Chicago Home Sales Experience Bump, but Prices Still Low

According to a recent article in the Chicago Tribune, Chicago-area home sales experienced a boost this March, but actual home prices are still lagging.  In fact, prices hit new housing-bubble lows, and Chicago is one of several markets experiencing the most severe lows.  While it is positive news that homes sales are up in our area, the Oak Park foreclosure lawyers at the Emerson Firm know many Chicagoland residents still are concerned about the stability of the economy and are worried about the possibility of mortgage foreclosure or bankruptcy.

Though home sales are up consumers and investors likely jumped on bargain deals, purchasing properties at prices considerably lower than the value of those homes prior to the burst of the housing bubble.  Some real estate agents have expressed cautious optimism about the encouraging sign of increased home sales.  For example, Loretta Alonzo, president of the Illinois Association of Realtors, stated that the numbers may represent a “turning point” provided there is not an “influx of foreclosures” flooding the market or any other drastic events that potentially could cause buyers to hesitate.

In the city of Chicago alone, March home sales rose 12.1%, with the median price at $171,750, a 5.2 % increase from a year ago.  Condominium sales in Chicago also increased.  Just under 1,000 condos were sold in March, an increase of almost 20% from a year ago.  The median price was $213,250, 4% higher than in March 2011.  It is likely that investors are particularly interested in snapping up city properties that would typically be significantly more expensive and that could still be rented at fairly lucrative rates.

In the greater Chicago area, sales of single-family homes and condominiums rose 23.8% from a year ago.  The median price was $151,850, down almost 4% from March 2011.

So, some prices have declined while others have risen.  Although many real estate agents have expressed optimism, many also have suggested that more time is needed before an accurate assessment of the state of housing market can be made.  More data is needed before it is apparent whether home values have actually stabilized. 

RE/MAX, the international real estate company, reported that distressed property sales accounted for 46% of the transactions in Cook, DuPage, Kane, Kendall, Lake, McHenry, and Will counties, in contrast with 52% in February and 51% in January.

The attorneys at the Emerson Firm are skilled and knowledgeable in the area of Oak Park and River Forest mortgage foreclosure and bankruptcy.  However, we are also happy to advise you regarding any real estate concerns or questions you many have.  Consider speaking with an Illinois real estate lawyer before the purchase or sale of your home because it is probably the largest financial transaction you will ever undertake.  In the past decade, our office has successfully completed more than 800 real estate transactions, including short sales, condominium conversion projects, FSBOs (for sale by owner), and first time home purchases.  You can be sure you can trust our experienced real estate attorneys to assist you with your real estate needs.

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The Federal Housing Administration Offers a Streamlined Refinance Program to Relieve Homeowners of High Mortgage Payments

In today’s harsh economic landscape, refinancing a mortgage is an appealing cost-saving method for a homeowner.  Refinancing a mortgage restructures the debt payment, usually by way of lowering the interest rate and creating a different loan term than the current mortgage.  Our Oak Park real estate attorneys understand that although reducing the interest expense is the most common goal of a refinance, some homeowners also look to extending the loan out to 30 years, resulting in a lower monthly payment.  In appreciation of the current state of the economy and the benefits of a refinance, the Federal Housing Administration (FHA) has created a streamline refinance program for homeowners with existing FHA mortgages. 

The FHA is a government agency that insures loans made by banks and other private lenders for home building and home buying.  One of the agency’s goals is to provide an adequate home financing system through insurance of mortgage loans.  The FHA’s streamlined refinance program is one such method for achieving this objective.  According to The Washington Post, this refinancing program is reserved for FHA homeowners who have paid their mortgage payments on time but are struggling to meet the monthly obligation.  Therefore, homeowners with mortgages with other companies, such as Fannie Mae or Freddie Mac, cannot benefit from this refinance program.

