Two States Sue Bank of America Over Mortgages

The attorneys general of Arizona and Nevada on Friday filed a lawsuit against Bank of America, accusing it of engaging in “widespread fraud” by misleading customers with “false promises” about their eligibility for modifications on their home mortgages.

In withering complaints filed in state courts in both states, the attorneys general accused Bank of America of assuring customers that they would not be foreclosed upon while they were seeking loan modifications, only to proceed with foreclosures anyway; of falsely telling customers that they must be in default to obtain a modification; of promising that the modifications would be made permanent if they completed a trial period, only to renege on the deal; and of conjuring up bogus reasons for denying modifications.

“Bank of America’s callous disregard for providing timely, correct information to people in their time of need is truly egregious,” Catherine Cortez Masto, the attorney general of Nevada said in a statement.

The lawsuit comes as top prosecutors nationwide are investigating whether the paperwork that banks used to support foreclosure cases often was egregiously sloppy, sometimes relying on robo-signers — employees who signed hundreds of documents a day — to sign sworn court documents.

Tom Miller, Iowa’s attorney general who is heading the multistate investigation into foreclosure fraud allegations, said the two states’ lawsuits would not dilute his inquiry. A Bank of America spokesman, Dan Frahm, said bank officials were disappointed that the lawsuits were filed “at this time,” given the bank’s cooperation with the multistate investigation.

Arizona and Nevada are among the states hardest hit by the housing downturn, and the state attorneys general said their lawsuits were prompted by hundreds of complaints by consumers who sought modifications of their mortgages.

The complaints in the lawsuit in many ways echoed problems encountered by homeowners nationwide who have tried with little luck to obtain mortgage modifications from banks, often through a federal program set up for that purpose. Thousands of homeowners complain that banks repeatedly lose their documents, fail to return calls or foreclose when a homeowner believes he or she is still negotiating a modification.

The lawsuit noted that Bank of America ranked last in “virtually every homeowner experience metric” monitored in a monthly report on the federal home loan modification program.

Former employees said that Bank of America’s modification staff was “chaotic, understaffed and not oriented to customers,” according to a news release. The Arizona complaint cites the case of an Apache Junction couple who faced foreclosure. Terry Goddard, attorney general of Arizona, said the lawsuit was filed in part because the bank had violated the terms of a 2009 consent decree that Countrywide Home Loans — which Bank of America purchased in 2008 — had engaged in “widespread consumer fraud” in originating and marketing mortgages. As part of the judgment, Countrywide had agreed to create a loan modification program for some Arizona homeowners.

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Most Americans Concerned About Housing Payments

More than half of Americans are worried about not having enough money to pay their mortgage or rent, according to a survey from the Washington Post released today.

A third of respondents were "very concerned" about their ability to make housing payments, while a fifth were "somewhat concerned," adding up to 53 percent of respondents. This contrasts to the results of similar surveys the newspaper conducted in February 2009 and December 2008.

In the 2008 survey, 37 percent of respondents said they were at least "somewhat concerned" about making their housing payments. By February 2009, that figure had risen to 46 percent.

In the latest survey, 15 percent of respondents said they were "not so concerned," while 28 percent said they were "not at all concerned." Three-quarters of African Americans were concerned; 55 percent were "very concerned," the paper said. The rest had no opinion.

"Americans' views about a moratorium are intertwined with their concerns about their personal finances and the economy. Opinions about whether homeowners or mortgage lenders are more to blame for homeowners' challenge in making payments and avoiding foreclosure haven't changed much since a September 2007 poll conducted by the Wall Street Journal and NBC.

The Washington Post survey found that 45 percent of respondents blamed lenders more, 26 percent blamed homeowners more, and 20 percent said they were equally at fault. The 2007 WSJ-NBC poll found 48 percent blamed lenders more, 27 blamed homeowners more, and 22 percent said they were equally responsible.

Despite concerns about the economy, the majority of respondents, 61 percent, said that now was a good time to buy a home. Twenty-nine percent said it was a bad time to buy, and 10 percent had no opinion.

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Most Americans Concerned About Housing Payments

More than half of Americans are worried about not having enough money to pay their mortgage or rent, according to a survey from the Washington Post released today.

A third of respondents were "very concerned" about their ability to make housing payments, while a fifth were "somewhat concerned," adding up to 53 percent of respondents. This contrasts to the results of similar surveys the newspaper conducted in February 2009 and December 2008.

In the 2008 survey, 37 percent of respondents said they were at least "somewhat concerned" about making their housing payments. By February 2009, that figure had risen to 46 percent.

In the latest survey, 15 percent of respondents said they were "not so concerned," while 28 percent said they were "not at all concerned." Three-quarters of African Americans were concerned; 55 percent were "very concerned," the paper said. The rest had no opinion.

"Americans' views about a moratorium are intertwined with their concerns about their personal finances and the economy. Opinions about whether homeowners or mortgage lenders are more to blame for homeowners' challenge in making payments and avoiding foreclosure haven't changed much since a September 2007 poll conducted by the Wall Street Journal and NBC.

The Washington Post survey found that 45 percent of respondents blamed lenders more, 26 percent blamed homeowners more, and 20 percent said they were equally at fault. The 2007 WSJ-NBC poll found 48 percent blamed lenders more, 27 blamed homeowners more, and 22 percent said they were equally responsible.

Despite concerns about the economy, the majority of respondents, 61 percent, said that now was a good time to buy a home. Twenty-nine percent said it was a bad time to buy, and 10 percent had no opinion.

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Chicago Home Prices Rise for Fourth Straight Month

Nationwide, home prices rose slightly in August compared to the same month last year, according to the monthly Standard & Poor's/Case-Shiller Home Price Index.

A 10-city composite index rose 2.6 percent year-over-year in August and a 20-city composite index rose 1.7 percent year-over-year. Compared to July, both indexes dipped slightly for the first time in several months: 0.1 percent and 0.2 percent, respectively.

Fifteen out of 20 tracked metro areas saw index declines compared to July. Despite the overall index increase, 12 metro areas also saw declines compared to August 2009. Seventeen metro areas saw slowing annual growth rates.

Average home prices nationwide are back to late 2003 and early 2004 levels.

Chicago, Detroit, New York and Washington, D.C., have posted at least four straight months of month-to-month increases, though none of the 20 metro areas posted more than a 1 percent increase from July, the report said.

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Homebuilder confidence up but still low

An index measuring homebuilder conference rose for the first time in five months during October, but showed the vast majority of builders view the current level of sales as poor.

Although more builders are expecting sales to pick up in the next six months, they remain in the minority, and traffic from prospective buyers remains low.

The National Association of Home Builders/Wells Fargo Housing Market Index asks builders builders to rate current single-family home sales, sales expectations for the next six months, and traffic from prospective buyers.

The index gauging current sales conditions rose three points in October, to 16. The index gauging sales expectations in the next six months rose five points, to 23. The index gauging traffic of prospective buyers rose two points, to 11.

The new-homes market is finally moving past the lull that occurred when the homebuyer tax credits expired and economic growth stalled this summer," said NAHB Chief Economist David Crowe in a press release.
Challenges to homebuilders include competition from foreclosures, inaccurate appraisal values, and "general consumer uncertainty about the economy and job market," Crowe said.

The toughest obstacles are credit-related, Crowe said: the scarcity of construction credit for builders and tighter mortgage requirements for consumers.

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Mortgage Rates Ease Again

Mortgage rates are at new lows for a third consecutive week as investor demand for mortgage-backed securities that fund most home loans continues to be more than adequate to satisfy demand for mortgages.

Rates for 30-year fixed-rate mortgages averaged 4.19 percent with an average 0.8 point for the week ending Oct. 14, down from 4.27 percent last week and 4.92 percent a year ago, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

That's a new low in Freddie Mac's records, which date back to 1971. Rates haven't been lower since April 1951, according to another set of data based on FHA rates that goes back to 1948.

