This blog, foreclosurefish.com, has some good information on options for people facing foreclosure.
Yearly Archives: 2009
Cook Co. predatory lending database protects FHA buyers
It’s turning out that first-time buyers, who obtain FHA loans, have a friend in the much-criticized Cook County Anti-Predatory Lending database. This database is an attempt to protect buyers from predatory lenders. A mortgage cannot be recorded in Cook County unless the buyer gets counseling on obtaining a mortgage or if an exception applies (thereby making the mortgage exempt from the database and making counseling not required).
So far, I have not had one Buyer go to counseling and the exceptions have always applied.
The borrower’s friend is this provision: If a mortgage has “points and fees that exceed five percent” (of the loan amount) then the mortgage must be reported in the database and the buyer must obtain counseling. Trust me, no one wants the buyer to go to counseling (including the buyer), so great efforts are now taken to keep the point and fees under five percent.
With FHA loans, there is an upfront MIP insurance premium charged on all loans that is almost 2% of the loan amount. Title companies have been including this in the “closing costs and points” so it is very easy to get to five percent in closing costs.
I have been at several closings during which the mortgage broker had to reduce the fees at closing so that the fees for FHA loans stayed under 5% of the loan amount. So in the end, the predatory database is protecting FHA buyers from excess closing costs.
Dealing with debt collectors
Here’s a nice, clear explanation of the fair debt collection act.
It covers what debt collectors can and can’t do.
It also explains what you can do if they go too far.
Illinois 09 inheritance tax trap may be no more
The Illinois House passed, and the Senate is reviewing, a bill that would prevent estate tax from being owed on the first to die of a husband and wife with a large estate. It looks like it will pass the Senate easily.
Technically, the bill does this:
“Amends the Illinois Estate and Generation-Skipping Transfer Tax. Provides that the State tax credit for the estates of persons dying after December 31, 2005 and on or before December 31, 2009 includes a reduction for qualified terminal interest property. Effective immediately.”
That’s a mouthful, but it means that there would be no estate tax due on the first death of a married couple. The history of the bill is here. I previously wrote about this problem and advised couples with large estates to amend their trusts to include a state marital trust.
I’m glad to see that they are patching up this mess before tax is paid by too many widows/widowers.
Renting a wireless card for a week
Out of town for a week in Puerto Rico with no internet access, I decided to rent a wireless card before I left. I googled “rent wireless card” a company called Rovair popped up in the paid ads.
(The overarching philosophical question is why could I not go on vacation with “just” my Iphone and why does one really need internet access 365 days per year, but being self-employed I thought it wise to be connected. And of course the kids have to check FB daily at least.)
It was easy to sign up on the site. The card was about $9 per day and it arrived by federal express well before I needed it. It was a USB card from Verizon. Installation was easy and took about 5 minutes. I would say that the signal strength out of town was about 60% that of a dsl line. Usable, but slow.
When I was done, I fed-x’ed the card back to Rovair and that was it.The company was easy to deal with and everything worked perfectly. This is a good solution when you need short term internet access.
FHA loans make up more than 30% of market
FHA loans, typically sought by first-time buyers, have gone from 3% of the mortgage market to more than 30% of the mortgage market. No wonder it takes forever to get one approved these days.
Fingerprinting now required to sign IL deeds
Beginning 6/1/09, fingerprinting will be required for deeds that transfer Illinois residential real estate. In the past, deeds simply required a notary. Now, the notary must take the right thumbprint of the seller and on a separate “notarial record.” The notary has to keep the notarial record for seven years. Thankfully, this does not apply to deeds to living trusts.
This is a really dumb law. It simply adds an extra layer of hassle to a real estate sale. Attorneys will not want to notarize deeds anymore because of the seven year record keeping rule. Title companies will charge to create and store the original notarial record and Sellers will be forced to come to a closing that they otherwise would have been able to skip.
There were many fraud cases involving the sale of real estate in the past few years, but I doubt that getting a thumbprint would have prevented any of those.
Here’s a piece on the fingerprinting requirement from CBS (thanks to Matt Hernacki of ReMax Unlimited for pointing out the CBS story).
Don't give Buyer the steering wheel in short sale
Recent, real-life case: Buyer makes offer on house being sold as a short sale. In the offer, buyer refuses to put down any earnest money and wants authorization to negotiate directly with the seller’s lender.
