Blame it on Distressed Properties: September?s Housing Numbers

This morning the Illinois Association of Realtors reported that in September 2009 the number of residential sales were up 3.3 % but that the median sales price fell to $160,000 statewide, a 9.3% decrease compared to September 2008. Following this trend, units sold in the City of Chicago were up 5.8% – 1,918 sales this year compared to 1,813 homes sold in September 2008. Chicago?s median home price this September was $225,000, down 16.2 percent compared to $268,600 in September 2008. Outside of Chicago, in those areas that include the rest of Cook County as well as DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will county, the average sales price was only $199,00.

Why the Increase in the Number of Sales but the Decrease in Pricing?

For the traditional homebuyer, pricing is back to 2004 levels. Short sales and foreclosures have impacted property values for sellers but they have also given buyers the opportunity for finding a good value for a home. The first time home buyer tax credit has been an incentive for some and steady interest rates that have hovered around 5% for the past year have also helped. As savings rates have increased over this past year, home buyers have repositioned themselves to meet new lending guidelines. It is not unusual to now see buyers putting 20% down.

What the Next Months Will Bring

Market watchers believe the next few months will be a mixed bag for buyers and sellers. If unemployment does not abate, distressed properties will continue to impact market pricing for months and even years in the future. Bank inventories of REO properties continue to grow. On top of this, the median sale price may only rise if financing larger projects and homes become increasingly available. For example, Chicago?s $500,000 – $1,000,000 market is crippled by having a conforming loan number of $417,000 – much lower than those numbers found in other areas of the country. Qualified buyers are expected to enter the market at higher rats because of relocation and also because they have financially readied themselves to move forward with a home purchase. On the flip side, many homeowners are opting to stay in their current home for longer periods of time, often to see if the market rebounds. Just as buyers need to be qualified to buy, sellers need to be qualified and willing to sell.

We would like to thank BasicGov for sharing today?s photo via the Creative Commons License.

7 July 2009 ? More foreclosures are to come. While the housing market has been showing signs of stabilization, we may see another surge of foreclosures before the end of summer, according to several major banks. Why now? Since the end of last year many lenders have held off on foreclosure proceedings, instead offering loan modifications made possible by President Obama?s home-stability plan, to qualified borrowers. But as these programs expire, many lenders have indicated that they will move aggressively to clear huge backlogs of delinquent mortgages. Additionally, with layoffs still on the rise, the pool of buyers qualified for modifications keeps shrinking. Obama?s administration has indicated that they are unlikely to implement another moratorium. This potential dumping of foreclosed properties into the inventory pool may counteract the balancing of supply and demand that has driven market improvement over the spring months, and could drag prices that were slowly improving in some areas back down.

Chicago's Row Houses Are a Favorite Rehab Target

Over the past few months, I have noticed more and more home insurance activity:

• People picking up houses in foreclosure to fix it up to rent out;
• Buying foreclosures to move in to eventually;
• Renovating homes to flip them;
• People who can?t sell their homes either (1) renting out their homes or (2 ) even walking away from their homes.

Whatever the reason is, please understand something very important: A standard homeowners insurance policy does not provide coverage for vacant homes, homes under construction, being renovated, or rented to others. A standard homeowners insurance policy is designed and rated for the insured who plans on moving into the home permanently. If there is any variation of this, the policy becomes null and void?immediately.

What should you do if you or a client find themselves in one of the above mentioned situations? Call you friendly neighborhood insurance agent and explain the change in risk. By doing so, you will have the appropriate coverage to protect your biggest asset?even if that asset is not working for you at this time.

An Example of When Standard Homeowners Insurance Won’t Work

A client is buying a foreclosed home in Chicago because it was such a great price. The client does not have any immediate plans on what to do with the home.

• Option 1 Keep the home as is, vacant, and maybe sell it in a year or two.
• Option 2 Rehab the home: update the kitchens, bathrooms, windows, paint, and possibly rent out.
• Option 3 Rent out the home as is, until the market gets better and then re-evaluates the options.