Rates for 15-year fixed-rate mortgages averaged 3.62 percent with an average 0.7 point, down from 3.72 percent last week and 4.37 percent a year ago. That's a new low in Freddie Mac records dating to 1991.
Rates for 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.47 percent with an average 0.6 point, unchanged from a week ago but down from 4.38 percent a year ago. Rates on 5-year ARM loans have never been lower since Freddie Mac began tracking them in 2005.

"September's employment report held no big surprises to financial markets, allowing long-term bond yields and fixed mortgage rates to continue to ease," said Freddie Mac Chief Economist Frank Nothaft. "As a result, both the 30-year and 15-year fixed mortgage rates hit all-time record lows for the third consecutive week."

Although the latest slide in mortgage rates has sparked another refinancing boom, demand for purchase loans remains down 37.1 percent from a year ago, according to a separate survey by the Mortgage Bankers Association.

Via Inman News

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Home-sale discounts jump 24%, Chicago 5th Highest Share of Discounted Listings

Sellers cut asking prices on 2.1 percent more homes last month compared to August -- a total of 323,316 homes.

Meanwhile, total inventory rose 0.6 percent from August and 13.6 percent from September 2009 to a total of 675,872 homes. The share of discounted homes is therefore 47.8 percent, up from 43.8 percent in September 2009 when 260,358 homes had experienced a price cut.

On average, sellers had reduced their list prices twice last month. Median list price last month was $245,265, down 1.8 percent from August and 15.3 percent lower than in September 2009.

Markets with the highest share of discounted listings (of 26 markets surveyed):

1. Jacksonville, Fla. (55.8 percent)
2. Phoenix, Ariz. (55.4 percent)
3. Minneapolis-St. Paul, Minn. (53.2 percent)
4. Orlando, Fla. (52.8 percent)
5. Chicago, Ill. (52.1 percent)
6. Tucson, Ariz. (51.7 percent)
7. Baltimore, Md. (51.3 percent)

Markets with the lowest share of discounted listings (of 26 markets surveyed):

1. Denver, Colo. (34.4 percent)
2. Los Angeles (39.1 percent)
3. Richmond, Va. (42.9 percent)
4. Miami-Ft. Lauderdale-Palm Beach, Fla. (43.3 percent)
5. San Francisco (45.2 percent)
6. Charlotte, N.C. (46 percent)

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Title Companies Asking For Reassurance from "Robo-Signing" Lenders

In addition to satisfying federal and state regulators that they're following the letter of the law, lenders embroiled in the "robo signing" scandal may soon have to provide warranties to title insurers in order to continue selling foreclosed homes.

Bank of America has already agreed to provide warranties to Fidelity National Financial Inc. that cover the title insurer's costs if employees processing foreclosure documents for the bank make mistakes, Bloomberg News reports, and is in talks with other title insurers to do the same.

Bank of America announced Friday that it would temporarily halt foreclosure sales in all 50 states until it completed a review of its foreclosure procedures, which so far "shows the basis for foreclosure decisions is accurate."

At least four other loan servicers have slowed or halted some foreclosure proceedings in 23 judicial foreclosure states, following allegations that employees handling court filings for the companies signed affidavits that contained information they had not personally verified.Other loan servicers taking action, to date, are GMAC Mortgage, JP Morgan Chase, PNC Financial Services Group Inc. and Litton Loan Servicing.

In addition to mollifying state and federal officials, lenders that want to sell properties they have foreclosed must also convince title insurers they have followed the proper procedures.

ALTA, the title insurance industry's trade group, continues to maintain that flaws in documentation filed in the foreclosure process should ultimately have little adverse impact on buyers of "real estate owned" (also known as bank-owned or REO) properties or on title insurance claims.

Old Republic National Title Insurance Co. has reportedly stopped insuring title for properties foreclosed on by JP Morgan Chase and GMAC Mortgage. The Associated Press reported Friday that Stewart Title Guaranty Co. has issued guidelines to agents that include restrictions on insuring title for properties foreclosed on by JP Morgan Chase, Bank of America, OneWest Bank and GMAC Mortgage.
In arguing against a foreclosure moratorium, Peter Swire, an Ohio State University law professor who until August was a special assistant to President Obama for economic policy, said senior corporate officers at banks should instead personally certify that they have checked their internal foreclosure processes.

The scope of such certifications could vary, based on the what the senior bank official can actually promise, Swire said.

The Mortgage Electronic Registration Systems, or MERS, saved financial firms hundreds of millions of dollars by reducing paperwork involved with reassigning loans, the Washington Post reports. "If you read nothing else," Pfotenhauer advised, "check out MERS's response to speculation about their role in the foreclosure process."

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Nancy Pelosi Pushes For Forclosure Fraud Investigation

House Speaker Nancy Pelosi and the other California Democrats are calling for an investigation into the foreclosure fraud scandal that has forced the nation's biggest banks to halt foreclosures in 23 states.

Bank of America, JPMorgan Chase, and Ally Financial (formerly known as GMAC) halted foreclosures in 23 states after employees admitted in sworn depositions that they didn't verify information in thousands of foreclosure documents. Their use of false affidavits to prove they have the right to foreclose is an eerie reminder of the predatory lending and “liar’s loans” that created the housing bubble and bust to begin with.

Menendez and Sen. Al Franken (D-Minn.) asked the Government Accountability Office to investigate as well, and Sen. Jeff Merkley (D-Ore.) sent a similar request to Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan on Monday.

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"Robo-signing" Controversy Continues

The "robo-signing" controversy over lenders' allegedly lax foreclosure procedures is picking up momentum, with the Office of Comptroller of the Currency ordering the nation's largest lenders to review their foreclosure processes.

Attorneys general in California, Florida, Colorado, Ohio, Illinois, Iowa, North Carolina and Connecticut are also looking into lenders' foreclosure procedures. Connecticut Attorney General Richard Blumenthal today asked the state's Judicial Department to freeze all home foreclosures for 60 days.

GMAC Mortgage and JP Morgan Chase have already halted foreclosure proceedings in 23 states, following allegations that workers the companies employed failed to follow the proper legal procedures in filing paperwork related to judicial foreclosure proceedings.

While lawyers representing homeowners in foreclosure proceedings have challenged lenders on such grounds before, they have mostly succeeded only in delaying, not stopping, foreclosure proceedings. The "robo-signing" controversy could slow the foreclosure process for thousands of homeowners, which some analysts say might help stabilize prices in distressed markets.

The Times reported that Old Republic National Title has instructed agents not to issue title insurance policies on properties foreclosed on by GMAC Mortgage (A spokeswoman for Old Republic told Inman News the company has a "policy of not speaking to the press.")

Is it safe to buy a foreclosed home now? Foreclosure laws vary from state to state, so it is difficult to make a blanket statement on issues involved with purchasing foreclosed and REO homes, the spokesman said.

In a statement, the American Land Title Association said flaws in documentation filed in the foreclosure process should ultimately have little adverse impact on new owners of REO properties, or on title insurance claims.

"If a new homeowner’s title is challenged because of a faulty foreclosure, the title insurer may have an obligation to defend the challenge," said Kurt Pfotenhauer, chief executive officer of ALTA. Laws vary from state to state, but homeowners who have purchased properties that have been through foreclosure have "numerous defenses available to assure their continued ownership," ALTA said.

The alleged deficiency in the foreclosure process may not have harmed the previous owner, for example. Mortgage financiers Fannie Mae and Freddie Mac employ loan servicers who are handling hundreds of thousands of delinquent mortgages, and both companies have large inventories of REO properties they are trying to dispose of.

Their regulator, the Federal Housing Finance Agency (FHFA), issued a statement today acknowledging that accounts of problems with GMAC Mortgage and Chase's handling of foreclosures "raise concerns for homeowners and mortgage investors alike."

