Short Sale and Foreclosure Assistance

Contrary to what most people are saying I believe that the market will start to improve in the Chicagoland area in the spring and summer of 2009. This is not to say that we will go back to those great prices everyone was use to but interest rates will be down and houses will, I believe, start to sell. The average person owns a home for 3 years, so people that wanted to move any time in the last 2 ½ years will see this as an opportunity to do so.

If you own a home and are not looking to move there are a number of things that you can do besides let your home go into foreclosures. First, either you, or an attorney, can contact your lender and explain your situation. Most lenders are willing to work with you, either by lowering your interest rate or coming to an accommodation to accept a lower payment for a period of time.

Another alternative is to do a short sale. This is where the lender accepts less than what is owed on your mortgage. Say you bought a home for $300,000 and the house will not sell for more that $250,000, you then present a real estate contract to the lender and ask them to accept less. There are several catches with this. First you have to quit paying your mortgage. Yes an attorney is telling you to quit paying your mortgage. Hard as that is to believe you can not be current with your loan. Then you need to list your home with a real estate agent. Short sales are not quick and/or easy to do. You need to hire an attorney to help as besides the documentation that is required it is a very long process. I closed in November on property that went under contract is July. There are a large number of people that are trying to sell their homes prior to the foreclosure so the mortgage companies are overworked. Although since the federal government took over Fannie Mae and Freddie Mac the process seems to be moving a little faster. You MUST prove that you can not continue to pay the mortgage and that you have no other alternative. They also request documentation as to your finances, so they may ask you to contribute with money you have in a bank account.

Another alternative is to list the home and if it does not sell within 90-120 days you can ask the bank to do what is called a deed in lieu of foreclosure. That is where you prove that you can not pay the mortgage and attempts to sell the home have failed and, basically, since they will eventually foreclose on you any way you will just deed it back to the bank. This also requires documentation as to bank accounts and W-2s, income tax returns.

With any of the above I recommend that you use a professional to assist you in working through this maze. Each bank is different as to what documentation they want. In fact banks are even different from one location to another.

If I can be of any assistance to you please feel free to contact me.

Marianne Savaiano Fleisher
Real Estate Attorney
847-913-1193
msfleisher@aol.com.

Recent Home Sales (November)

November was not a very good month for housing sales in the Chicago metro area.

According to the Illinois Association of Realtors housing sales for the nine-county Chicago area fell 32.3% for the month of November. A total of 3,910 single-family and condos were sold compared with 5,774 for the same period a year prior.

The numbers for the City of Chicago were even worse. Housing sales fell 41.3% (1,057 vs. 1,801 a year earlier).

Housing prices dipped as well. For the nine-county Chicago area housing prices declined 15.9% for the same period a year ago, while Chicago saw prices fall 23.3%.

The nine-county Chicago area consists of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will counties.

Thinking of Refinancing? Better Think Again

I know I may be stating the obvious here and I'm sure someone else has posted something similar, but I'm going to rant about our banking system as it pertaining to refinancing.

So lets say you purchased a home for $350,000, 2-3 years ago and put down 15% and your mortgage rate is 6.25%. Well, now rates are at or below 5% and you would like to refinance and save a few hundred dollars a month, so you contact the bank your existing mortgage is with and fill out the appropriate paperwork. The bank then sends an appraiser out to look at your home (it's probably just a drive-by) and then informs you that your home is worth about what you owe on it currently and that you will not be able to refinance.

Now if you are like most people your reaction is, what? Why not? So my loan that is already with your bank, that I've never been late on, can not be refinanced at a lower rate? The loan officer then tells you that they are sorry, there is nothing they can do.

Now here is where it gets interesting. Lets say upon learning this that you decide to skip a few mortgage payments and you can prove that you're having a difficult time making your mortgage payments, the bank will then try and work with you and may possibly lower your mortgage rate temporarily or in some cases permanently. Sure your credit score will take a hit, but if you don't plan on making any large purchases within the next year and you plan on being in your home for the long term, it may be worth the gamble.

However, help may be on the way. The government recently has had discussions to help people in this situation. Apparently if you are in good standing with your loan, you may be able to refinance at today's lower rates regardless of the appraisal, but there is not timetable for this and it may never happen.

Fixed Mortgage Rates???

So I guess my idea to freeze interest rates wasn't so crazy after all.

According to the Wall Street Journal, "The Treasury Department is considering a plan to boost the depressed housing market by easing mortgage rates on new home loans. The plan, which is in the development stages, would bring loan rates down as low as 4.5%, a full percentage point lower than the prevailing rates for 30-year fixed mortgages."

By lowering rates to 4.50% this will make housing more affordable for potential home buyers, but will it increase demand? Mortgage rates are already close to historic lows and that hasn't seemed to help. I think in order for this plan to work they need to allow existing home buyers to refinance at that rate as well. The government has taken a trickle down effect (gave money to financial institutions) when all along they should have taken a trickle up effect (give money to the taxpayers, like the last 3 or 5 years in federal income taxes), meaning in order for you to access the funds the government injected into the economy, you must borrow it. So by offering the reduced rate of 4.50% to everyone you are in essence allowing every homeowner the opportunity to access those funds thus creating a stimulus for every homeowner.

Here are some examples of how much you would save by refinancing at 4.50%:

Current mortgage amount of $250,000 at 6.00% would save about $250/mo.
Current mortgage amount of $350,000 at 6.00% would save about $250/mo.
Current mortgage amount of $250,000 at 6.50% would save about $300/mo.
Current mortgage amount of $350,000 at 6.50% would save about $425/mo.

If you have any questions about how this potentially could impact you, please send your questions to info@illinoisrealestate.com

Home Loans Still Available

Many homebuyers are concerned that there is no mortgage money available to them to purchase a home in today’s rocky environment. Not true!!! Banks and lenders are just being more cautious before opening the purse strings until they have fully verified the ability of the buyer to pay back the mortgage.

Today’s homebuyer must be ready to provide more financial data than they’ve had to in the past. Lenders are looking for job stability, good – excellent credit, a history of savings and most importantly the strict numbers formula that says you can in fact afford the payment. No longer will lenders provide the “Exotic” loans that allowed for the purchase of more home for less money in the here and now, with the hopes that income and appreciation would take care of rate increases down the road. Today most loans fall into the 30 or 15 year fixed variety, and with rates and housing prices being at an all time low it’s to every buyers advantage to strike while the irons are hot.

Before you start the home shopping process get together with your mortgage loan representative and get “Pre-Approved” for your financing so that you can shop with confidence when you’re out searching with your realtor. Make sure that you’re dealing with a state registered loan originator (look for their 031 number), and also ask them if they have obtained the National Lending Integrity Seal that requires them to abide by stricter ethical standards. See if your loan originator has obtained a National Designation for CRMS or CMC as this indicates that they have taken additional courses and passed stringent exams to obtain these certifications.

I can help you with your home financing needs as I have obtained the designations outlined above. In addition, I am the President of the Illinois Association of Mortgage Professionals, please feel free to call me with any questions and/or concerns that you may have.

Jorge G. Gomez – CRMS
(773) 278-9595 – Direct
(773) 307-5509 – Cell

Jorge.Gomez@1amllc.com