There are several requirements for a FHA homeowner to satisfy in order to be eligible for this streamlined refinance program.  The basic requirements are:  (1) the mortgage to be refinanced must already be FHA-insured, (2) the mortgage to be refinanced should be current and not delinquent, (3) the refinance results in a lowering of the borrower’s monthly principal and interest payments, or the conversion of an adjustable rate mortgage (ARM) to a fixed-rate mortgage, and (4) no cash may be taken out on mortgages refinanced. 

Once these basic requirements are met, a FHA homeowner is eligible for the streamlined refinance program and can reap the benefits of the program.  One of the major perks of the program is that it does not require a home appraisal.  Essentially, this means that the FHA does not care if a FHA homeowner is underwater on his or her mortgage.  Therefore, even if a homeowner owes twice the current value of the home, the FHA will still refinance the home without any penalty. 

The FHA is in a posture to offer this program with minimal eligibility requirements because the agency’s main objective is to insure mortgages, not to make them.  Therefore, for purposes of reducing occurrences of loan defaults, our Oak Park foreclosure attorneys understand that it is in the FHA’s best interest to lower the mortgage rates of as many FHA homeowners as possible.  Hence, the streamlined refinance program is beneficial for both the FHA and FHA homeowners who qualify for the program.  All parties involved in a successful implementation of the streamline refinance program are on a more favorable platform than before the refinance was put into action. 

Of course, the streamlined refinance program entails more detail than these basic elements.  If you are considering a FHA streamline refinance or a traditional refinance with any other conventional lender, please contact an Oak Park or River Forest foreclosure attorney at Emerson Law Firm to discuss your options. 

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Bankruptcies Down, Foreclosures Up in Chicagoland

For struggling Chicagoland families, bankruptcy and foreclosure often go hand-in-hand.  It is not uncommon for families facing serious financial difficulty to fear they will lose their homes and to consider filing for bankruptcy.  As our Oak Park foreclosure lawyers know, there are many legal options available for struggling Illinois residents, as well as several new federal and state programs that specifically provide assistance for homeowners.  Our attorneys frequently follow the trends of foreclosure and bankruptcy across the nation and in the Chicago area to ensure we have as much up-to-date information as possible about the factors currently affecting the economy.

For example, local bankruptcies are on the decline, in contrast with the current national trend, according the Medill Reports.  According to data reported by the U.S. Bankruptcy Court in the Northern District of Illinois, the number of bankruptcy filings has dropped in January, February, and March of this year in comparison to those same months in 2011.  Those of us working in Chicago bankruptcy law know that lower filing numbers have been occurring for a few years now.  In 2011, bankruptcy filings dropped about 10% from 2010, the first annual decline since 2006.  On the other hand, bankruptcy filings across the nation rose last year from approximately 1.53 million in 2010 to 1.57 million in 2011, an increase of 2.6%.  Numbers for the first quarter of 2012 are not yet available.

Experts are divided over the reasons driving this trend.  Some experts attributed the local decline to a slightly improved economy, as well as low mortgage interest rates and tougher controls over borrowing.  However, others have questioned whether the decline is indicative of an overall trend.  Numbers may be low at the beginning of the year because consumers choose to wait until closer to the filing deadline to declare bankruptcy.  Many Oak Park and River Forest bankruptcy lawyers are still speaking with distressed consumers concerned about a variety of debt, including credit card debt, medical bills, and student loans.

In contrast, foreclosure filings recently have increased in the Chicago area.  In March, such filings jumped 18.5% from a year earlier and 1.8% from this February, according to an article in the Chicago Sun-Times.  Illinois is doing significantly worse than the nation as a whole in this area.  Nationally, the numbers dropped 17.1% from March 2011 and fell 3.9% from this February.  In 2012’s first quarter, our state had the nation’s third highest foreclosure total with 11,342 homes receiving filings.  Although the national foreclosure trends have been more positive so far this year than those in our home state, these trends are not expected to continue.  Increases in foreclosure filings are expected to increase as less and less mortgage paperwork will be tied up in courts inspecting the accuracy and authenticity of those documents in the wake of the robo-signing scandal.