FHFA said it supports efforts by Fannie and Freddie to remind loan servicers to process foreclosures "in accordance with their seller-servicer agreements and applicable laws and regulations." Terry Edwards, Fannie Mae executive vice president for foreclosure process compliance, said in a statement that the company is disturbed by reports of servicers failing to follow proper procedures in the administration of foreclosure cases.

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It's a Great Time to Buy!

A survey by Fannie Mae shows seven out of 10 Americans now agree with half of the proposition put forward by the National Association of Realtors in a notorious 2006 advertising campaign -- that "It's a great time to buy or sell a home."
Seventy percent of Americans polled in June and July think it is a great time to buy a house, compared with 64 percent in a similar survey conducted in January 2010. But 83 percent believe it's a bad time to sell, Fannie Mae said.  And while 78 percent believed that home prices will either remain flat or go up in the next year -- up five points from January -- the number of Americans who think housing is a safe investment has fallen from 83 percent in 2003 to 67 percent today.
The number of respondents saying they would be more likely to rent their next home if they were to move increased from 30 percent in January to 33 percent in the latest survey.

"Although most Americans believe that home prices have bottomed, they are adopting a much more cautious approach toward buying," said Fannie Mae Chief Economist Doug Duncan in a press release. "Homeowners and renters alike continue to be wary of taking on risk, and they are less confident in the long-term outlook for housing."
People with mortgages (74 percent) and even underwater borrowers (69 percent) were more likely to say owning a home is a safe investment than delinquent borrowers (57 percent) and renters (54 percent).

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History Suggests That Recoveries from Debt-fueled Financial Bubbles are Bound to be Slow

If your waiting for the market to return before you sell your home then you may be in for a long wait, we are still in a declining market and have not seen the end of the tunnel yet!  Consider getting out now while interest rates are still at record low for buyers.  Not ready to sell, have you considered renting?  

"With uncertainty hovering over the economy like a gray cloud, we don't visualize a return to trend growth to approach 3 percent or so until late 2011," said David Shulman, a senior economist with the UCLA Anderson Forecast.
"In this environment, the unemployment rate will remain extraordinarily high, ending this year at 9.7 percent and 2011 at 9.5 percent."

That's about where unemployment is now -- 9.6 percent was the official rate reported for August.

The UCLA Anderson Forecast anticipates that housing starts, which plummeted from a peak of 2.07 million in 2005 to 554,000 last year, will total only 606,000 this year and 815,000 next year. It will be 2012 before housing starts break through the 1 million mark again, the forecast predicts, when they are expected to reach 1.2 million.

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Agent Responsibilities

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Want To Sell Your Condo But Your Association Isn't FHA Approved?

Have you recently read about FHA providing a lifeline to new Manhattan luxury condominiums after sales stalled? The Federal Housing Administration agreed in March to insure mortgages for apartments at the 98-unit Gramercy Park development and several other developments. This enables buyers to make a down payment of as little as 3.5 percent in a building where apartments are listed at $820,000 to $3 million.

Buildings featuring pet spas, concierges and rooftop lounges are applying for agency backing to unlock bank financing for purchasers. Developments where sales began more than two years ago had 10 units go into contract with FHA backing since approval in March.

It’s no secret. If a buyer has to put down 5-10-20% on a condo there are going to be less buyers than just putting 3.5% down to purchase a home.

Not sure if your building will qualify for FHA and you want to make your building more MARKETABLE? Smart Property is partnered up with a lender that has an internal department that takes care of all the paperwork to see if the development is eligible for FHA approval. Sohail and his lender are experts in FHA Condos and want to help you take advantage of this service to make your unit more marketable.

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Buying foreclosures that need, 203K will pay for it!

Yesterday we started talking about a 203K. Most experts are estimating that $473.4 billion in loans that will eventually need to be liquidated corresponds to approximately 1.75 million individual properties. This number represents almost 50% of the existing homes available for sale as of December 2009, and moreover, only accounts for expected defaults for mortgages outstanding in the private securitization market which makes up less than a third of the total securitization market and less than 5% of the total mortgage market. Foreclosures are "as is" properties. There are a lot of opportunities!

Now think of yourself as an asset manager of the bank and all the properties they have in inventory that you have never seen or don’t know what condition the property will be in due to theft, winterizing of the utilities, etc. Most of these asset managers are going to only accept a 203K borrower or a cash buyers because they have already lost money on the property. They want to get the maximum dollar and they want to make sure the deal will CLOSE. In comes a 203K – no certificate of occupancy is needed and the property is sold AS IS with just 3.5% down including the repairs.

What does the 203K loan program cover?
•Remodeling bathrooms or a kitchen
•Replacing a roof, gutters, and downspouts
•Adding a family room, bedrooms, or bathrooms
•Replacing flooring, tiling, or carpeting
•Completing a basement or attic conversion or adding a second story
•Expanding or building a garage or carport
•Renovating a deteriorating property, such as repairing a chimney, termite damage, or structural problems
•Upgrading plumbing, heating, air conditioning, or electrical wiring
•Eliminating health and safety hazards, such as removing lead-based paint or mold
•Installing a well or a septic system
•Adding a porch, deck, or patio
•Adding or repairing siding or repainting
•Installing energy efficient windows or doors
•Purchasing appliances like washer, dryer, microwave, stove

The list is endless – the only thing it doesn’t cover is putting in a hot tub in the back yard or a built in swimming pool..

Not sure you qualify for the 203K loan? Smart Property is partnered up with a lender that wrote the State of Illinois course for 203K and covers 7 states! Sohail and his lender are experts in 203K and want to help you take advantage of this unprecedented time in history to buy Call Sohail Salahuddin at 312-437-7799 or send your email questions to Sohail@smartpropertyusa.com.

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Even the Playing Field With Investors to Buy Foreclosures

Ever heard of a 203K? Well it is the “IT” product for the next 5 years. It’s an FHA loan that allows you to not only refinance your existing home and get some necessary repairs or improvements done, but will also let you purchase a home and get the cost of the improvements all in one loan! And you can do virtually ANYTHING to the home accept put in a built in swimming pool in the backyard or a hot tub. You can even tear the home down to the foundation, build on it and start all over. And best of all with FHA 30 year fixed rates below 5.00% it is the only ASSUMABLE MORTGAGE PRODUCT IN THE INDUSTRY. Get a LOW interest rate loan and fix the property up – and sell it down the way – the buyer can assume the mortgage. Think about how marketable that will be as the rates start climbing again when you are selling a below 5.00% property!

Let’s say you want to buy a home at these ridiculously low prices. If you are purchasing a home that needs major or minor repairs, it can be a difficult proposition because most banks won't lend the buyer the money to purchase the home until all the repairs have been completed. Also, you can't repair a home that you don't own. Thus, FHA created the 203K loan program to alleviate these problems by facilitating the lending of the funds needed to buy the home before it is repaired. You actually close on the home and over the course of up to 6 months you can draw repair money from the loan to have the necessary work done.

What can program mean to you?

• More money to work with. The amount you can borrow is based on the expected increased value of your home, after improvements are made.
• Less Strain on Your Budget. You can pay for your renovation gradually and affordably, over the loan term of your mortgage and if you are buying you only put 3.5% down.
• Less to Pay at Tax Time. Unlike other credit options, the interest you pay on funds used for a renovation is tax deductible since it is mortgage interest.
• Less Hassle. You'll have one loan to apply for, one set of fees, one closing to attend, and one monthly payment to make.
• Lower Payment. If you own a home you can use the 203K on your existing home. In many cases if you are refinancing with today’s lower interest rate, with your improvements your payment might actually go down or stay the same even with borrowing more money.

Want to hear more? Smart Property is partnered up with a lender that wrote the State of Illinois course for 203K and covers 7 states! Call Sohail Salahuddin at 312-437-7799 or send your email questions to Sohail@smartpropertyusa.com. Sohail and his lender are experts in 203K and want to help you take advantage of this unprecdented time in history to buy.