Most times, clients call and tell me that they are buying this home and it will be “owner-occupied” because that is what the loan requirements state. Most insurance agents will write an “owner-occupied,” standard home insurance policy because (1) the client doesn?t disclose the truth or (2) the agent isn?t providing the level of professionalism that the client needs. A good insurance agent will ask the right questions to get to the truth because it is the agent’s job to protect you in the event of a loss.

The Possible Solutions

• Solution 1 The client purchases a Vacant Building policy that not only protects the mortgagee’s interest but it also protects the client’s interest because he just spent $340,000 on a home and if it burns down, the client would want the home rebuilt. A $ 340,000 Vacant Building policy will cost $1396 per six months. The client can lower the amount of coverage to fit their risk tolerance and budget. At $200,000, the six month premium drops down to $842.
• Solution 2 The client needs to purchase a Builders Risk policy, again, to protect the mortgagee and their selves. The Builders Risk policy covers not only the existing structure, but all of the money you will invest into the home. The client is planning on spending $260,000 on the full, gut rehab of the home. A $600,000 ($340,000 existing structure + $240,000 renovations) will cost only $1,200 per year.
• Solution 3 The client needs to buy a Dwelling Fire policy, again, to protect the mortgagee and their selves. The Dwelling Fire policy will provide coverage for the existing structure, and more?very similar to a standard home policy. It will als, recognize the fact that the home is being rented out and in the event of a loss, the policy will reimburse the loss of rent you will experience. A Dwelling Fire policy will also provide the client with Liability and Medical Payments to Other coverage. This is important for the client to protect their financial exposure, in case your tenants have a party and someone gets hurt. Here is the kicker: A $340,000 Dwelling Fire policy will only cost $921 per year.

As you can see, a good insurance agent will make sure the client is protected, and the costs of doing so are minimal when compared to the worse case scenario?of having no coverage.

Sign 'O the Times

Here?s a question real estate agents are hearing lately??With so many short sales out there?does that mean the market is getting worse and should I be concerned about buying now verses later this year??

The answer, in a word, ?No.? Short sales certainly seem to be on the rise due to a variety of reasons: it can depend on:

• when someone bought their property (at the height of the market perhaps)
• the down payment
• drops in home prices and values
• did the owners take out a 2nd mortgage
• and of course just the overall economic crisis (i.e. rising unemployment)

All these factors are contributing to the increasing number of short sales. This creates many challenges for real estate agents and their clients. People want to get a handle on what is happening and how to navigate today?s real estate market.

What is a short sale?

A short sale is simply a transaction in which the lender (or lenders) agree to accept less than the mortgage amount owed by the homeowner. In some instances, the difference is forgiven by the lender, and in others, the homeowner must make arrangements with the lender to settle the remainder of the debt. Ouch!

Are short sales different from a foreclosure?

YES! Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses. A short sale can also be the best option for a homeowners who are ?upside down? on their mortgage because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

Stay tuned! Next week I?ll discuss the specific challenges faced when dealing with a short sale and how to find the best real estate agent to work with to navigate the short sale process!

We would like to thank TheTruthAboutMortgage for sharing today’s photo via the Creative Commons license.

As prospective buyers are sitting back, waiting, and speculating about when to take advantage of the bottom, it appears we have hit a plateau. One of the most effective ways for pricing to stabilize and then see appreciation is depleting inventory.

Signs Home Prices in Chicago Are Stabilizing

Sun Rise Over Belmont Ave...Maybe Over the Chicago Real Estate Market Too?

According to the Illinois Association of Realtors, May marked the fourth consecutive month-to-month increase in home sales for the Illinois housing market and the third monthly increase in the statewide median home sale price. Locally, IAR reports home sales were up 18.7 percent to 5,634 homes sold in May 2009 compared to 4,747 home sales in April 2009. The Chicago median price increased 2.3 percent to $225,000 in May compared to $220,000 in April 2009.

