Attorneys At Law

Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

Attorneys At Law - Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

Illinois Underwater Homes Trap Homeowners in Place

DuPage County Property

Illinois home values in some areas have never fully recovered from the real estate market crash, trapping some homeowners in houses that they are ready to move out of.

 

Trapped in their underwater mortgages

For example, Steinar Andersen of Huntley Illinois is ready to move out of the state. He is a disabled veteran who cannot work because of service-related injury who still owes $187,000 in principle on his home.

“We really should be living in Arizona as it is more “disability friendly” and the property taxes are much less,” he said. He can’t though because he is so far underwater on his home loan.

Another example is Collen Percy and her recently retired husband, currently living in Plainfield.

“We’re stuck,” she said. “We would love to sell and go live in a smaller home so we don’t have the upkeep and tax burden.”

Unfortunately, they are $85,000 underwater on their suburban Plainfield home. They’re concerned that rising property taxes are further eroding their home’s value, pushing the opportunity to sell even further into the future.

Related: High Property Taxes Sending Illinois Homeowners Towards a Cliff 

 

Illinois has the highest rate of underwater homes

Edge of CliffA study of negative equity by real estate site Zillow found that nationwide, less than 10% of homeowners have negative equity in their homes.

In Illinois however, 16.4 percent of homeowners owe more on their mortgage than their home is valued at. Nationally, only the State of Louisiana had a higher rate.

In Chicago, the negative equity rate is at 20%, overtaking Las Vegas as the city with the highest negative equity rate in the nation.

 

Difficulty selling

The combination of negative equity and high property taxes can mean homeowners who want to relocate can’t actually sell their homes.

“It makes it difficult to move for a new job opportunity to relocate elsewhere,” Zillow economist Sarah Mikhitarian said.

The high property tax rates in Illinois serve to help slow or decrease the value of homes.

Related: Illinois Has Second Highest Property Taxes in Nation

Home prices in Illinois, while up since 2013, are still down 10 percent compared with the market peak in 2006, according to data from the Federal Housing Finance Agency.

Illinoisans need reforms to make owning a home more affordable, and staying in or moving to the Land of Lincoln more attractive.

 

 

You may call The Law Offices of Lora Matthews Fausett P.C. with your questions:  630.858.0090


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


 

The Law Offices of Lora Fausett P.C. provides real estate law services including loan modificationsbuying and selling legal assistanceshort sales and deeds in lieumortgage foreclosure defense, and more.

Located in Glen Ellyn, Illinois and serving clients in DuPageCookKane, Will, and Kendall Counties.

For Information Call 630-858-0090


President Trump Suspends Mortgage Fee Rate Cuts

On his first day in office, President Donald Trump signed an executive order reversing a recently passed Obama administration policy that reduced the fee rate for Federal Housing Administration backed loans.

What is the change?

The administration canceled a reduction in the Federal Housing Administration’s annual fee for most borrowers.

The cut passed during the final days of the Obama administration would have reduced the annual premium for someone borrowing $200,000 by $500 in the first year.

When the fee rate policy change was announced by Obama’s Housing and Urban Development secretary Julian Castro in January, it was criticized by Donald Trump and Republicans.

What are the fees for?

The premiums fund the Mutual Mortgage Insurance Fund, which bails out lenders if borrowers default on their mortgages. Republicans argued the fee reductions put taxpayers at risk by lowering the funds the FHA has to deal with mortgage defaults.

FHA mortgage loan fees were raised during the housing recession to cover program losses. The Obama policy cutting them would have returned them to almost to the level they were before the housing bubble burst in 2008.

A letter from HUD to lenders and the real estate industry announced they would “suspend indefinitely” the rate reduction, stating “more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.”

What was the response to the change?

The responses to the Trump administration policy were mixed.

Senate minority leader Chuck Schumer denounced the move, while the nominee for Secretary of HUD Ben Carson criticized the new policy when it was implemented by the outgoing administration.

Some housing industry groups approved of the change, saying it would increase home buying by offsetting recent rises in mortgage rates.

Other critics included the President of the National Community Reinvestment Coalition, John Taylor, who asked through a spokesman: “Exactly how does raising the cost of buying a home help average people?”

President of the National Association of Realtors, William E. Brown, said the fee rate cuts would have allowed more people to qualify for a mortgage because it would allow them to meet the debt-to-income ratio required for borrowing money.

The mortgage rate fee hikes were originally implemented during the Obama administration when FHA was under severe stress because of the financial crisis. In 2013 the agency was bailed out by the for $1.7 billion after a huge wave of mortgage defaults.

What does it mean?

In their letter to the real estate industry, HUD stated that “FHA is committed to ensuring its mortgage insurance programs remains viable and effective in the long term for all parties involved, especially our taxpayers.”

With this recent policy change, potential home buyers and the real estate industry will need to wait and see what the effects on the housing market will be.


