Mortgage Refinancing Challenges for Chicago Homeowners

The Wall Street Journal reported this week on the struggles that homeowners across the country continue to face as they try to refinance their mortgages.  This is an issue with which our Oak Park and River Forest mortgage foreclosure attorneys are intimately familiar.  It s yet another hurdle faced by those throughout our area who continue to work hard to try to get their finances in order following the recession.

 Like trying to talk to a real person when calling the cable company, residents are finding it difficult to even get a real conversation going with bank employees about the refinancing process.  One man interviewed for the story heard something when calling Bank of America that is likely familiar to many local residents: the bank was “swamped with business” and might be able to call him back in two to three months.

This can be incredibly stressful for all local homeowners trying to take advantage of the particularly low mortgage rates—averaging 4.05% at the end of April.  However, the increased demand for refinancing comes when banks own a larger share of the market than ever before.  In addition, it comes as banks generally tighten standards, taking more care when figuring out who to lend money to and how to process their loans. 

Experts advise that is it crucial to shop around.  The bigger banks often boost their rates, because they have enough traffic that they can afford to demand higher rates and make bigger profits.  The president of a smaller bank, Accunet Mortgage, explained, “It really is a rat’s maze for the consumer.  [Big banks] have enough people saying ‘yes’ to those [high] offers that they’re taking super-high profit margins.”

One expert explained that “You have more loans going through a pipeline that is too small.”

Loan originations  seems to be concentrating with larger banks more than at any time the past,  particularly the nation’s four largest banks.  In 2004 these banks—Wells Fargo, J.P. Morgan Chase, Citigroup, and Bank of America—originated about 38% of loans.  Now, six years later, those banks account for 55%

Right now more than one-third of all refinance applications are coming amid President Obama’s Home Affordable Refinance Program, according to the Mortgage Banker’s Association. The program generally allows those with loans backed by Fannie Mae and Freddie Mac to refinance even without equity or particularly strong credit.  The President continues to push for similar legislation to help underwater homeowners who have loans not backed by Fannie or Freddie.  It remains to be seen if that legislative proposal will become  

At the end of the day when it comes to refinancing, dealing with foreclosure, or working with banks on any number of home ownership issues, it is easy to get confused and overwhelmed.  No matter what, please remember that help is available.  Each Oak Park real estate lawyer at our firm is available to help residents throughout the area on these issues.  Whether you’re hoping to reinstate your mortgage, modify your loan, arrange a short sale, or just learn what options are available, the Oak Park foreclosure lawyers at the Emerson Law Firm can provide the experienced legal counsel you need.

See Our Related Blog Posts:

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Mortgage Assistance May Be on the Way for Some Illinois Homeowners

High-Fee Credit Cards Target Consumers with Poor Credit Histories

Recently, we explained that the Supreme Court ruled that binding arbitration clauses in credit card agreements are permissible, making it harder for consumers to challenge lenders in courts.  In fact, the Supreme Court’s decision all but ensures that a significant number of consumers will lock themselves into such agreements without realizing they cannot sue their credit card companies in court.  Compounding this setback for consumers, the Consumer Financial Protection Bureau is now proposing the reversal of a ban on exorbitant credit card sign-up fees. 

 

Those of us working in Chicago bankruptcy law know that many consumers in the greater Chicago area and across the country are still struggling.  Unfortunately, at least some of the current economic recession is due in part to poor choices made by those in the financial industry.  Many big banks were bailed out, and a number of predatory lending practices have been exposed.  Yet our Oak Park bankruptcy attorneys know that unscrupulous lenders may still prey upon consumers if our legislators do not remain vigilant.

According to an article in The Washington Post, the high credit card fees target consumers with poor credit histories.  The high-fee credit cards are known as “fee-harvester cards” because they typically have low credit limits, but high fees and interest rates, sometimes up to 36%.  Consumers trying to rebuild their credit histories with high-fee credit cards (likely because it is difficult to obtain approval for other cards) could actually cause their scores to plunge even further.

Three years ago Congress attempted to curb high-fee credit cards as part of a plan to address abuses by the credit card industry.  Congress wanted to cap the fees a credit card issuer could charge at 25% of the card’s limit during its first year of use.  So, for example, a card with a $300 credit limit would have a $75 annual fee.  However, such high-fee cards also come with a large up-front fee—e.g. $95 to open the account—which lenders can legally charge because the fee is imposed before the account is opened, thus circumventing the cap required by Congress.  In 2010, the Federal Reserve tried to extend the cap to include up-front fees, but its plan was thwarted, at least temporarily, by a lawsuit seeking a preliminary injunction to stop the rule from taking effect.

The Consumer Financial Protection Bureau (CFPB), formed last summer, took over the responsibilities formerly held by the Federal Reserve and other agencies for regulating consumer protections.  Yet the CFPB, an agency that is supposed to be working to protect consumers, is now proposing to undo the Federal Reserve’s regulation on up-front fees, which would allow banks to impose large sign-up fees (and high annual fees as well). 

Those of us working in Oak Park bankruptcy hope the government will do what is best for consumers.  Making the decision to file for bankruptcy is not easy, but there is no shame in asking for help and finding out about all of the legal options available to you.  If you are concerned about your credit card debt, or if you are worried you might lose your home to Chicago mortgage foreclosure, please consider speaking with a qualified professional today.

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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.

See Our Related Blog Posts:

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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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Mortgage Assistance May be on the Way for Some Illinois Homeowners

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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. 

 

See Our Related Blog Posts:

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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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