The Vice-President of the Woodstock Institute, a Chicago-based policy and advocacy nonprofit, stated that “concerted effort” was necessary “to address the forces that drive foreclosure activity, such as negative equity and unemployment.”  Our Cook County foreclosure defense lawyers agree that many homeowners are still in jeopardy and feel hopeless in the face of foreclosure.  Much must still be done to help our faltering economy recovery, but in the meantime, if you are at risk of losing your home to foreclosure, please consider contacting a legal professional to discuss the number of options available to you.

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Illinois and Cook County Primary Judicial Election Results Announced

Illinois recently had a primary election where many vacant spots in the local judiciary filled by voters.   As our Oak Park foreclosure attorneys know, it is very important for fair and knowledgeable judges to sit on the bench.  In particular, in complex mortgage foreclosure or bankruptcy cases, a number of complicated legal issues may arise, requiring careful attention and expertise from the judges as well as from the lawyers involved. 

A helpful report from Chicago Appleseed summarized  results from the Illinois Judicial Primary for the Illinois Supreme Court, Illinois Appellate Court, Cook County, and Cook County Subcircuit races.  The Illinois Supreme Court is the highest court in our state, and the Illinois Appellate Court is the court of first appeal for both civil and criminal cases arising in our Illinois Circuit Courts.  Two judges listed as elected to the Appellate Court—Matthias Delort and Jesse Reyes—are Cook County foreclosure judges.  Those of us working in Cook County mortgage foreclosure know that judges in the Chicago area handle a heavy workload involving complex and important cases that affect many of our city’s residents.

Judge Delort won in the Democratic Primary, Cook County-wide, for an open seat on the Illinois Appellate Court, formerly held by the late Justice Robert Cahill.  Thus, Judge Delort is the endorsed candidate of the Cook County Democratic Party, and will run in the general election later this year.  He also received an endorsement from the Chicago Tribune, which stated that its editorial board makes recommendations based on the evaluations of major bar associations, interviews with judges and attorneys who know the work of the candidates, and information provided by the candidates to the board.  High experience, legal ability, impartiality, and integrity were listed as qualities that the paper looks for in a judicial candidate.  The Tribune’s article noted that Judge Delort is known as a “workhorse” in the Chancery Department.  Judge Delort was found “well qualified” by the Chicago Council of Lawyers and “highly qualified” by the Chicago Bar Association.

Judge Reyes also won a spot on the Appellate Court to fill the vacancy left by Judge Shelia O’Brien.  Judge Reyes was listed as “qualified” by the Chicago Council of Lawyers.  The attorneys at the Emerson Firm know that Judge Reyes is knowledgeable in the area of Chicago mortgage foreclosure and has expressed concern in the past about the problem of too many Illinois residents losing their homes because the court system can appear intimidating.  Those of us working Oak Park and River Forest foreclosure defense want to congratulate Judge Reyes on his primary win, even though we will be sad to see him leave the Circuit Court.

We agree with Judge Reyes in his assessment that too many Chicago residents may find the foreclosure process intimidating and overwhelming.  However, we also know that your home is an investment worth protecting.  It is worth finding out more about your legal rights.  Speaking with a qualified Oak Park foreclosure defense attorney could greatly ease your mind if you are facing mortgage foreclosure. 

 

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The Fed Makes Efforts to Convert Foreclosures into Rental Properties

The Federal Reserve (Fed) is making efforts to improve the housing market for the broader purpose of restoring economic stability in the United States.  According to The Chicago Tribune, the Fed has released new policies with the purpose of implementing a course of action that would move to turn banks’ foreclosure inventory into rental properties, and then ultimately selling those homes to investors.  Our Oak Park foreclosure attorneys understand that one of the goals of the Fed’s new policies of converting foreclosures to rentals is to allow banks to relinquish assets that carry minimal value. 