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REAL ESTATE AFFORDIBILITY NEAR RECORD LOW!

The share of homes that families making the national median income could afford to buy remained above 70 percent for the sixth quarter in a row, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).  Nationally, the HOI was at 72.3 percent in the second quarter, unchanged from the same time period last year and close to the index's record-high 72.5 percent, set in first-quarter 2009.  The HOI tracks the share of homes sold in a particular area that would have been affordable to a family earning the local median income. The index assumes a family can afford to spend 28 percent of its gross monthly income on housing, according to NAHB's website.

Annual median family income estimates by metropolitan area come from the Department of Housing and Urban Development.  The median home price nationwide was $179,000 in the second quarter of this year, up from $177,000 in 2009's second quarter. The weighted interest rate was slightly higher, 5.11 percent, in the second quarter compared with 5.03 at the same time in 2009. The national median income was $64,400. The index covered 225 metro areas. NAHB attributed the continuing high level of affordability to favorable interest rates and low home prices. 

"Homeownership is within reach of more households than it has been for almost a generation," said Bob Jones, the building association's chairman, in a statement.

"Interest rates continue to hover at historic low levels, the economy is beginning to rebound, and with house prices starting to stabilize, conditions are beginning to draw homebuyers back into the market, which is a positive step on the path to recovery."

Three Rust Belt states featured prominently among the top 10 most affordable metro areas: Ohio, Michigan and Indiana. Syracuse, N.Y., was the most affordable metro area in the country, where households with the area's median family income of $64,300 could afford a whopping 97.2 percent of homes sold.

That metro area pushed Indianapolis-Carmel, Ind., which had held the top spot for nearly five years, to the 14th most affordable metro area. Syracuse had a median sales price of $88,000 in the second quarter, compared with $179,000 nationwide, according to the NAHB.

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Don't Believe Everything You Read

There are a slew of emails floating around out there that seem to be meant to scare people into believing that the new health care bill will greatly increase taxes for those selling their homes. In the event you have not yet been on the receiving end of such emails, it reads like this:

“Under the new health care bill - Did you know that all Real Estate transactions are subject toa 3.8% "Sales Tax"? You can thank Nancy, Harry & Barack (and your local Congressman) for this one. If you sell your $400,000 home, this will be a $15,200 tax. Higher taxes on real estate investments. The 3.8% Medicare surtax would hit average, middle-class investors in real estate. A middle-class taxpayer who happens to sell real estate for a gain in a particular year would be liable for this new tax, regardless of how low her income might be in other, more typical years.”

Despite what the email says, it’s simply not true. According to the National Association of Realtors, the new law does not at all impact average home sellers, just a handful of those in the very top income bracket.

FactCheck.org, a non-partisan website breaks it down a little further: “The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.”

According to the National Association of Realtors, half of all existing homes sold for $170,700 or less in March of this year. Obviously, none of those sales could possibly generate a $250,000 profit and so none would be subject to the tax.  Bottom line, for the vast majority of people, a typical home sale would not incur any tax and the 3.8 percent tax will not apply.

If you need further reassurance of who would have to pay the tax, here’s another summary from FactCheck.org:

• A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway.
• An "empty nester" couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half-million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy.

There you have it. Next time such an email lands in your inbox, before pushing that forward button and passing along misinformation, take a minute to look into what it says. You might just find it more valuable to click delete instead.

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Mortgage Modification Failures! By Sohail A. Salahuddin

More failures for loan modifications hit our market.  The Banks still don't get it, which most of us don't get.  What makes sense to us doesn't make sense to them, or so it seems.  Most us understand that the banks that don't do a loan modification for a home owner have to file suit for foreclosure which cost them legal fees and in today's foreclosure world this is very costly and time consuming for the banks.  Now, once they are successful with the foreclosure they have to then get the house back on the market and who knows when it will sell.  If the property does sell, it's going to be for a minimum price.  What makes sense to most people is that if the banks modify the loan, the home owner can stay in the house, pay the bank some money still, the bank will have a loan out there still collecting some interest and it seems to all workout in the end.  Here's the kicker and what most people don't realize in less they are in the business is that an individual with home financing has front end ratio's (housing ratios) and back end ratios (total debt to income ratio).  What the banks look at are all the other bills that come into effect such as the revolving debt from credit cards which on average have the home owner at a back end ratio of over 60%.... WHICH IS A SLAM DUNK FOR FORECLOSURE!  Maybe the banks aren't so dumb and they really see the inevitable.  Here is my suggestion, stay away from loan modification companies and work diligently with your bank to stay in your home.  If that doesn't work out, you do have other options such as short sale, consent foreclosure, your one time right of reinstatement.  There are many options to avoid foreclosures.... speak to a real estate professional who has the knowledge to guide you in the right direction.


www.smartpropertyusa.com

sohail@smartpropertyusa.com

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Chicago Real Estate Still Has Years to Recover!

Chicago housing market won't recover until 2013. It is predicted that existing home sales will reach 95,000 a year by 2013. During the peak of the housing boom, that figure was over 50,000 higher. If we assume that the 95,000 figure is based on more sensible lending practices, it would seem to be a sustainable recovery if it happens.



One of the more disturbing quotes from the article is, "Chicago homeowners will have to get used to a new reality, where selling a house routinely takes six months or more and home appreciation just barely outpaces inflation." This indicates that real estate may not be the way to invest money for the long-term. When I was growing up, my father, a high school teacher "lucky" enough to teach a section of consumer economics, always told me, "Everyone should buy a home. You save your 20% down, you find one that won't have a mortgage payment greater than 40% of your monthly income, and you begin to build equity."


This is clearly not the case as it is projected that home values in Chicago will drop 5.7% by the third quarter of this year. Moreover, the price of a home in Chicago compared to income is upside down. The median home price was 3.3 times that of the median income in the third quarter of 2009. On average, from 1980-2000, this figure was 2.6. If the market takes a long time to rebound, we may see the City of Big Shoulders become the City of Big Rentals.


As we get into the underwater mortgage foreclosure wave, we may see housing values decrease even further. According to Crain's, 21% of mortgages in Chicago are underwater. As those homes go to foreclosure, we can expect them to further devalue housing. Since most people don't fight their foreclosures, we can further expect that the market will be flooded with judicial sale properties as well as even more REOs.


This may seem like a buyer's market, but since banks aren't lending as freely as they once did, the decreased cost of a home will not do much to drive purchases.

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Mortgage Rates At 9 Week Record Low!

Mortgage rates on a fixed-rate mortgage tracked by Freddie Mac hit new lows this week, with 30 year fixed-rate loans averaging 4.42 percent.  This is down from 4.44 percent the previous week and down almost 3/4 a percent a year ago.


"Investors in long-term bonds appear very confident that inflation will remain in check, and as a result long term fixed mortgage rates have continued flat", said Amy Crews Cutts, Freddie Mac's deputy cheif economist.


Rates on a 15 year fixed-rate mortgage aveaged 3.9 percent, down from the previous week.  This was a low dating back since 1991.


Rates on 5 year Treasury Inexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.56 percent, down a full percent point from the previous year.


Rates have been dropping for 9 straight weeks to record lows, with no forecast for upward change anytime soon.

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How Do You Pick The Right Agent To Sell or Rent Your Property?

With so many real estates agent who have come and gone in the past decade as well as a giant shift in the market who do you choose to represent you in the sale or lease of your home and how do you choose the right agent for the job?  It can be a tough choice and you will need to choose wisely. 


