Effective April 2011, the Federal Reserve Board will require mortgage brokers and lenders to adhere to new rules meant to protect consumers:
1. Lenders may only compensate mortgage brokers based on a fixed percentage of the loan amount. After April 2011, lenders cannot pay mortgage brokers based on the yield spread -- in other words, broker compensation cannot be based on the interest rate charged to the consumer. This is meant to discourage mortgage brokers from charging higher interest rates to their clients in exchange for greater compensation from lenders.
2. Homebuyers will have to be notified up front of any balloon payments due when the loan term expires.
3. If the loan is an adjustable rate loan, the lender must disclose what the buyer could end up owing after rate increases.
These new rules are meant to keep consumers from falling prey to unscrupulous lenders, and to give homebuyers more information about the loans they are signing up for. Since the rules do not kick in until April 2011, buyers should ask their lenders questions about these specific issues in the meantime.
Thursday, August 26, 2010
Monday, August 16, 2010
Can you sue a contractor because you can't use your home?
Well, sure, you can sue for anything. The real question is can you win the lawsuit? What your chances are of winning will really depend on your individual case, and your attorney will be able to assist you in determining, overall, the merits of your lawsuit. Recent case law, however, can serve as a guideline in how you argue your case.
In Meyer v. Chicago Mechanical Services, Inc., (2010 Ill. App. LEXIS 203, 2nd District), the owner of a condominium hired the defendant to install an air conditioner in her unit. After mold accumulated in her unit, the condominium owner had to move out while repairs were made. The person living underneath her unit had to move out also. The two condominium owners sued the company that installed the air conditioner for damages based on the inconveniences associated with having to move out of their homes.
However, they lost the case -- not because the court felt that they had not suffered any inconvenience, but because of the way the plaintiffs framed their case. The court thought that the plaintiff's case should have focused on actual concrete damages, rather than on how sentimentally attached they were to their homes. For example, the court did not agree that the plaintiffs should get damages based on the fact that they did not get to sleep in their own beds.
In other words, the court was looking for something concrete, not something abstract. If you ever end up suing your contractor, make sure you keep that in mind!
In Meyer v. Chicago Mechanical Services, Inc., (2010 Ill. App. LEXIS 203, 2nd District), the owner of a condominium hired the defendant to install an air conditioner in her unit. After mold accumulated in her unit, the condominium owner had to move out while repairs were made. The person living underneath her unit had to move out also. The two condominium owners sued the company that installed the air conditioner for damages based on the inconveniences associated with having to move out of their homes.
However, they lost the case -- not because the court felt that they had not suffered any inconvenience, but because of the way the plaintiffs framed their case. The court thought that the plaintiff's case should have focused on actual concrete damages, rather than on how sentimentally attached they were to their homes. For example, the court did not agree that the plaintiffs should get damages based on the fact that they did not get to sleep in their own beds.
In other words, the court was looking for something concrete, not something abstract. If you ever end up suing your contractor, make sure you keep that in mind!
Monday, August 9, 2010
Cook County Senior Homeowners Beware!
Up until now, in most situations, senior citizens who received a senior citizen's exemption on their real estate taxed continued to receive it annually. However, a new law signed last week changes that. Effective fall of 2011, the senior citizen's exemption in Cook County will not renew automatically. Rather, seniors age 65 and older will have to reapply on an annual basis.
How do you apply for the senior exemption? You should receive your application in the mail, which you will have to complete and send back to the Cook County Assessor along with copies of your driver's license and property tax bill. If, for some reason, you do not receive the form in the mail, you will have to contact the Cook County Assessor's office to request a copy of the form.
Approximately 280,000 seniors will be affected by this change. Last year, the savings received by seniors for the senior exemption ranged from approximately $150 to $850. If you are eligible for the senior exemption, make sure you remember to apply for it, or you could face higher tax bills in the years to come!
How do you apply for the senior exemption? You should receive your application in the mail, which you will have to complete and send back to the Cook County Assessor along with copies of your driver's license and property tax bill. If, for some reason, you do not receive the form in the mail, you will have to contact the Cook County Assessor's office to request a copy of the form.
Approximately 280,000 seniors will be affected by this change. Last year, the savings received by seniors for the senior exemption ranged from approximately $150 to $850. If you are eligible for the senior exemption, make sure you remember to apply for it, or you could face higher tax bills in the years to come!
Monday, August 2, 2010
7% Cook County Homeowners' Exemption Extended!
Many Cook County homeowners were worried that they would lose the 7% real estate tax cap this year (it was set to expire). Fortunately, over the weekend the governor signed a bill extending the tax cap. Without this bill, Cook County homeowners would have faced larger real estate tax bills in the coming years.
The 7% cap allows homeowners to receive an increased exemption on their taxes, resulting in a lower tax bill overall. Because of the 7% cap, the assessed value of a home can be reduced by up to $20,000. Without the cap, the exemption could not be more than $6000.
Over the last few years, homeowners have come to expect this reduction. If you add these expectations to dropping real estate values and the current economy, a sudden increase in real estate taxes would certainly be unwelcome!