Properties Not Hitting the Market

With the average time people who are remaining in their homes on the rise, the number of market-rate units coming into the marketplace is decreasing. Although the banks are carrying a large inventory of REO (bank owned) properties, some are using other vehicles besides putting them on the open market working with local and state agencies to help stabilize communities hardest hit by foreclosures. Many new developments originally marketed as condominiums are being converted to rentals.

Where are the Buyers Coming From?

Traditionally, we have been able to identify which parts of the market where strongest for potential purchasers. Over the last year or so it has been a roller coaster. One of the largest segments that have always driven the market is first-time home buyers. They fell out of the market when it became almost impossible to buy with less than 10% down. However, they are now back. Lenders have now found options for these home buyers such as FHA. The $8,000 first-time home buyer tax credit seems to have stimulated this segment of the market as well.

This is also one of the greatest opportunities for current homeowners to buy up. Although the seller might be seeing the downside on what they get on the sell-side, they are able to take advantage of the pricing on the buy-side, which keeps the scale tipped toward the good.

For the last year, I have seen so many buyers trying to find that dream home, only focusing on short sales and foreclosures. After losing out on a variety of properties for one reason or another, real home buyers are now looking for a home that works for their needs and negotiating to get a good value for the marketplace.

Although the numbers are not what they once were, we still are seeing a significant number of people relocating and buying homes. Chicago is also still a strong market for second homes. There are some investors in the market taking advantage of pricing as well.

The Key to Getting to the Closing Table

Although many contracts had been written over the last year, many did not come together. It now seems that real estate agents, attorneys, and lenders are working at finding solutions to getting properties under contract and the mortgage brokers and bankers are problem solving the ever changing lending guidelines. Professionals who have faced the challenges of the market and educated themselves through seminars and out there working are taking their newly learned skills to achieve the goal: getting the property closed.

We would like to thank John Picken for generously sharing today’s photo via the Creative Commons License.

22 June 2009 ? Signs are appearing that both inventory and pricing in the housing market are starting to level. Banks modifying existing mortgages are keeping people in their homes who thought they would have to sell. A large number of foreclosure units will not be hitting the open market as reported in Friday?s Chicago Tribune. Bank of America’s REO (bank owned property) department  will be working with City of Chicago?s Department of Community Development through the Neighborhood Stabilization Program grants from the U.S. Department of Housing and Urban Development. (Bank of America recently acquired Countrywide Bank.) Developers are renting rather than selling new construction and conversion buildings. This trend is expected to continue which will remove hundreds, eventually thousands of units from the area marketplace.  The decrease in number of market priced, short sale, and foreclosure units will contribute the stabilization of housing prices.

Two reports yesterday seem to cast a shadow over recent good news in closings.

Home Builders Not Predicting Increased Business

Hanging on

The National Association of Home Builders (NAHB) reported yesterday that it’s nation-wide monthly sentiment index dropped by a point to 15. This is down from a score of 18 one year ago and an all-time high posted four years ago of 72. NAHB doesn’t slice its data very thinly, so the only numbers we have for Chicago are the Midwest area, which actually increased from 14 to 15.

It’s important to note exactly what this survey is. According to NAHB’s web site, the survey is,

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as ?good,? ?fair? or ?poor.? The survey also asks builders to rate traffic of prospective buyers as ?high to very high,? ?average? or ?low to very low.? Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Chicago’s Vacancy Rates at Historic Highs

The Census Bureau is reporting that vacancies are on the rise in Chicago and are actually the highest ever since they began collecting this data in 1996. In the quarterly analysis released yesterday, the vacancy rate in Chicago is now at 3.8%, which is a 41% increase over a year ago, when the rate was 2.7%. It is also up 3% from 3.7% in the fourth quarter of 2008.

Crain’s is reporting that Neighborhood Housing Services of Chicago (NHS) has data that shows South Side neighborhoods are being hit the hardest. Examples cited are Englewood has the highest vacancy rate in Chicago of 16.1% and North Lawndale is standing at 11.8% vacant.