You have so many real estate companies and agents to choose from and you will need to be aware of a few important things you will need to know when choosing.  The first and most important choice should how hungry, motivated and aggressive the agent is when selling or leasing homes.  You don't want an agent who practiced the three Ps: Put up sign, Put in MLS, and then Pray!  I see this far too often and it's not selling, it's wishful thinking.  You need an agent who will create a specific marketing strategy for your home as well as a target market.  You need to pick an agent who has the time for you property.  This means they have the time to show it, review their marketing, review the activity, follow up with prospects, networks with other agents in the area, open houses, time to take a close look at the property and give you ideas such as arrangement of furniture, landscape ideas to add curb appeal, and much more.  What you don't want is an agent who is sitting on a ton of listings and wants to add yours to his or her list of properties they are listing.   You need an agent who can put 110% into your property and focusing on finding a buyer and selling it.  Make sure you ask the agents you interview what their marketing plan to sell your property is. 


It's very important that you realize that the company you choose doesn't make a difference, the agent is what's important.  As long as you choose a good agent, it doesn't matter is you choose a nationally recognized firm or a small local boutique firm.  The most important deciding factor should be the agent you choose no matter the company is.  I will tell you that I personally know agents who work for firms that no one has ever heard of however these agents are some of the best in the business. 


If you are going to lease your property, find an agent who has different strategies to market your property: internet, signage, flyers, media, etc.  In today's leasing market, a good agent will have no problem use a non-exclusive listing agreement which gives you the freedom to try and lease the property yourself or use other companies as well.  You will not be locked into any agreement that you can't get out of.  A confident agent won't mind who else you list it with since they know who and how to market yout property.  Make sure that the agent is licensed and double check with the Illinois Department of Financial and Professional Regulations that their license is active.


Remember these important tips and choose wisely.   Take your time and interview each prospective agent.  You can even ask for a list of testomonials and referrences.

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Rent vs. Own Shift

There has always been the debate of rent vs own, should  I buy now or should I continue to rent?  There is definitely benefit to home ownership such as tax benefits, you own the home and don't have to worrry about moving or renewing a lease, and in the past there was home appreciation (not a current benefit in these times).  If you own your home you could make any improvements that you want, or make changes without any concern since your the owner. 


If you are renting, you cannot make any changes to the property without permission and I don't see why you would want to pay for any improvements yourself to someone elses property.  Every year or two you would have to renew your lease or prepare for a move.  The great thing about renting is that you don't have to worry about any real estate taxes, association dues, etc... you are only responsible for paying your rent which is less stressful and majority of the time a less expensive monthly payment.  You are also not responsible for any issues with the property.  For example, if an appliance breaks the owner will be responsible for repairing it. 


So, should you rent or own? In todays market it is a great time to buy with interest rates the lowest they have been in fifty years.  The price of homes are at a low, and there are so many great bargains out there that it's the deal of the century.  So why not buy?  The decision should be made depending on how long you live there.  If you plan on moving within the next five years then you may want to consider renting.  The first five years of your mortgage payment is almost all interest and there would be no real benefit if you plan on moving in a short time, so renting may make the most sense.  If you are planning on staying for a while, five years or more then it's time to buy! 


Now, consider your options and speak to a Realtor who knowledgeable in both home ownership and leasing real estate.  They should also have knowledge on the current home finance industry, rates, programs, or have someone on their team who does so they can guide you to make the right decision for you.

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Nationwide Foreclosures Up 6% Over Last Year

The number of U.S. homes lost to foreclosure surged in July, another sign lenders are moving quicker to take back properties from homeowners behind in payments. Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009, foreclosure listing firm RealtyTrac Inc. said Thursday. Banks have stepped up repossessions this year to clear out the backlog of bad loans. July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.

Meanwhile, homeowners who are falling behind on their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market. The number of properties receiving an initial default notice – the first step in the foreclosure process – rose 1 percent last month from June, but tumbled 28 percent versus July last year, RealtyTrac said. Initial defaults have fallen on an annual basis the past six months.

The latest data reflect a foreclosure crisis that continues to drag on as many homeowners struggle to make their monthly payments amid high unemployment, slow job growth and an uneven rebound in home prices.
Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures. Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent, or about 530,000 homeowners, have fallen out of the administration's main effort to assist those facing foreclosure. That program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009. Still, RealtyTrac estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In all, 325,229 properties received a foreclosure-related warning in July, up 4 percent from June, but down 10 percent from the same month last year, RealtyTrac said. That translates to one in 397 U.S. homes. The firm tracks notices for defaults, scheduled home auctions and home repossessions – warnings that can lead up to a home eventually being lost to foreclosure. Among states, Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. The number of properties in Nevada receiving a foreclosure warning last month rose nearly 7 percent from June, but fell nearly 30 percent from the same month last year. Rounding out the top 10 states with the highest foreclosure rate last month were: Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland. Las Vegas continued to be the city with the highest foreclosure rate in the U.S., with one in every 71 homes receiving a foreclosure notice in July – more than five times the national average.

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Wells Fargo Must Return Overdraft Fees

A federal judge in California ordered Wells Fargo & Co. to change what he called "unfair and deceptive business practices" that led customers into paying multiple overdraft fees, and to pay $203 million back to customers.

In a decision handed down late Tuesday, U.S. District Judge William Alsup accused Wells Fargo of "profiteering" by changing its policies to process checks, debit card transactions and bill payments from the highest dollar amount to the lowest, rather than in the order the transactions took place. That helped drain customer bank accounts faster and drive up overdraft fees, a policy Alsup referred to as "gouging and profiteering."

The ruling detailed the experiences of two Wells Fargo customers who used their debit cards for multiple small purchases, and were then charged hundreds in overdraft fees because the order the purchases were cleared by the bank depended on the amounts. The judge found the customers, who were part of a class action, were not properly informed of the bank's policies on processing payments and were unaware the bank would allow debit purchases to go through when their accounts were overdrawn.

"Internal bank memos and e-mails leave no doubt that, overdraft revenue being a big profit center, the bank's dominant, indeed sole, motive was to maximize the number of overdrafts," Alsup wrote. That policy would "squeeze as much as possible" from customers with overdrafts, in particular from the 4 percent of customers who paid what he called "a whopping 40 percent of its total overdraft and returned-item revenue."

The judge dismissed Wells Fargo's arguments that customers wanted and benefited from the policies, and detailed evidence he said showed efforts to obscure the practices in statements and other materials. Wells Fargo's online banking system, for example, would display pending purchases in chronological order, "leading customers to believe that the processing would take place in that order."

"The supposed net benefit of high-to-low resequencing is utterly speculative," he wrote. "Its bone-crushing multiplication of additional overdraft penalties, however, is categorically assured."

Alsup also criticized the bank for allowing overdraft purchases after accounts had been drained by offering a "shadow line of credit" that customers were unaware existed.
The decision noted that the Federal Reserve has outlawed some of the practices detailed in the case, most notably debit card overdrafts permitted without customers agreeing to accept overdraft protection.


Judge Alsup ordered Wells Fargo to stop posting transactions in high-to-low order by Nov. 30 and to reverse overdraft fees charged to customers from Nov. 15, 2004, to June 30, 2008, as a result of the policy. A study cited in the decision by a Wells Fargo witness put the restitution at "close to $203 million."

Wells Fargo spokeswoman Rochele Messick said the bank is "disappointed" with the ruling. "We don't believe the ruling is in line with the facts of this case and we plan to appeal," she said.

Messick noted that Wells Fargo changed its policies earlier this year, and customers can no longer incur more than four overdraft charges in one day.

Wells Fargo shares closed Wednesday trading down $1.47, or 5.3 percent, at $26.30, as the broader markets dropped sharply on economic concerns, with banks being particularly hard hit.

The case, heard in the U.S. District Court for Northern California, is Gutierrez vs. Wells Fargo.

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WHY CAN'T I GET FINANCED TO BUY A HOME?

