If a property is a condominium or a townhome, then the real estate must be “approved” or “certified” by the FHA in order to qualify for an FHA loan.  The certification process is the FHA’s way of making sure the condominium or townhouse meets certain basic quality standards.  There are lots of condominiums and townhomes in Chicago and the surrounding suburbs that are already FHA approved.  Some, however, are not.

Before the laws changed in 2010, when a property was not FHA approved, a lender might be able to get the unit a “spot approval” provided it met certain FHA guidelines.  In addition, once a property was certified, it stayed certified.  Today, in the wake of the “real estate bubble”, the spot approval process no longer exists and FHA certifications now expire and an FHA approval must be renewed every two years.

HUD maintains a website that details approved properties and when their certification is set to expire.  Buyers in the market for a condominium or a townhome who want to get an FHA loan would be smart to check the list to make sure the property they want to buy is actually FHA approved!

Our own Ed Reda penned a short piece on the topic of impairment and the issues it creates in estate planning.

As our population ages, more and more attorneys are dealing with clients with cognitive impairment.  What is cognitive impairment?  One clinical definition is “A change in intellectual capacity characterized by a loss in both memory and executive functioning.” (Dr. Stafford Henry).  Executive functioning involves using the higher levels of the brain to plan ahead, organize, strategize, multi-task, problem solve and engage in abstract reasoning.  Among the symptoms of cognitive impairment include forgetfulness, vapid or vacuous facial expression and impairment of language function.  Individuals suffering from cognitive impairment are at risk for being manipulated and taken advantage of.  In cases where the impairment is great enough, a family attorney may recommend that guardianship proceedings be instituted in order to protect the impaired individual.  Estate planning for an individual with cognitive impairment can be particularly problematic.  Individuals with cognitive impairment can present themselves to appear quite normal or “with it”.  Often, only a trained medical professional can make a determination that an individual is suffering from cognitive impairment.  Estate plans made by individuals suffering from cognitive impairment may be subject to being contested or challenged by family members who are disappointed with the estate plan.  For all of the foregoing reasons, clients should attend to their estate planning while they are clearly healthy.   Notwithstanding our human inclination to procrastinate, “sooner” is definitely better than “later” when it comes to estate planning.

Landlords can also find the security deposit interest rate for past years on our website.

Landlords can also find the security deposit interest rate for past years on our website.

In 2007, congress passed the federal Mortgage Forgiveness Debt Relief Act, a law that allowed taxpayers to exclude “forgiven” debt after a shortsale, foreclosure, or loan modification to be excluded from a person’s “income”.  That law is set to expire on December 31, 2012.  Prior to the enactment of the law, any forgiven debt was considered “income” to a borrower and the borrower had to pay income tax despite not actually receiving actual “cash-in-hand” income.  If Congress does not extend the law, a number of real property owners will face increased income taxes in the wake of transactions related to distressed properties.  Many short sales currently in progress will be effected.  Attorneys General from a majority of states have urged the congress to extend the law when they go back to work in December.

The Illinois Secretary of State is warning about this “statewide corporate scam“.  They report that they are “investigating this deceptive business practice” and the Secretary of state recommends that “corporations do not reply to the solicitation”.

If you look closely at the paperwork, the company is offering to prepare annual corporate minutes and the form collects the information necessary to do that.  In small “disclaimer” language, the form informs consumers that they still need to file their annual report.  However, because the form resembles an official document and asks for similar information, many corporation registered agents could be confused thinking the state is employing a new form.

If you have questions about your annual report or if you are looking for assistance with an Illinois Registered Agent, please feel free to give us a call and we can see if we are a match for an engagement.

I’ll say it again.  Pre-approvals don’t mean a thing.  I know it is hard to believe, but it’s true.  I probably average one telephone call a month from a confused seller-client who wants to know why the buyer needs a mortgage contingency extension when “they were already pre-approved”.

Here is a secret.  A pre-approval letter is not an approval.  In fact, the entire home mortgage banking process is littered with things that make consumers think they are approved when they are not.  “Pre-Approved”; “Pre-Qualified”; “Approved subject to conditions”; “Approved but not clear to close”.  None of these are a guarantee that the buyer will get a loan and are really just different ways to say the buyer is NOT APPROVED.

Many buyers, sellers, and real estate agents think that a pre-approval makes an offer to purchase a home “stronger”.  I don’t.  What is a pre-approval really?  Well, in Chicago’s home lending market, it usually means one simple thing: that the buyer placed a call to a mortgage lender and the mortgage lender is willing to try to get the buyer a loan.

Pre-approvals are a great way for mortgage lenders to market their services though.  I think most people could pick up the phone and in ten minutes get five pre-approvals faxed to them from five different lenders.  Today’s pre-approval letter really just says “prospective borrower, if everything you told me is true and if I don’t find anything wrong with your credit or the place you want to buy, I will give you a loan… maybe.”

In some rare instances, a lender might actually “underwrite” a loan (ie. gather verifications of deposits and employment, pull credit and submit the file to an actual underwriter for review).  That sort of pre-approval is a bit better than what most home buyers can produce.  But even those pre-approvals are still subject to other conditions like appraisal and condominium review, title, and “quality control” review.  The type of pre-approval where a lender actually does all of this is pretty rare in the Chicago lending market.

Over the years, the real estate industry has recognized the trouble created by pre-approval letters and has responded with attempts to clarify the situation.  The Multiboard 5.0 real estate contract added a final page breaking down the different kinds of pre-approval a buyer might present.

In my experience, the use of this form as part of a “standard” real estate contract is, unfortunately, quite rare.  Until lenders stop the practice of issuing a pre-approval to just about anyone who calls, smart sellers would be wise to not put too much stock in that letter as any sort of indicia that the buyer really qualifies.