There are many factors leading to this increase, among them are all the foreclosures due to people using sub-prime loans they could not afford, foreclosures due to more and more people losing their jobs as unemployment continues to rise throughout the country, and the huge numbers of newly developed homes that have come on the market in the past two years not selling.

So, you are facing foreclosure, and are worried and scared and don?t know what to do? Well, you are not alone. Millions of people nationwide have been foreclosed on or will be soon. There?s been all kinds of blame and finger-pointing (see my Who?s to Blame post for further info on that), but that’s not what this article is about. Something happened, and you got behind on your mortgage (and surely a lot of other things), and now you?re in a pickle.

What is foreclosure?

You Can Push Back on Foreclosures...Despite What You're Told

Foreclosure, or FC for short, is when a bank or lender takes steps to take your house away because you have not made the payments. You took out a loan, and for whatever reason fell behind on your payments, and the bank is trying to cut their losses by taking the house and selling it. It?s perfectly legal, and although it may appear that they are your nemesis, they aren?t necessarily the bad guys. I?m not taking the banks? side or defending them, I?m just telling you that they are in business to make money, like any business. Some time ago, you signed a promissory note saying you would send them a check every month, and for whatever reason, you couldn?t hold up your end of the bargain. I?m not here to judge; it happens to a lot of people, but if you don?t make your payments, they get to take your house. Maybe it?s not really your fault, and there were circumstances out of your control, but that?s just the way it is.

What is the Foreclosure Process?

I want to start off by saying don?t panic too soon. Some people think that if they are 15 or 30 days late on a payment, the hammer is going to get dropped on them, but this just isn?t so. Banks don?t want to foreclose on a house. Almost all of the time, they are going to lose money on a foreclosure. They would much rather get your monthly check and go about their business. Banks don?t want to take your house; they have to take it because they aren?t getting the money that was promised to them.

Typically, the foreclosure process doesn?t get started until the homeowner is 120 or 150 days past due. So, if you become 30 days past due, but keep sending in one payment every month, that is called a ?rolling 30?, and you honestly aren?t in any risk of foreclosure at that point, despite what the schmuck from the collections department is telling you. I have heard of times when a homeowner is 60 days down, and they offer up one month payment, but the lender refuses it. If you are 30 days down, they may take only one payment, but once you become 60 days delinquent, the answer is ?No, you cannot give us one payment, you now owe us two, and it?s two or nothing.? This one has always mystified me; it just doesn?t make sense. So, the moral is, if you can prevent becoming 60 days late by hook or crook, do it. I don?t want to throw out bank names for fear of getting sued for libel or slander, but some of the big names are guilty of this.

Try to See Trouble Coming Before It’s Too Late

If you had some unexpected expenses, and it looks like you might not be able to make a payment, but you are still working, and you aren?t late yet, and your credit is still OK, you can possibly refinance. There are programs out there for people who have current loans with Fannie Mae, Freddie Mac, or FHA that allow people to refinance with little or no equity. You do need to have a job, though. If it?s the end of May, and you don?t think you are going to be able to make you June payment, call to do a refinance NOW. Even if you can only lower your rate and payment just a little bit, you can likely skip one or two mortgage payments, maybe get an escrow refund, and have a new, lower payment. It may be just enough of a shot in the arm to keep out of trouble.

How Can I Fight Foreclosure?

So, 120 days passes. You get a knock on the door from the sheriff, or maybe a bonded messenger because there are too many being served for the sheriff?s department to handle. This can be a scary moment and very intimidating. ?Are you Joe Homeowner?? he asks. ?Umm, yes I am,? you reply. He hands you the envelope with court papers and your heart sinks. Maybe you want to cry. This would be one of the times that it is OK for a grown man to cry. After you are done sulking, inevitably you will say, ?What now?? That?s what I want to help with.