Do you want to buy a home however you are having problems getting financed?  Well, here are the top reasons you may not be able to be approved for home financing:


Poor Credit: Even if you have a large down payment and great income, if your credit is not up to par with the banks current lending standards  you will have a problem getting financed.  Even FHA loans, which cater to borrowers with a lower credit score, has increased its FICO score standards bringing the average credit score of todays home buyer to 693


Insufficient Liquidity: If you don't have a heavy down payment (20% to 30%) and a strong excess in liquidity the banks don't want to take the risk of funding your loan.  Even minimum down payments of 3.5% (FHA) loans still require you to have six months of reserves in liquid assets to offset the risk.


Lack of Inome: If you can't afford it with room for all of your other bills then you can't buy it.  In todays market, you will need consistent income for the past two years. 


Debt: If you have too much debt then you cannot qualify for more debt from the banks to finance your home purchase.  Your debt to credit ratios have to pass the banks qualifying guidelines


Self Employment: Thse of you who are self employed, pay attention because your gross adjusted income will determine what you can afford and can't afford.  This means that the more deductions you take the less money you show that you net, the less you have to spend on your home.

With the strict current lending guidelines  these days private lending seems to be the future for securing real estate funding. 

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Ben Bernanke Says Current Lending Guidelines Too Strict!

Finally, it's about time that someone with authority admits that it is becoming very hard for individuals to get home financing, causing more home owners to go into foreclosure.   Fed chairman Ben Bernanke announced that lending guidelines are too strict!  Well, we all new that right?  You did if you could not get financed to purchase a home in the last two years for reasons that you could not believe.  An example, an individual looking searching for homes finally finds a great home in which the home owner is in trouble and needs to sell.  The individual puts in an offer and the home owner agrees, both are very happy.  The buyer goes to get home financing and everything looks good, 780 credit score, good income, etc.  Now, during the process he goes and purchases a few small pieces of furniture with his credit card for the new home.... you know, planning.  Now the bank puts a big stop on everything!!  The buyers borrowed credit/debt has increased and they don't like it.  The deal is killed and the process has to start all over again, however this is too late for the seller.  His bank hears the news and moves forward with the foreclosure.  Another property foreclosed on and another buyer who can't believe the bank did that.  This is just one example and it happens everyday, the lending guidelines are so strict that they start to not make any logic sense at all.  Not to mention, the guidelines are becoming stricter every month.  The more foreclosures, the tighter the guidelines become.  The tighter the guidelines become, the more foreclosures.  Aren't we working backwords?  Hopefully we will see some new and positive light shined on our current real estate industry in the next few months so more people can get loand and buy homes, which means more sellers can actually sell their homes to buyers needing financing.

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Fannie Mae Releases New Website To Help Troubled Home Owners

Fannie Mae has just launched a great new website to assist home owners who have financial difficulty with their homes.  The new website, http://www.knowyouroptions.com/ is an easy to use site that provides individuals with options regarding their home and a decision they will have to make if they are in financial difficutly.  The site is a great source especially when there are tons of loan modification companies trying to provide you with advise which may be incorrect for your situation.  The site is interactive and very easy to use.  There is also a resoures page, advise from other homeowners and more. 

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Well known for sale by owner firm files for liquidation

Florida-based company that helped for-sale-by-owners market their properties around the country has reportedly filed for liquidation.
Buy Owner of South Florida Inc., which does business as Buy Owner, has turned over its assets to Michael Moecker & Associates, an auction firm that liquidates insolvent companies, DailyBusinessReview.com reported.

The auction firm says that it will continue operating the BuyOwner.com website and provide services to consume in order to pay off creditors.

The Deerfield Beach-based company does business in 10 markets, including Miami, Chicago, Dallas and Atlanta, Daily Business Review reported.

By Owner was established in 1984 and claims to be the first "by owner" company to provide nationwide radio, television, and magazine publications.
Buy Owner promises to provide exposure for clients' properties through an "ultra-aggressive advertising campaign" that includes highway billboards, television commercials and Internet advertising.  The majority of the home sellers who use Buyowner end up using a Realtor to sell their home and end up wasting time and money.

Buy Owner operates corporate offices and authorizes franchises, which it says distinguish the company from networks of "real estate agents just trying to make some extra money by associating themselves with a 'by owner' name."

Buy Owner and 18 affiliates filed an assignment for the benefit of creditors, or ABC filing, on July 26 in the Broward County 17th Judicial Circuit of Florida, DailyBusinessReview.com reported. An ABC liquidation is an alternative to filing for bankruptcy in federal court.



Buy Owner reportedly settled a class-action lawsuit last year that required it to pay refunds to many clients who were clients between 2002-08. The lawsuit alleged that Buy Owner hadn't allowed clients to cancel contracts, the story said.

Buy Owner reportedly owes more than $3.9 million to its only secured creditor, and $1.2 million in back wages to executives.



CEO Scott A. Eckert and other members of the Eckert family involved in running the company resigned on July 23, the publication reported.

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The Wall May be Cracking - Bank America to Reduce Mortgage Principal

Bank of America under pressure to keep distressed borrowers from losing their homes, said Wednesday that it would begin forgiving some of their mortgage debt. While limited in scope and by invitation-only, the program is a significant shift in efforts to assist the four million homeowners who are facing foreclosure.

 It comes as banks and the Treasury Department are under growing pressure from the Obama administration, lawmakers and community groups to stem the foreclosure tide.

With the housing market entering another period of stress, worries about foreclosure are compounded. As the volume of sales drops, prices start to slide as well. When the gap keeps increasing between the size of a mortgage and the value that the home could fetch from a buyer, owners tend to give up.

“Banks are willing to take some losses now to avoid much greater losses later if the housing market continues to spiral, and that’s a sea change from where they were a year ago,” said Howard Glaser, a housing consultant in Washington and a former H.U.D. official.

The Bank of America program is intended for owners who received loans from Countrywide, the biggest and one of the most aggressive lenders during the housing boom. Bank of America bought Countrywide in 2008.

Bank of America executives said the program would work this way: A borrower owes $250,000 on a house now worth $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account.

As long as the owner continued to make payments on the $200,000, every year $10,000 in the special account would be forgiven until either the balance was zero or the housing market recovered and the borrower once again had positive equity.

“The time has come to test this sort of program,” Jack W. Schakett, who heads credit loss mitigation strategies at Bank of America, said in a briefing. “Modifications are better than foreclosure.”

That was the original notion behind the government’s modification program, which was originally touted as helping millions of borrowers but has resulted in permanently improved loans for less than 200,000. The program, which stresses reductions in interest rates, was criticized Wednesday by the special inspector general for the Troubled Asset Relief Program for over-promising and under-delivering.

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Mortgage Fraud Continues - Know Who You Are Working With!