The banks are not the only parties to potentially reap the benefits of this new process.  People in need of housing could also gain significant advantages from the conversion of foreclosures to rentals.  Specifically, people facing foreclosure would have a better chance of renting property despite their poor credit, and more importantly, they would not be left homeless.  Each Oak Park foreclosure attorney at our firm recognizes that in the successful conversion of foreclosed homes to rentals, lenders could also receive Community Reinvestment Act credit for their service in providing housing to those in need, namely low-income and moderate-income people.  Therefore, this conversion process can positively affect the needs of banks and people in need of housing. 

In order for this system to be successful, the Fed has expressed the significance of the banks’ actions.  Specifically, banking organizations should make good faith efforts to dispose of foreclosed properties at the earliest possible date.  To counterbalance the required quick action of the banks, the Fed has stated that it will allow the banks to rent out foreclosed properties without being required to demonstrate continuous active marketing of the property for sale.  However, the banks must follow the relevant policies and procedures in order to be granted this leniency. 

This system of converting foreclosures into rentals has been the topic of discussion for some time.  Bloomberg Businessweek reports that as early as last year in September, Fed Governor Elizabeth Duke pushed for government efforts in promoting the rental of foreclosed homes.  Like most experts, Duke understood that the recovery of the housing market was a necessary component in the revitalization of the economy as a whole.  In order for this system to come into fruition, the Fed is taking strides to remove some of the barriers in the conversion of foreclosures into rental properties.

Bank of America (BofA) is the first entity to test the Fed’s new policies.  Last month, BofA implemented a foreclosure-to-rental pilot program for 1,000 homeowners who are facing foreclosure in Nevada, Arizona and upstate New York.  In this program, BofA has promised these homeowners that they would be relieved of their mortgages.  In exchange for the mortgage forgiveness, the homeowners facing foreclosure will enter into rental contracts with BofA.  The rental properties will then be sold to investors. 

If the Fed is successful in its efforts to put this conversion system into full effect, troubled homeowners facing foreclosure would have more legal options.  Until this system is officially adopted and injected into the slow-moving economy, those who are facing foreclosure must be knowledgeable of the other many legal options currently available.  If you are facing foreclosure, please contact an Oak Park or River Forest foreclosure attorney at Emerson Law Firm to discuss your options. 

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Lawmakers Target Student Loan Debt as Next Debt Bubble

Lawmakers and those working in the financial industry have been predicting for some time that student educational debt will be the next big financial bubble to burst.  Illinois Senator Richard Durbin recently took aim at the private student-loan industry, advocating for new rules that would permit educational debts to be cleared away during bankruptcy, reports the Washington Post.  The ballooning cost of higher education and the long-term effects of student loan debt have caught the attention of lawmakers in Chicago and across the nation.  Some believe the current restrictions on discharging educational debt must change.

Last month, the Senate judiciary subcommittee held a hearing to discuss the problem.  As our Cook County bankruptcy lawyers know, the Federal Reserve Bank of New York issued a study finding that Americans owe about $870 billion in student loans.  That whopping figure surpasses the amount of outstanding credit-card debt or automobile loans.  Even worse, according to the report, more than a quarter of borrowers had past due balances.

Those of us working in Oak Park bankruptcy are concerned about high educational debt, too.  We realize that many Chicago area residents are bearing the heavy burden of paying back substantial student loans.  This, in turn, jeopardizes their overall financial security, and can impede their ability to buy a home, take out a car loan, or pay off medical debt.  Frequently, high debt, including educational debt, also goes hand-in-hand with the threat of Illinois mortgage foreclosure.

Currently, consumers cannot discharge student debts even if they file for bankruptcy.  Thus, those debts can cast a shadow over one’s financial security for decades.  Other debt, such as mortgages and credit card debt, typically can be discharged.  As Senator Durbin said during his opening comments at the judiciary subcommittee hearing, “It is clear that too many students have been steered into loans that they will not be able to repay and that they will never be able to escape.”