Sometimes the papers will have a court date already assigned. Most of the time, it will give you 30 days to file a response with the court. And then if a response hasn?t been filed (it will cost over $100 to file, by the way), the plaintiff (bank and their attorneys) will file for a default judgment of foreclosure because of a failure to respond, which you will get a copy of, along with the date and time of the court hearing. GO TO YOUR COURT HEARING. On your first time through, the judge will almost always grant another 28 or 30 days continuance to respond, but usually only once.

So what kind of ?responses? can you file? Well, I want to start off by saying that I am not an attorney, but I know what I know because I talk to a lot of people, and kind of know the ropes. Two of the most common, and most effective, are alleging RESPA violations, and requesting that the servicer, ?produce the note,? which I will get into shortly. There are many things that can count as RESPA (Real Estate Settlement Procedure Act) violations, many of them small technicalities, but enough to help your case. I can tell you from experience that most loan officers aren?t terribly detail orientated. This means there can be small mistakes on your paperwork you can use to your advantage. The documents you?d likely want to focus on are the Truth-in-Lending disclosure, the Good Faith Estimate, the Servicing Disclosure, and the HUD-1 Settlement Statement. If you are going to try this route, it may be wise to get an attorney, as they will know what mistakes are ?fatal blows? and which ones aren?t. These mistakes are more common than you might expect.

If you do nothing, a default judgment of foreclosure will be entered. With the judgment comes a 90 day ?redemption period?, meaning that you get 3 months to get caught up, should you win the lottery, get a big bonus, or maybe an inheritance. Assuming you haven?t gotten any windfall, after the 90 days is up, they can set a sale date for your house to be sold. They must give you a minimum of 60 days notice prior to the sale date. After the sale you have a minimum of 30 days after to get out, or risk being thrown out, which you really, really don?t want to happen. If the sheriff knocks on your door with an eviction order, you have about 15 minutes to get your bare essentials, and they change the locks, and put your stuff in storage, which you can pick up later. This is a very ugly scene you want to avoid. So, from the time you get papers, you should have a minimum of 7 or 8 months to get out (30 days to file a response, 30 days continuance, 90 days redemption, 60 days for sale, and 30 to eviction), and like I mentioned earlier, you don?t get papers until you are 4 or 5 months down, so you are probably looking at a year or more from the time you made your last payment until you have to get out. Another sad fact is that after foreclosure, many houses sit vacant for a year or more. There was even one non-profit agency advocating the evicted break back in and take back their house because it ?s better for the neighborhood to have an occupied house than a vacant house. Not that I?m recommending anybody do anything illegal, but if you resume residence, and can prove it (with utility bills and such), they have to go back through the whole eviction process again, even though the house isn?t yours anymore.

Produce the Note Defense

The other defense I like is the ?produce the note? strategy. As you probably know, your mortgage note can, and probably has, be sold one or more times. A common scenario is you close with mortgage company XYZ. Within the first month, they sell the servicing (who takes your checks) to mortgage company ABC. ABC might sell it again to mortgage company DEF. Now, theoretically, all the paperwork gets moved with the sale or transfer. But, in reality, many times it does not. And, even if it does get transferred, it may be lost, or may be stashed in a warehouse with tens of thousands of others, and very difficult to locate. There are a few steps to this process. First you have to mail a legal request to the lender and their attorney to ?produce the note,? and file this request with the county. After that you wait 30 days and file a ?motion to compel? asking the judge to order the bank to come up with the original promissory note. They then have 30 days to produce it. If this is done before the judgment of foreclosure, it may not make it to foreclosure. There was a story on TV about a lady who was basically living free for 2 years because the lender couldn?t come up with the note, and about a judge who threw out many foreclosures because of this. They have to prove you owe them the money. If you do this after the judgment has been entered, and the note is not produced, you may have to file an appeal, or a motion to vacate the judgment, or a motion for a stay on the sale and eviction. If the judge grants a stay until they can produce the note, you are still technically ?in foreclosure,? but your house won?t get sold, and you won?t be evicted. It?s sort of ?in limbo,? but it beats getting kicked out. And, if they do produce the note, you go back to the 60 days notice before sale, and another 30 to vacate, so it?s not like they can just come up and throw you out with no warning. There is a great site that details how to mount this defense, and has template forms you can fill in.  Again, you can probably do most of this on your own, but it?s not a bad idea to hire some legal help.

