid a Unit to go into foreclosure, and most often, the Unit purchased was then used for the benefit of the Unit Owners (i.e. a place for Mom and Dad to stay when they come to town, etc.)

I am hearing rumors that FHA is currently working on lessening these restrictions to make it easier for FHA buyers, but I have not seen anything come through yet...stay tuned!

9:16 pm cdt 

Wednesday, June 24, 2009

First Time Homebuyer Credit Questions and Scenarios

I've had a lot of clients ask me details about the first time homebuyer credit and various scenarios. While I still recommend that you talk with a qualified accountant before making an decisions, I do have some interesting scenarios taken directly from the IRS website regarding this credit as below:

S1. If a single person (Taxpayer A) qualifies as a first-time homebuyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time homebuyer and then later that year they marry each other, is the credit still allowed?

A. Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit.

S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?

A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence.

For more scenarios, you can click here.

1:43 pm cdt 

Tuesday, June 23, 2009

Do I Need an Attorney for a Refinance?

I have been getting quite a few calls from clients lately asking if they need representation on refinance. My answer is "no", it's not really customary for one to have an attorney for a refinance, but at the same time, I am happy to give counsel to clients who have questions about the refinancing process. I have also been present at the request of a few clients for a refinance and that is fine, too.

A few tips that I always give clients are as follows:

1) Make sure you receive and review a good faith estimate from your lender. Make sure that your mortgage broker clearly explains all fees to you (or call a real estate attorney for help).

2) Make sure that at the refinance closing/signing, you pay careful attention to the Note and the Mortgage. The Note governs the terms of the loan. Make sure if you're expecting a 30-year fixed loan that there are no Adjustable Rate Riders. Make sure if you're expecting a 5.5% rate that the front page of the Note clearly states this rate.

3) Make sure that there are no prepayment penalties if you are not expecting them. On your "Truth in Lending" document the box that indicates that there is no prepayment penalty should be checked.

I'm always happy to review documents or answer questions for clients if they are involved in a refinance.

12:24 pm cdt 

Friday, June 19, 2009

A Really Interesting Website - Crib Chatter.com

I had a closing the other day and while we were waiting for funding, we started talking about a building that another client was purchasing in. The other client had asked me to ask around for feedback on the building, developer, etc.

After the closing, my client I was sitting in the closing with sent me an e-mail with a link to CribChatter.com, with some very useful information about the building that I was asking about.

The site has some very interesting pieces on what's on the market, what is going on in the market, etc.

9:01 pm cdt 

Split Block Construction Issues Becoming More Prevalent

Will Decker, a home inspector that I use and recommend, and I were both interviewed for a piece that Chicago Public Radio did on split block construction and all of the issues that Chicago condominium owners are having with it in their buildings. Split block is concrete block with a brick face, and if it not installed with flashing and weep wicks/holes and sealed properly, it can become a moldy, wet mess for homeowners.

I have represented a couple of condominium associations with these issues, and am seeing many more on the horizon.

For more about Will Decker, visit his website at www.deckerhomeservices.com. For more information on this issue and to see the article itself, click here.

4:39 pm cdt 

Thursday, June 18, 2009

Right of First Refusal Still An Issue with Condo Associations, Sellers and Buyers

I'm still getting a flood of calls and e-mails regarding the right of first refusal in condominium associations. Even with existing owners who want to refinance into an FHA loan, it is still a problem. If you have an issue with the right of first refusal within your condominium association, I'm happy to help!

Keep in mind, though, that this process takes time. First, you have to have enough votes to approve the removal of the right of first refusal. Then, depending on the Declaration, you have to either get all lien holders (mortgage companies) approval, and then prepare and record the Amendment. This can take a month or more.

For more information, please contact my office. I am happy to have a free consultation with you about how I can help.

12:16 pm cdt 

Monday, June 15, 2009

Credit Scores More Important Than Ever

I've blogged a lot about credit scores and their importance over the last few months. This weekend I was in Minnesota for my sister Hannah's graduation from Carleton College and while I was there, I picked up a Star-Tribune, the Minneapolis-St. Paul metro newspaper. The front page story was entitled, "Hard Times Make Credit Score Key". You can click here for the full story, but basically the gist of it is this: Americans' credit scores are being hard-hit by foreclosures, short sales, late payments and more. Million of consumers have overwhelming credit card debt, and the average household's credit card debt is now $8,565, which is up almost 15 percent from 2000.

This trend could become a vicious circle - lenders don't want to lend to people with bad scores, yet it will become impossible to help build your credit score if you can't get a loan.

If you don't know your own credit score, find it out. Look carefully at the report and see if it's accurate. Many credit reports have inaccuracies that can hurt your score.

On an average $20,000, 36-month car loan, a credit score of 720-850 can help save on the payment and interest rate. The average going rate would be 5.961%, which translates to a monthly payment of about $608.

Drop that credit score to 690-719, and we are talking a rate of 7.397% and a payment of $621.

Go even further down to 660-689, and the rate goes to 8.824% and a payment of $634.

A credit score of between 659-620 will get you 11.649% and a payment of $661.

A credit score of 590-619 gets 15.512% with a payment of $698 and finally, credit of 500-589 gets an astronomical 16.398% and a payment of over $100 more than the top credit score, at $707. 

Everyone checks credit these days, from landlords, to utility companies, to even future employers. Don't let your credit score drop, especially in these difficult financial times.

