Yearly Archives: 2004

"Dry" Closing Fee is Here

At real estate closings, about 50% of the time there is a “dry” closing (meaning that no money is disbursed and the closing is on hold), usually because the mortgage lender has not wired the mortgage funds to the closing yet.

This makes the following people irritated (for good reason):

1.The seller is mad, because she doesn’t get her money until the wire is received.

2. The buyer is mad because she doesn’t get the keys to the new house and can’t move in (even if the moving van is in the driveway).

3. The real estate agent is mad because he doesn’t get paid.

4. The attorneys are mad because they have to deal with people who are mad.

5. The closer for the title company is mad because she has to deal with people lurking around all day asking “did you get the wire yet” and a one hour closing drags on for 5, 6 or sometimes 24 hours or more.

Something has to be done to force mortgage lenders to get the money to the closing on time. Some title companies (ATG for one) now charge the Buyer a dry closing fee of $100 if the money for closing is not there at the closing. I have mixed feeling about this. First, the Buyer is already mad because she can’t move in; charging her $100 will make her borderline psychotic. I refused to let my Buyers pay this fee recently and the lender paid it instead.

If everyone knows in advance that this fee will be imposed, I think charging a dry closing fee is a great idea. The Buyer is responsible for choosing the lender and should be held accountable for this decision to some extent. But people buy homes only once every 10 years or so and don’t really understand the behind-the-scenes stuff anyway. IF this fee is charged by all title companies, the buyer will have to get his or her lender to agree in writing to pay the fee if the funds are not there at closing. I think this will happen if title companies start charging the dry closing fee.

The solution: Don’t use an out-of-state lender or internet lender. Check with your mortgage lender in advance and insist that the funds be wired the day before or, better yet, that a check be at closing.

Assessment Notices Coming to Palatine Barrington

Every three years the Cook County assessor increases the assessments for real estate. The schedule for the so-called triennial reassessments goes by township– Palatine and Barrington townships will be reassessed in the 2004 tax bill issued in 2005.

Notices were mailed to Barrington homeowners a few days ago. They will be mailed to Palatine homeowners the first week of August. Why is this important? You only have 30 days from the mailing of the assessment to protest the increase.

The 7% assessment cap that was just passed should help keep large increases under control. It is very important to check your new assessment and to file a protest if it looks too high. If you miss the 30 day window you are out of luck for more three more years.

Reasons not to use a mortgage broker

Mortgage brokers are middlemen who prepare a loan application and submit it to an end lender for you. They are paid about 1.5% of the loan amount from the end lender. Lately I have come to the conclusion that the most (not all) mortgage brokers actually hinder a client trying to close on his or her home.

It is best to obtain a mortgage from a local representative (not a 1-800 line that is out of state) of a direct lender (with no middle man). This way you deal with a person who cares about your closing, wants it closed on time and smoothly and will make sure that the money is there at closing. Examples of direct lenders would be Harris Bank, Fifth Third, Wells Fargo, Countrywide and Charter One (Washington Mutual is usually a hassle, but is getting a little better.)

Reasons not to use a mortgage broker:

1. The broker takes the application and may not pass all of the information on to the end lender, forcing you to resupply the information at closing. With mortgage brokers we frequently cannot disburse the loan because the broker did not give the end lender some documentation and we have to hunt down the broker at closing (of course he or she is not there) and find the missing documents.

2. Often it takes at least 72 hours from the time the closing is scheduled to prepare the documents and close. That’s too long 24 to 48 hours is plenty of time.

3. Mortgage brokers charge document preparation, underwriting fees, review fees and other garbage can charges. The end lender also charges these same fees. Why pay two sets of fees?

4. The funds for the mortgage rarely come from the mortgage broker, but are usually wired from the end lender to closing. The end lender does not know you and really does not care about you or your closing. The end lender only cares about having their loan file correctly documented and disbursed. Many of them do not even BEGIN to send the funds for the mortgage until the closing is over. They start to wire the money after a signed RESPA or HUD-1 is faxed to them. This means your moving van will remain parked in front of the new house (with you paying the movers) until the wire comes in. This is absolutely wrong and no client should have to put up with it. The money should be at closing in the form of a check or should be wired the day before closing.

If you must use a mortgage broker, but be sure that they fund their own loans by check at closing, that there are not duplicate charges and that the loan representative will be at closing.

Buyers: Clue report the new thing

A new contingency is showing up in home purchase contracts: We already have attorneys’ approval, mortgage, home inspection, lead paint, mold and radon. And now, introducing, the clue report contingency!

I have a closing in process where the buyer requested that my seller furnish a clue report. I expect that this will show up as a buyer’s contingency more and more.

A clue report can be easily obtained online for $9 and it shows the last 5 years claims history of your house on homeowner’s insurance. So if your basement has flooded 15 times in the last two years and you filed claims on your homeowner’s insurance it will show up on the clue report. If you failed to disclose that flooding the buyer will probably bail out on the contract when he or she see the clue report.