Loan Modification Can Help

One other option may be loan modification. This is where a lender agrees to modify the original loan terms to allow for you to stay in the home under new terms. These can be hard to get, and I have heard stories where a servicer has agreed to a modification over the phone, the homeowner has signed the papers and sent them in, but their house has gone into foreclosure or continues through the process in the meantime. The right hand may not know what the left hand is doing, so don?t put all of your proverbial eggs in the ?loan modification? basket, because the lender likely isn?t. You can try to make a loan mod go through, but don?t ignore the above advice either. It?s also noteworthy that above defensesw (produce the note and RESPA violations) can be used as leverage to force the bank into a modification.

Ownership Defense

Another option is called term ownership. It?s something between renting and owning, and relies on an obscure aspect of the law known as conditional ownership. A good description of the system can be found at www.termownership.com. Stephen Weeks is the attorney that developed this defense. I?ve corresponded with him a bit, and his a good guy, and very knowledgeable. He can be contacted at Weeks@WeeksLaird.com

Final Option: Bankruptcy

One last option is bankruptcy. There are two kinds of bankruptcy, or BK. One is a Chapter 13. This is where the court mandates a repayment plan over the course of 3 or 5 years, and all of your debt is included. You must prove the ability to repay for the court to approve a Chapter 13. And if you fail to make the required payments, the bankruptcy can be dismissed, and the foreclosure is back on. Most BK attorneys will give a free consultation to those interested in filing. Chapter 7 is where all of your ?unsecured? debt (credit cards, etc-not mortgages or car loans) is wiped out. You must be current on your mortgage if you plan on keeping your house, and there are very tight income requirements now (as opposed to a few years ago) for filing Chapter 7.

As you can see, there are several ways to help you fight foreclosure. I hope I?ve given you a better understanding of the process of foreclosure, and maybe some hope for those of you in trouble now. I also want to ask any of you who are behind on your mortgage or facing FC to take a hard, honest look at your situation. For many people, if you lost your job and have been out of work for several months, or had some sort of medical problem where you couldn?t work, but now are back on track, fighting to save your home may be a good idea. For some, if you are just in over your head, you have to ?know when to fold ?em?. Don?t let your emotional attachment to your house cloud your logic. Sure, you love your house. It?s your home. You have memories built there. But if you are making much less now than you were previously, or maybe just bit off more than you could chew, you might want to consider the steps here as a stall, so you can save up as much as possible so that when it comes time to move, you have money for a security deposit and all the other costs associated with moving, and be in a better position when it?s ?go time.? Yes, uprooting your life and you family to move to a new (and probably much smaller) place is no fun, but having to move with no money saved up and no plan in place is even worse.

I sincerely wish the best for anybody reading this. I know we are living in trying times right now.

We would like to thank redjar for sharing today’s photo via the Creative Commons License.

The Up

Home Sales are Up and Down

We are seeing the continuation of a trend that seems hopeful. According the Illinois Association of Realtors® home sales in Chicago for April 2009 were up when compared to March 2009 by 16.7 percent. There were 1,378 home sold in April as compared to 1,181 in March. This seems to reflect the time of year (sales are usually strongest in the spring of the year). Hopefully this also represent some evidence that, at a minimum, the downward spiral of real estate sales is declining. It would be nice if it signaled even more?that the bottom has been reached. However, it’s difficult to find any credible analyst willing to say that.

Most analysts attribute the three month to price drops (see below) and purchasing of foreclosures. First-time buyers are figuring heavily in this as well because of the $8,000 tax credit being extended to them.

The Down

The 16.7 percent month-on-month increase is only part of the story. When we compare to 2008, sales are down a whopping 26.9 percent. This means in April of 2008, 1,886 homes were sold in Chicago.