* Advertising Material: To the extent that the information in this e-mail is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


The Law Offices of Lora Fausett P.C. provide real estate law attorney services including short sales and deeds in lieuloan modifications and workouts, and buying & selling assistance.

For Information Call 630-858-0090


Sources:

Trump Reverses Obama’s Mortgage Fee Cuts on First Day – Bloomberg

Trump’s first executive action: Cancel Obama’s mortgage premium cuts – USA Today

Trump’s Mortgage Fee Cut Reversal: What it Really Means for House-Hunters – Fox Business

HUD Official Website

Changes to Wells Fargo Loans and The Borrower Closing Disclosure

Changes are coming to the Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act and the Truth In Lending Act. These changes will be effective August 2015, and Wells Fargo is working to meet internal compliance and regulator expectations by controlling the generation and delivery of the borrower Closing Disclosure (CD).

These new changes may prompt questions about the rules and how they affect Wells Fargo and individual loans. Some frequently asked questions are answered below.

Will all lenders collaborate on a standard and consistent process for meeting all of the TILA-RESPA Integrated Disclosure Rules?

No.

Each lender is accountable for compliance and must determine its own method for achieving compliance.

Wells Fargo made an operational decision in September regarding our method for achieving compliance and we continue to build processes to support our approach.

Can we begin using the new CD form earlier than August 1, 2015?

No.

In fact, there will be several weeks/months that we will be required to use the previous disclosures with some loans and the new LE and CD on other loans*.

·        Applications prior to August 1, 2015 will use the previous GFE, initial TIL, final TIL and HUD-1.

·        Applications taken on or after August 1, 2015 will use the new Loan Estimate (LE) and CD.

There are no exceptions to this requirement – early use of the LE and CD are not allowed.

*Note: The new disclosures do not apply for home equity lines of credit, mortgages securing mobile homes that are not attached to real estate or for creditors who make five or fewer loans per year.

Can settlement agents prepare the CD and send it to the lender for approval, just as today for the HUD-1?

No – not for Wells Fargo loans.

Lenders are accountable for compliance, which includes the CD timing and accuracy. The new CD is governed by the Truth-in-Lending Act (TILA), not the Real Estate Settlement Procedures Act (RESPA).

TILA and RESPA have different accuracy expectations and enforcement provisions, as well as differences in definitions. The risks and penalties for Wells Fargo are more severe with TILA than RESPA.

How will Wells Fargo determine the exact fees that are applicable on loans?

Collaboration and input from our settlement agents on fees applicable for each transaction continues to be critical.

Wells Fargo will continue to work closely with settlement agents to determine the fees and other content required on the CD. This interaction must occur earlier in the process than is typical today.

How will Wells Fargo determine buyer/seller pro-rated amounts on purchase transactions?

Just as today with the HUD-1, we will work closely with our settlement agents to determine the amounts to be disclosed on the borrower CD.

The settlement agent will be responsible for the seller CD.

The TILA-RESPA Integrated Disclosure Rule uses the term “consummation” – what does that mean?

The TILA-RESPA Integrated Disclosure Rule requires that the borrower receive the CD at least three business days prior to consummation.

TILA defines consummation to be: “The time that a consumer becomes contractually obligated on a credit transaction.”

Wells Fargo considers consummation to be the date the borrowers will sign the note for all transactions (becomes contractually obligated), including transactions in escrow states.

What happens if the pre-closing walk through identifies a change to the buyer/seller agreement that will impact the CD?

The settlement agent must notify the lender’s closing contact if there are any changes that impact the CD. Wells Fargo will determine if an updated CD can be provided for delivery at the closing or if the change triggers the three-day receipt requirement to be restarted.

Will Wells Fargo assume the responsibility for disbursing loan proceeds?

No.

The settlement agent is critical and continues to be responsible for executing the closing including document signing, notarization, disbursement of funds, document recordation and delivery of final documents post-closing.

What education and training materials can we expect?

Specific Wells Fargo training plans are under construction in collaboration with other industry partners such as ALTA, title underwriters and other service providers. Plans include many educational communications and an information guide.

More details will be provided as available.

Contact us with any additional questions or to learn more.

NATIONAL MORTGAGE SETTLEMENT

The Federal Government & Attorneys General have reached a landmark settlement with major banks. The agreement covers roughly $25 billion in relief for distressed borrowers, states and federal government. After many months of negotiation, 49 state attorneys general and the federal government have reached agreement on a historic joint state-federal settlement with the country’s five largest loan servicers:

Ally/GMAC
Bank of America
Citi
JPMorgan Chase
Wells Fargo Who May be Eligible for Assistance

Because of the complexity of the mortgage market and this agreement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief. Borrowers from states who did not sign the settlement will not be eligible for any of the relief directly to homeowners. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.

The settlement provides assistance for:

Homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.

State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.

Borrowers who are current, but underwater. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.

Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process. $1.5 billion will be distributed nationwide to some 750,000 borrowers. Additional information is available at: http://www.nationalmortgagesettlement.com/help.