The 7% cap allows homeowners to receive an increased exemption on their taxes, resulting in a lower tax bill overall. Because of the 7% cap, the assessed value of a home can be reduced by up to $20,000. Without the cap, the exemption could not be more than $6000.
Over the last few years, homeowners have come to expect this reduction. If you add these expectations to dropping real estate values and the current economy, a sudden increase in real estate taxes would certainly be unwelcome!
Monday, July 26, 2010
New Mortgage Requirement for Loans Sold in the Secondary Market
Effective June 1, 2010, Fannie Mae and other investors have increased the requirements for a salable loan. Going forward:
1) Lenders are responsible for verifying the borrower's social security number.
2) Lenders must obtain documentation from the borrower, confirming that the borrower intends to use the purchased residence as his primary residence.
3) On the day of closing, lenders must confirmt that the amount of debt borrower has, the borrower's payment history, and the borrower's credit score is reconciled with the information the borrower provided when applying.
4) Loans cannot be originated, underwritten, or serviced by companies or people that are on HUD's Limited Denial of Participation List, or on the General Services Administration Excluded Party List.
Keep in mind that this does not mean that a residential loan cannot be made if it does not meet these requirements. You can obtain a residential loan that does not meet these requirements if it is not sold on the secondary market. Unfortunately, those loans are few and far between!
1) Lenders are responsible for verifying the borrower's social security number.
2) Lenders must obtain documentation from the borrower, confirming that the borrower intends to use the purchased residence as his primary residence.
3) On the day of closing, lenders must confirmt that the amount of debt borrower has, the borrower's payment history, and the borrower's credit score is reconciled with the information the borrower provided when applying.
4) Loans cannot be originated, underwritten, or serviced by companies or people that are on HUD's Limited Denial of Participation List, or on the General Services Administration Excluded Party List.
Keep in mind that this does not mean that a residential loan cannot be made if it does not meet these requirements. You can obtain a residential loan that does not meet these requirements if it is not sold on the secondary market. Unfortunately, those loans are few and far between!
Monday, July 19, 2010
Home Buyer Tax Credit Closing Deadline Extended!
Good news for those homebuyers who were eligible for the home buyer tax credit but could not close by June 30, 2010! If you were unable to close by the deadline, you now have until September 30, 2010 to close your real estate purchase. Because of the backlog of mortgages, Congress decided to extend the deadline for closing.
Keep in mind, if you did not enter into a real estate contract by April 30, 2010, this extension will not help you. The extension is only for those who had a valid, binding real estate contract as of April 30, 2010.
Also, you must be otherwise eligible for the tax credit. In order to qualify for the first-time buyers credit of up to $8,000, you must not have owned a home in the last three years. For the existing homebuyer credit of up to $6,500, you must have owned your home for at least the last five years. Furthermore, the home must be your principal residence, and must cost less than $800,000. Vacation homes are ineligible for the credit. There are income restrictions also. Speak to your accountant and make sure you are eligible!
Keep in mind, if you did not enter into a real estate contract by April 30, 2010, this extension will not help you. The extension is only for those who had a valid, binding real estate contract as of April 30, 2010.
Also, you must be otherwise eligible for the tax credit. In order to qualify for the first-time buyers credit of up to $8,000, you must not have owned a home in the last three years. For the existing homebuyer credit of up to $6,500, you must have owned your home for at least the last five years. Furthermore, the home must be your principal residence, and must cost less than $800,000. Vacation homes are ineligible for the credit. There are income restrictions also. Speak to your accountant and make sure you are eligible!
Friday, June 4, 2010
Problem Tenants in Your Condominium Association?
Associations frequently want to know what they can do when a unit owner rents out their condominium unit to someone who constantly violates rules. Well, assuming the association has not banned rentals altogether, there are a few options available:
1) If the condominium documents allow it, the association can assess fines to the unit for the various rule violations. Unit owners will not want to pay fines for problems their tenants are creating. In this way, unit owners are encouraged to deal more proactively with their tenants. Hopefully the unit owners can convince their tenants to comply with the association's rules, or if not, they can start the eviction process.
2) The condominium board can also terminate the lease. The Illinois Condominium Property Act allows condominium associations to terminate tenant leases, so long as the requirements of the Act are met (i.e. proper notice, eviction proceedings, etc.)
If you have problem tenants in your association, it is wise to address the problems early on, before it gets any worse!
1) If the condominium documents allow it, the association can assess fines to the unit for the various rule violations. Unit owners will not want to pay fines for problems their tenants are creating. In this way, unit owners are encouraged to deal more proactively with their tenants. Hopefully the unit owners can convince their tenants to comply with the association's rules, or if not, they can start the eviction process.
2) The condominium board can also terminate the lease. The Illinois Condominium Property Act allows condominium associations to terminate tenant leases, so long as the requirements of the Act are met (i.e. proper notice, eviction proceedings, etc.)
If you have problem tenants in your association, it is wise to address the problems early on, before it gets any worse!
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