The Price

Median home prices in Chicago did not change month-on-month; prices held steady at $220,000 in April. This is down 26.7 percent from $300,000 in April 2008.

The Illinois Association of Realtors® web site quotes David Hanna, president of the Chicago Association of REALTORS® saying,

?We continue to see homes in foreclosure and short sales driving prices lower in many areas of the city. Policy changes such as allowing first-time homebuyers to use the $8,000 tax credit at closing and a streamlined process for short sales will help, but the critical issues are the rising numbers of foreclosures and restrictive lending guidelines not crafted for our urban market. The federal loan modification program has not yet slowed the pace of foreclosures, a must for turning housing around in the Chicago metropolitan area. Regulators and lenders need guidance and latitude in creating a lending environment that addresses regional and in particular urban housing differences. That is not happening right now, and our numbers reflect the result.?

We would like to thank TheTruthAbout once again sharing today’s photo via the Creative Common’s License.

The new bill strives to give those in trouble a chance to recover.

It’s good to hear that the government wheels are turning & finally churning out legislation to help those that they were elected to serve. On Sunday, April 5th, the Illinois State Senate passed and Governor Pat Quinn signed into law, as The Chicago 77 reported on Monday, Senate Bill 2513.

As stated on Illinois Realtor^®, this new law adds an entirely new section to the Code of Civil Procedure regarding procedures and forbearance for delinquent residential mortgages. It states that if a mortgage secured for residential real estate (a.k.a your home, personal residence, condo, 2-flat, town home, bachelor pad, flat, stomping pad, domicile, homestead, asylum, hideout, mansion, dwelling, safe haven, home base, “my place”….ok, you get the picture.) If your residence, whatever you choose to call it, becomes delinquent by more than 30 days, the mortgagee must mail a notice (a.k.a letter) advising the homeowner that he/she may wish to seek approved housing counseling (a.k.a help). Of course, this help must come from a HUD approved counseling agency, as defined in the legislation.

30 Days + 30 Days + 30 Days

Foreclosure action cannot begin before mailing this notice, which is, of course, spelled out in the legislation. If, within the 30-day period an approved counseling agency provides written notice to the mortgagee that the homeowner is seeking approved counseling services (a.k.a help), then no legal action can be instituted for 30 days after the date of that notice.

During the 30-day period the homeowner or counselor or both may prepare and proffer (FYI – The act of proffering involves making an offer prior to any formal negotiations…yes, I had to Google proffer to better understand the legislation) to the mortgagee a proposed sustainable loan workout plan (of course, as defined in the legislation). The mortgagee determines whether to accept the proposed sustainable loan workout plan. If the parties agree to the plan, then no legal action will be instituted for as long as the sustainable loan workout plan is complied with by the homeowner.

The Law Is on the Books for Two Years

If IDFPR (Illinois Department of Financial and Professional Regulation) determines that the demand for counseling services in an area exceeds the number of available approved counseling agencies, the Secretary can certify other persons or entities as approved counseling agencies. These provisions will be repealed in two years and apply only to residential real estate that is the homeowner?s principal residence.

Residential Real Estate Only

It is important to point out, that this legislation does not provide assistance to investment, commercial, retail or development property owners. It is intended solely for a homeowner’s primary residence (as we defined earlier, your home, personal residence, condo, 2-flat, townhome, bachelor pad…ok, ok, ok, you get it).
On a positive economic note, it’s being reported by top economists that the economic recovery has begun! To take a snippet of news from Realtor.org, Joseph Carson, chief economist at AllianceBernstein, calls improving home sales, a rising stock market, and better-than-expected retail sales in February and March good signs of a turnaround. By the time President Obama?s stimulus package takes effect, the economy will be ready, he says. Understandably, we can pick and choose what we want to hear. For me, I choose to stay on the positive side, glass is half full mentality. It goes a long way to maintaining a healthy mind and life.

So what do you think? Is this bill a good enough measure to help those in need? What else do you think government should be doing?

We would like to thank A God’s Child for kindly sharing today’s photo via the Creative Commons License.