You can get your credit score for a small fee at one of these four places:

FICO: www.myfico.com or 866.406.7204 - cost is $15.95

Equifax: www.equifax.com or 800.685.1111 - cost is $15,95

Experian: www.experian.com or 866.200.6020 - cost is $15

TransUnion: www.transunion.com or 800.888.4213 - cost is $18.95

10:15 pm cdt 

Tuesday, June 9, 2009

Mr. Nitz Buys a Car - Good Press for One of My Clients

A client and friend of mine, Daryl Nitz, is a teacher out in Glenview. He was in the market to buy a new car, so he made it a class project for his fifth grade class. The process that they went through was a great learning experience for his kids, and the Pioneer Press in the Glenview Announcements section did a great article on the experience, as copied below:

"When it came to buying a new car, Glen Grove School teacher Daryl Nitz didn't have to ask himself whether he was smarter than a fifth-grader.

He turned over the decision-making process -- including the sales pitch and financing options -- to his fifth-grade accelerated math students.

"I'm not going to be disappointed and I'm going to be driving a good car, because they're informed consumers and they're making that decision just like I could do," Nitz said.

The classes started with Nitz's four parameters: a $20,000 price limit, a decent stereo system, a sun roof and a cool color.

They whittled down the 30-car field to eight, using research and data from Consumer Reports magazine.

Nitz test drove the eight cars over a weekend, and chose the four he liked best.

The four dealers were invited to bring their cars -- a Hyundai Elantra, a Mazda 3, a Toyota Matrix and a Honda Fit -- to Glen Grove May 27. The Honda salesman was a no-show, but the other three showed up, and the students drilled them for the pertinent facts, from engine size to dynamic stability control to USB ports.

"I can honestly say it was one of the toughest hard sells I've ever had," Patrick Datt from Autobarn of Evanston said. "I've never sold to 50 children before."

The students raised their hands and waited to be called on before asking their questions, but that didn't throw Dean Maruyama from Grossinger Toyota in Lincolnwood off his game.

"I really tried to be as professional as possible. I think they appreciated it as well to understand what the true facts on the car are," Maruyama said. "Fifth-graders have a lot of great questions and you've got to treat them as adults when talking to them about something like this."

Rich Margaritondo from Loren Hyundai in Glenview had done his homework. He tailored his presentation to include a green plastic blow-up gator, aware that it was the school's mascot.

"The guy was really cool. I liked the sales pitch," an impressed Nathan Meier said, "but I liked the (Mazda) better."

Anna Madsen was on the Elantra research team, and Margaritondo's answers bolstered her original findings about the model.

"I don't find any fault with it yet," she said. "I think it has a real good consumer rating and a good mph. It has a 33 highway (rating), so I really like it."

The classes narrowed the choice to two, and the students then compared financing options.

Through the Glenview Credit Union, Nitz was told he could get an interest rate of 5.87 percent for 36 months or just over 6 percent for 72 months.

"I want to show the kids how when you go up that point on the interest, that you end up paying ... $2,000 more or $3,000 more to carry that for another year," he explained.

"When I was a kid, nobody sat down and explained to me (what that meant) in the long run. They're smart enough to get this. They're smart enough to be able to choose a good car."

Earlier this week, the students delivered their verdict: the Elantra in the "purple rain" color. Margaritondo delivered the car to the school Tuesday.

"Even though I voted for the Mazda 3, I'm not upset at all. It's an awesome car," Mark Galperin said when the students came outside to see it.

Along with the sale, Margaritondo thoroughly enjoyed the experience.

"If everybody buys a car, I'll be all set," he joked."

See photos and the actual article by clicking here and see the video by clicking here.


10:01 am cdt 

Friday, June 5, 2009

Appraisals Becoming an Issue with Some Real Estate Deals

There's been a few deals I've been working on where the property has not appraised for the selling price. One in particular had the sales price significantly lower than the selling price.

This is becoming more and more common in the current real estate environment. Some appraisers are now becoming extremely conservative in their appraisal methods and some are even being accused of trying to get guess how much more the market is going to drop, not looking at how it may rebound.

Especially hard hit is Nevada, where real estate practicioners say that the too-conservative appraisals are affecting sales and preventing recovery.


12:28 pm cdt 

Tuesday, June 2, 2009

More on the First Time Homebuyer's Tax Credit

FHA has announced a deal to 'monetize' the tax credit for first time homebuyers depending on the mortgage amount, but it's not yet available from FHA lenders in Illinois. The Illinois Association of Realtors (IAR) is currently working with the Illinois Housing Development Authority to determine the feasibility of developing such a program that can be used in conjunction with an FHA mortgage loan. The tax credit applies to qualifying home purchases made by first-time homebuyers on or after Jan. 1, 2009 and before Dec. 1, 2009. Read the Mortgagee Letter 2009-15 regarding the monetization program released by HUD last week.

8:44 pm cdt 

Home Price Decline Slowing

Signs that the real estate market decline is slowing are here! According the Crain's Chicago Business' June 1 issue, single family home prices in the Chicago area are forecast to drop 6.1% this year, which would be the third straight yearly decline, but much less severe than the year before. The market is expected to stabilize next year with a dip of only about 0.4%, and if prices do drop 6.1% this year, that would bring the median price in Chicago down to $247,000, the lowest since mid-2004.

The biggest drop happened last year, when prices fell 13%. The hardest hit neighborhoods were the low-income city neighborhoods and close-in suburbs where there was a lot of subprime lending going on.

The three hardest-hit towns were Oak Lawn (-22.3%), Burbank (-21.5%) and Berwyn (-19.5%). In the city, the biggest losers were on the South Side. Single family homes in Chatham dropped 39.9%. Auburn-Gresham dropped 37.8% and South Shore dropped 37.2%. Wealthier areas like Lincoln Park, prices only dropped about 2.7% and seemed to have stabilized.

8:55 am cdt 

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