The problem with clue reports is that some insurance agents report phone calls to the agent concerning coverage issues as claims. Car and umbrella policy claims are included too.

Smooth Murabaha Closing

I recently helped an Islamic client complete a “Murabaha” closing. Islam prohibits payment of interest. This makes it difficult (if not impossible) to buy a property using a mortgage.

Devon Bank has a Murabaha program that works quite well. At closing the Buyer assigns the contract to the bank, the seller deeds the property the bank and the bank immediately transfers the house to my Buyer for the original purchase price plus the bank’s “profit.”

There is no reference to interest payments in the loan documents and all of the bank’s profit (interest) is rolled into the loan agreement. The bank sent a representative to the closing to help us all out and it closed easily.

One potential pitfall: There are two deeds in a Murabaha closing. One from Seller to Bank and a second one from Bank to Buyer. If you are closing in a town that has a transfer tax make sure you get an exempt stamp for the second deed.

Ding Dong the Exemption Postcard is Dead

I just received a letter from the Cook County Assessor telling me that I did NOT need to fill out a homeowner’s exemption packet this year. For years, the county insisted on annually mailing postcards (and in recent years a packet) to every homeowner in the county. Homeowners were forced to sign and return the card in order to qualify for the homeowner’s exempetion for real estate taxes (reducing taxes about $400.00). Needless to say many people overlooked the cards or they were lost in the mail

The county has wisely dispensed with the yearly application. Now you only need to apply for the exemption if you just bought your property.

This change came out of left field. I called the assessor on April 16 and was told the packets were late and would be mailed soon. No one will miss filling out what was really an unnecessary form.

Which multiple listing service is for me?

When you list your home for sale with a real estate agent, the agent inputs data on your house in a multiple listing service web site available solely by other real estate agents (not the general public).

There are two multiple listing services in the Chicago area: MLSNI (the big one) and MAP (the small one– is an acronym for Mt. Prospect, Arlington Heights and Palatine). Some real estate companies have recently dropped MLSNI in favor of the smaller MAP. Several Coldwell Banker offices on the north shore have pulled out of MLSNI and now use MAP exclusively. The reasons for this are cloudy at best (and you probably don’t care anyway). MLSNI does have a public web site that is very good and shows most of what’s on the market. MAP does not have a public site, but relays listings through to the Tribune and

What does this mean to you? If you list your home for sale, make sure your real estate agent puts the listing in BOTH MLSNI and MAP. You pay a lot to list your home and you should get maximum exposure.

Bad Combo: Will and Safe Deposit Box

I recently had a rather unpleasant experience with a bank in trying to get an original will out of the bank’s safe deposit box. The client’s mother had just passed away and he knew that her will was locked in the safe deposit box. My client was not a signer on the safe deposit box. The box was in his deceased Mom’s own name.

Rule #1: Always put one or two trusted heirs/relatives on your safe deposit box so they can get access to it.
We met and I told my client that we could get access to the safe deposit box because he was an “interested person” as defined in the act (mainly he was “interested” in not being hassled to death by the bank). (The Safety Deposit Box Opening Act is an Illinois law that allows this.)

The law says that if an affidavit is produced saying that an original will may be in the safe deposit box, the bank will send the will directly to the clerk of court for filing. The bank will not allow access to any other things in the box. I put together an affidavit and my client drove to the bank. After 5 or 6 phone calls the bank refused to accept the form. They wanted the affidavit on their form.

Rule #2: Banks are hyper and follow routines set up by someone 50 years ago. Ask them first if they require their own form to be used (even if it reads the same as your form).

We got the will from the safe deposit box and can now open the probate estate.

Rule #3: Never lock an original will in a safe deposit box. Keep it at home and give copies to relatives/heirs with the location of the original marked on the copy.

Better yet sign a living trust, instead of a will. This will bypass the need to hunt down the original will like it was the treasure of the Sierra Madres.

Scan Away

scannerFor the last five years I used a Canon flatbed scanner that was slow, but reliable. I read some reviews online and decided to upgrade to a faster sheet fed scanner. I narrowed it down to the Fujitsu Snapscan and the Visioneer 450

I picked the Visioneer for about $600 and bought it on It scans directly into PDF format which is essential for me because I use PDF to store documents and to send letters and other things faxed to me on to clients by email.

My only complaint (this may have more to do with my fax machine than the scanner): When I receive documents on my fax it curls them a little at the top. The scanner jammed alot at first when I tried to scan them in top first. The solution was to scan them bottom first, where they were flatter, and I haven’t had a jam up since.

This scanner is a must have. It saves a lot of time (scans 20 pages per minute) and helps us keep documents flowing out to clients and is an incredible aid in the never-ending attempt to stay organized.