CHICAGO –Officials from the Illinois Department of Financial and Professional Regulation’s (IDFPR) Mortgage Fraud Task Force (MFTF) today announced a series of disciplinary actions, including $769,000 in fines, against 16 licensees—including a title company, 7 mortgage companies, 6 loan originators, and 2 appraisers—plus three unlicensed companies and a number of straw buyers, all of which were involved in an alleged $7.7 million scheme to defraud lenders in a rehabbed 27-unit condominium building located at 4725 S. Michigan Avenue and other properties on Chicago’s South Side. All 27 apartments at 4725 S. Michigan are in foreclosure. “This is the first time that we have seen a case in which all of the building’s units are in foreclosure,” said Brent E. Adams, IDFPR Secretary. “We believe this case will serve as a dramatic example of the damaging ripple effect that mortgage fraud has on communities by lowering the property values of neighboring homeowners.” The type of fraud scheme alleged by IDFPR, which puts entire neighborhoods at risk and can net millions of dollars for the perpetrators, involves complicated financial transactions that can be successfully unraveled partially as a result of the 2004 consolidation of all three state agencies with responsibility for overseeing portions of real estate transactions: from listing a property to transferring the property to a new owner. Illinois is one of the few states in the nation that has the capability to conduct investigations into alleged mortgage fraud within one state agency. Tipped off by a confidential informant, MFTF investigators late last year began to unravel the alleged fraud that resulted in every unit owner in the building being unable or unwilling to keep up their mortgage payments.  The alleged scheme involved title agents, mortgage brokers, loan originators, appraisers, unlicensed real estate brokers and straw-buyers who were induced or compensated to participate in the origination of loans using knowingly false information on loan applications.  According to IDFPR’s investigation, most if not all of the units were alleged to have been sold to straw buyers, beginning in late 2006 and continuing through October 2007, at artificially inflated prices based on fraudulent appraisals. The buyers would allegedly sign loan documents stating that the address was going to be their primary residence when, in fact, they had no intention of ever living there. At least one of the alleged straw buyers purchased five units claiming that each unit was her primary residence. Often times, the sellers would allegedly ask the buyers to risk their good credit for generous cash kickbacks or on the promise that a bevy of renters will cover the cost of the mortgage. In the end, the buyers failed to make payments, defaulted on their loans and the lenders began the foreclosure process. According to the informant, Schaumburg-based Traditional Title Company LLC was the alleged ring leader in the fraud and, two of its principals, Ira Kaufman and Elbert Reniva, both of Chicago, were “outwardly committing fraud” by recruiting investors, mortgage brokers, appraisers and straw buyers. Traditional Title’s title insurance license was revoked by IDFPR’s Division of Financial Institutions and the company was fined $24,000.  Traditional Title is contesting IDFPR’s revocation. In its revocation order, IDFPR said that Traditional Title demonstrated “untrustworthiness” in transacting the business of guaranteeing titles.  It alleged that the condo development’s seller hired Kaufman as the attorney of record for 19 transactions in which alleged straw buyers signed purchase agreements for properties they could not reasonably afford.  Many of the alleged straw buyers reported inflated incomes from working as employees of E&H Distributors, Inc.  IDFPR could not confirm employment and found no evidence that the company was doing business. Some of the alleged straw buyers purchased multiple properties as their primary residence. In addition to Tradition Title, the MFTF’s investigation also cited and fined several other licensed companies and individuals. IDFPR’s Division of Banking revoked, fined and/or disciplined the licenses of: Mortgage Companies AM Mortgage Corp., Lincolnwood (Revoked license; $100,000 fine) Atlas Preferred LLC, Chicago (Revoked license; $100,000 fine) Exclusive Bancorp, Inc, Lincolnwood (Revoked license; hiring unlicensed loan    originator Arfeen S. Ahmed; $100,000 fine) KRK Financial Services, Inc. (dba KRK Mortgage Bancorp, Inc.), Chicago (Revoked license; $100,000 fine) Elite Financial Investments, Inc., Oak Brook (90-day suspended license; $25,000 fine) Two other mortgage companies: C.D.K. USA Mortgage in Chicago and Country Mortgage Services, Inc. in Arlington Heights; each were operating on previously revoked licenses. They also were fined $100,000 each. Loan Originators Theodore Cardenas of Schaumburg (Revoked license; $20,000 fine) John Karapournos of Skokie (Revoked license; $20,000 fine) Razzak Khader  of Morton Grove (Revoked license; $20,000 fine) Zarak Khan of Chicago (Revoked license; $20,000 fine) Sara Mian of Niles (Revoked license; $20,000 fine) Jeff Townsend of Glendale Heights (Revoked license; $20,000 fine) Arfeen S. Ahmed (Cease and desist unlicensed loan origination) IDFPR’s Division of Professional Regulation also filed formal complaints against the following licensed professionals: Real Estate Appraisers (complaints seeking revocation, suspension or other disciplinary action) Choudhry Z. Muzaffar of Chicago Jason M. Powell of Chicago According to investigators, Muzaffar and Powell allegedly inflated the value of the properties by $50,000-$75,000, failed to select appropriate comparable sales, and failed to accurately reflect certain information necessary for a valid appraisal. In addition, ENH Services LLC, Zeal Management LLC, and Eliot Higueros were all charged with unlicensed practice as real estate brokers for accepting commissions on the sale of condos at 4725 South Michigan. In multiple instances, ENH and Zeal are alleged to have received commissions of more than $20,000 on the sale of single units. Due to the nature of the investigation—including possible evidence of criminal fraud—IDFPR has referred this case to the Federal Bureau of Investigation for further review. The Mortgage Fraud Task Force (MFTF)—which consists of representatives from the Illinois Divisions of Financial Institutions, Banking, and Professional Regulation—was formed four years ago to ensure that businesses and individuals involved in real estate transactions comply with the strict standards of conduct established by state laws. Since its inception, the MFTF has taken disciplinary action against more than 100 persons and entities and assessed fines of almost $2 million and conducted a regulatory sweep of more than 150 mortgage companies.

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TAX CREDIT DEADLINE JUST AROUND THE CORNER

The tax credit deadline is just around the corner, what are you waiting for?

First time home buyers have just over a month to find their first home purchase and receive a $8000.00 tax credit.  To qualify as a first time home buyer you must have not owned a home 3 years prior to the purchase.  Repeat buyers can still take advantage and receive $6500 tax credit, but they must purchase before April 30, 2010.  The credit can be applied to primary residences  only, sorry but no investments.

There are limitations, the new law raises the income limits so the full tax credit will only be available to taxpayers with modified adjusted gross incomes up to $125,000 for individual or $225,000 for joint filers.  Sorry again, but those with higher incomes will not qualify. 

Do you qualify?  Contact one of our sales associates to find out how you can take advantage of the tax credit, current low interest rates and discounted home prices.  Right now may be the a golden opportunity to buy.

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YELP Loses All Credibility - Class Action Lawsuit Filed

Finally, Yelps extortion tactics are coming back to haunt the company.  A national class action lawsuit has been filed against YELP alleging that the company engages in extortion of business by manipulating its viewers' reviews in exchange for advertising dollars from the company's reviewed.  Refuse to play the YELP game and bad reviews suddenly appear and good reviews curiously disappear.  YELP has lost all credibility and will likely not survive. Read the suit here.

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Great Time to Buy in Northshore!

According to the NorthShore Insider the real estate market in the Northshore area has been suferring. October was the worst month it's had, condo sales and single family home sales were off sharply. According to data from the MLS, a toal of 196 new and resale single-family hoems were sold in the reqion over the last month... a 20% decline in demand from the same period last year. The average sales price of homes has also dropped to $705,523, down from $880,401. The dramatic drop in demand for the most expensive homes in neighborhoods such as Winnetka and Glencoe was the main culprit for the slide in the average sales price.


Condo sales also took a big hit. Accordign to MLS data, only 91 new and resale condos were sold in the previous month, down 24% from the same period last year. The average price plunged to their lowest levels in two years. The average time for turnover in the North Shore has risen to 181 days, up from the previous 94 days.

Buyers haven't returned to the market yet to take advantage of deals in the North Shore neighborhoods yet. Listing prices have plunged in Glencoe and Winnetkam, two exclusive markets in the area. This can possibly be due to the fact that many homeowners are simply waiting for a better market, particularly more wealthy homeowners that aren't facing foreclosure.

Now is a great time to take advantage of the property prices in the North Shore.

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Should I Rent or Should I Buy? Smart Property/ Rent Smart Can Guide You.

In today’s market there is a common question amongst someone looking for a new home, should I rent or should I buy?  There are many reasons why you should buy in today’s market and many reasons why you should not buy.  For starters, the current trend in home financing is simple… there not many programs available, tough lending guidelines, and a poor economy.  Add in the current job market and you will see that for many it may not be the best time to buy a new home.  On the other end of the spectrum there are builders, sellers, condo developments, etc., all with inventory which they find difficult to move… the home finance trend is affecting them as well.  So what does one do?  Lease! 