What is particularly concerning for us is that it is not only young people who are burdened with heavy debt.  The New York Federal Reserve study found that Americans 60 and over accounted for nearly 5% of past due student loan balances.  Rather than focusing on retirement and health care costs, notoriously high for older individuals, they are instead concerned about paying decades-old educational debt.  One consumer advocate who works for the National Consumer Law Center said she works with consumers in their 80s whose Social Security checks are being garnished to pay for old student loans.

The legislation sponsored by Senator Durbin would permit private student loan debt to be discharged in bankruptcy.  Consumers would still have to pay back their federal student loans.  This may not even go far enough, however, as it is likely that the bulk of student loan debt stems from federal loans.                        

So, the jury is still out on how to resolve the problem of student loan debt, an issue one consumer group has called the country’s next “debt bomb.”  It is important to note that while the law is still evolving in this area, Chicago bankruptcy law does permit many types of debt to be discharged.  Therefore, it is crucial to find out if you are eligible to file for bankruptcy if you are struggling.  There are many viable avenues to pursue to help you and your family regain financial security.  Please contact our firm today if you have questions about the process of filing for bankruptcy. 

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Foreclosure Pools

According to The Wall Street Journal there is a new trend of selling foreclosed properties in pools to major Wall Street investors.   Fannie Mae (Fannie) has recently begun selling pools of foreclosed properties to investors who are required to rent the homes for several years before selling them.  Many experts, including some Illinois foreclosure attorneys, believe that this type of arrangement could help speed up the recovery of the housing market.

In the past year rent prices have increased, while home prices have continued to decrease. Goldman Sachs economists predict that the annual yield on a rental property in the United States is 6.3%, but in cities hurt most by the mortgage crisis the yield can be 8% and above.  These yields are out-performing many traditional investments.  These financial trends have piqued the interest of Wall Street investors to enter the property management business on a large scale basis. 

In general, properties are one at a time, which can be inefficient and expensive with a large number of properties to sell.  Selling properties in pools can clear out inventory quickly, and can also result in a discount for investors.  While this may seem to benefit all parties, banks are currently receiving more than 90 cents on the dollar for their asking price on foreclosures, and therefore may be reluctant to sell properties in pools if doing so requires selling for much less. In fact, until now Fannie and Freddie Mac (Freddie) have largely resisted selling properties in pools because they could make more selling houses one at a time. 

The pool currently up for auction by Fannie consists of 2,500 houses with a total market value of $320 million.  The houses are divided into eight regional pools.  These regional pools range from 572 properties in Atlanta to 99 properties in Chicago.  This is just a fraction of the 180,000 foreclosed properties, worth an estimated $14.7 billion, that Fannie and Freddie hold.  Last year Fannie sold 240,000 properties primarily through real estate agents one by one.  Fannie is now testing selling properties in pools in order to be more efficient and possibly keep a stake in the pools.  It is unclear whether this type of sale will end up benefiting Fannie more than the traditional one at a time sales.

In order to invest in a pool of properties, Fannie requires the submission of an application where the investor’s capital backing and ability to manage the properties will be analyzed.  Bids for the pool are due in mid-April, with the transaction expected to be complete by late May.

Some experts believe that this type of sale will help fully stabilize markets that are already close to stabilizing.  However, not everyone is entirely on board.   Our Oak Park foreclosure defense lawyers understand that there may be some benefits for area residents if Fannie and Freddie would provide more loans for small local investors instead.  Giving the little guys a chance is often a fairer process.

In any event, if you are facing a foreclosure it is important to contact an experienced Oak Park and River Forest foreclosure attorney who can potentially help you avoid a foreclosure.  The attorneys of the Emerson Law Firm can go over your options with you in a confidential consultation.

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