So the seller would be out-of-the-loop in negotiations with his lender to try to unwind the single biggest (failed) investment of seller’s life. And he is supposed to trust a complete stranger with negotiating a way out of the mess. This buyer also added, “Don’t worry, not many people know about this technique yet,” as if the buyer talking with the seller’s lender direct was an ancient secret passed down on a piece of paper to Moses right after the ten commandments.
My client said no to this proposal. I can’t think of a single reason why a seller in a short sale would let the buyer negotiate directly with the seller’s lender. It’s just a bad idea.
You are much better off having an experienced attorney or real estate agent, who is working for the seller, handle the details with the lender.
This buyer above was an investor with an out-of-state phone number. Investors are now jumping into the short sale game. They form an LLC and make multiple offers on short sale properties, often with no earnest money. They make very low offers. Most offers are way, way below the asking price; many times up to 40-50% below asking price. Some investors don’t even make a written offer, but want an option agreement.
This gives them an option to buy the property if they can beat down the price enough with the lender. They can also walk away from the option at any time.
If you are facing a short sale of your property, here’s some steps that you need to take to get things rolling:
1. Prepare a hardship letter explaining why the payments can’t be made.
2. Put together recent pay stubs and a list of assets.
3. Ask your agent to print out the listing history and pricing history of the property.
4. Give your attorney or realtor written authorization to deal with your lender and send it to the lender.
5. Make contact and find out who will be the “negotiator” with your lender.
6. Ask the lender to order a Broker Price Opinion (BPO) right away so that you will know how much the lender thinks the house is worth.
7. Be very courteous, gentle and kind to the negotiator. If you steamroll him or her and tell him war stories about your years of short sale experience and how “It’s always done like this…” you will go to the bottom of his or her very large pile of cases.
8. Prepare a closing statement showing the amount the lender will net and be careful not to underestimate anything because the figures are hard to change once they are approved.
Most of all don’t trust negotiations with your lender to the buyer.
Dropbox and Filecenter
Dropbox and Filecenter work beautifully together.
Filecenter is file-organizing software that frees you from the tyranny of the typical windows file tree. It opens automatically whenever you save a file, has an intuitive look and makes it snap to add folders and files to the right places without sifting and clicking through 10 different folders and subfolders. It costs $79. I’ve used it for years without any problems. I don’t use it for scanning, although you could. I scan documents directly into Adobe Acrobat and then save them using Filecenter to the location that I want. The only problem is that the files are sitting on my work computer and can’t be accessed without using Gotomypc or something.
Enter Dropbox. It’s an online backup and file syncing software. Any files that you add to the “MyDropbox” folder in “My Document” are automatically backed up to Amazon web services and are synched with any other computers that are running Dropbox. So, you are able to access your files from any of your computers running Dropbox or from any computer connected to the internet because you can log onto the Dropbox website and see all of your files. (Bonus sidecar: Dropbox is free for the first 2 GB of storage and charges are reasonable thereafter.) I use Dropbox for my active work files (thus staying in the free category), but I use Jungledisk to back up the whole mess, including all archived files. Finally, Dropbox can be accessed easily from an I-Phone, so you can get your files no matter where you travel.
Once Dropbox is installed, you simply set up Filecenter to access the Folders that you create in Dropbox. Under the “My Dropbox” folder, you can create as many sub-folders as you want like “Wills Forms,” Trust Forms” or “My Recent Arrests.” Filecenter simply streamlines the process of saving the many files we open and close and move each day. And Dropbox gives you a complete copy of all files on your computers, backs up those files instantly to Amazon “in the cloud” and lets you access them from any internet connection. Good combination.
Bensenville pre-closing village inspection
Bensenville is one of the few towns that requires a certificate of occupancy for closing. The village inspects the property and a creates a long list of code enforcement items that need repair. In the closing I am handling now, the village asked for 38 repair items. Either the seller has to repair the items or the buyer must agree to do the repairs after closing. This is kind of tough, especially since many buyers and sellers don’t know about the certificate of occupancy. If you don’t get the certificate, the buyer could get dragged to housing court after closing.
On a positive note, they have a grant program in which they give $5,000 to homeowners to repair these items. The buyer does not have to pay back the grant, but must submit to annual property inspections.