An individual looking to sell can lease his/ her property for a period of time until things turn around and they can sell.  Someone looking to move to a larger home or simply downsize can lease for a year or two until things change.  However what if a buyer can buy a new home, should they?  I would suggest not always.  There are times when it makes sense not to buy even if one can.  For example, let’s take a family who wants to move to a bigger, newer home.  They really can afford the mortgage, but should they really buy now?  Perhaps not.  You see, if a large down payment is not involved and the individual perhaps doesn’t have the savings, then it may make more sense to rent a newer home for a low monthly rent.  Compare the costs of a $600,000 home.  A home at this price would cost you a monthly payment of anywhere between $5000 and $6000 per month including your taxes and insurance.  Additionally, you must must aside 5-10% for the down payment.  Those high monthly payments could be hard on a family when you add all the other monthly expenses.  Now, you can rent this same house for half those monthly payments, not have to worry about taxes or home owners insurance and have money left over to save for your down payment when you do buy.  You can put your savings into an investment that is gaining interest for a year or more.  When it’s time to buy that new home, you can put down 10% to 20% or more and have lower monthly payments, less worries and more room in your pockets for life’s unexpected bumps in the road.

Now,  a situation in which you are putting down a large down payment would  be a good time to buy a house rather than rent… that is if you have a large sum of money to put down which will result in monthly payments that won’t “break the bank”.   Now, if you are looking for a smaller purchase then it’s a good time to move forward and purchase the new condo or home, if you can qualify for a loan.  With today’s low rates,  many incentives, low cost of real estate along with minimum down payment requirements it may make sense to go straight forward with the purchase.  

We are in a new age and keeping up with the housing market takes research.  Let us help you to make the right choice, the choice that makes sense for you and your long term goals.  Ask you Smart Property/Rent Smart Agent to guide you in making the correct decision.

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Fannie Mae Announces 3.5% Buyer Credit

Fannie Mae owned 72,275 homes as of the end of the third quarter 2009.  It wants desperately to move those home out of inventory and into the hands of new homeowners.  Like any seller with too much inventory, Fannie Mae is offering new incentives.  Until May 1, 2010, buyer's of Fannie Mae owned properties can elect to receive either a 3.5% closing cost credit or 3.5% credit toward the purchase of appliances for the home purchased.

Ask your Rent Smart/Smart Property agent for a complete list of Fannie Mae owned homes in the Chicagoland area.

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WARNING - Know Who You Are Working With

Would you let a stranger into your home?  Of course not.  Yet, every day well meaning landlords place their property at risk by failing to do their homework before listing their property for rent with an apartment broker.  When you list a property and give that person keys or access to your property you are bestowing a great deal of trust in the individual or company.  Have you made sure that they are worthy of that trust?  Here are some basic questions you should ask:

1.  What is the company or individual's experience?  Delve deep here. Ask how long they have been in the business, where they have rented properties and how many deals have they closed.  Ask for references from prior landlord clients and call them. Is the company and the agent a member of a professional association of realtors?

2.  What is the Company's name and how long have they been in the brokerage business?  You would be amazed by the number of rental brokers that have emerged over the last year.  Its fairly easy for any inexperienced broker to pass and exam, throw an add on Craigslist and starting calling landlord's for listings.  Does the company have a real office (as opposed to the trunk of their car or a "virtual" office).

3.  Is the Company insured for liability  against accidents?  Demand liability coverage and ask for a copy of the policy.  A reputable broker will take no offense.  Consider the fact that it is you that can be named as a defendant if there is an accident at a showing.

4.  Is the company properly licensed?  Ask to see a copy of the agent's "pocket card".  All licensed real estate agents are required to carry a pocket card showing that they are licensed.  Check with the Illinois Department of Financial & Professional Regulation to verify the agent's license.  Again, no reputable agent will take offense.

5.  Is the agent covered by errors and omissions insurance?  Ask for a copy of the policy.  If they do not carry coverage, do not list your property with that agent.  Errors and omissions can offer protection should the agent make a mistake in his representation of you in a leasing transaction.  Don't underestimate what the potential liability can be.  For example, many landlords are shocked to learn that tenants can recover two times the security deposit amount, plus the deposit, plus attorney's fees for simple errors like failing to properly create a receipt or lease.

Following these simple steps will go a long way toward protecting yourself and your property.  If you have questions or concerns ask for additional information from your Rent Smart agent.  Rent Smart is a licensed Illinois real estate broker corporation with five locations located throughout Chicago and 150 properly trained and licensed agents.  All Rent Smart agents are covered by liability and errors & omission insurance policies.

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Cats and Dogs Love Rent Smart

Cats and dogs love us. 

I just wish more Landlords loved cats and dogs. 

I have noticed throughout Chicago that the number of dog owners has increased.  But, working in the industry, I have noticed how few Landlords allow dogs.  Per capita it is more difficult than it should be.

People who rescue animals are especially vulnerable.  Without a home that allows pets, cats and dogs cannot be rescued.  Helping create a home for human and canine/feline co-habitation is a positive experience that nurtures the soul.  It is estimated that around 40% of all dog owners also own at least one cat.  I understand that, and look for the pet friendly buildings where ever they are.  It becomes a mission.

According to the Mendocino Coast Humane Society, Pet Owners looking for an apartment are best served when they assemble references for their pet(s).  Some Landlords even want to meet Fido before signing the lease.  So, working with your dog, training him/her not to jump on people, etc. goes a long way to helping us find a nice apartment for you and your extended family.  

The Mendocino Coast Humane Society’s Web-site suggests that “a dog or puppy jumping on you is caused only by their excitement and their desire to receive your attention and affection.  A dog is down there and you are up there and they want to say ‘Hello’ to you at face level.  Every time we accept a dog jumping on us, we reward their behavior.  Consistency is the most important part of training a dog.

There are a few different techniques to stop jumping, but the most effective method is for everyone in the family must agree that jumping is unacceptable behavior.

The best technique is to ignore your dogs jumping.  If a dog jumps on you, look up and ignore him or her.  Be silent and do not respond in any way until after the dog stops. Petting, yelling and talking only reinforces the behavior to jump on you.  After the dog stops wait before you look down and respond to the dog.  Vary the amount of time you wait before you respond.  It may be best to always ignore your dog when you arrive home until it calms down.  Carry a cookie next time you will greet your dog.  If it does not jump, give it a cookie and praise it for good behavior.

Remember that dogs are not all that dumb.  If every time you come home, the dog jumps on you, your ignore it, it stops, you reach down and pet it, you have just taught your dog a new trick.  Reinforce good behavior, ignore bad behavior.”

Other methods may also be employed.  According to the Mendocino Coast Humane Society’s Web-site, “kneeing the dog, holding its paws and declaring ‘Off’ are other techniques.   ‘Kneeing’ is a technique of raising your knee, just as you see your dog approach with a jump.  It is not meant to be violent or to hurt, just to rebound the dog. Caution should be used with this technique; your timing must be perfect and you risk possible injury to yourself and your dog.  It is also difficult to knee a dog when sitting.

‘Holding the paws’ is a technique of allowing the dog to jump, grasping their paws and holding on. This is combined with lots of enthusiastic and pleasant talk to your dog. Dogs do not like their paws being held and will begin to struggle.  The technique is taught that you keep holding on until the dog becomes very unhappy with the exercise. The goal is to convince the dog that jumping is an uncomfortable event.  The disadvantage is that you must do this every time your dog jumps on you and this is not always easy when carrying the groceries.  Caution should be used with technique; I have seen a professional trainer get bitten very badly by a friendly puppy.

Giving the command ‘Off’ works only as a reminder to a dog that understands the behavior is not acceptable.  ‘Off’ means put all four feet on the ground and works better than the command ‘No’.  Do not yell, scream; just say ‘Off’ and ignore your dog.  Dogs hear you; they are capable of selective hearing like some people.”

By working with your pet(s) and your Rent Smart Agent, the application process will be a smooth one and the pet interview will result in a positive transition which secures the apartment you want.

So, as our Dogs and Cats love us, let us show them some love also.  More pet friendly buildings today!

By Chuck Ward

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