Archive for December 2015

Ruling Puts Lenders on the Hook for Unpaid Condo Assessments

December 17, 2015

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This ruling should be of great interest to all Condo HOAs and Property Managers. This could potently reduce losses form non dues paying homeowners that quite often run into thousands of dollars.

For a more detailed look at this subject – please read the article below.

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The Illinois Supreme Court created potentially hazardous territory for lenders who take title to condominium property via foreclosure lawsuits. In 1010 Lake Shore Drive Ass’n v. Deutsche Bank Nat’l Trust Co., the Supreme Court held that liens for unpaid condominium assessments are not extinguished unless the lender pays post-sale assessments and in doing so it upheld a money judgment against a lender for unpaid assessments which were the debt obligation of the prior unit owner. The decision does not provide much clarity for lenders going forward, and it leaves lenders potentially vulnerable to money judgments for all unpaid assessments—even assessments which became due prior to judicial sale.

A brief explanation of the condominium statute and the foreclosure statute will clarify the issues at stake before the Supreme Court. In Illinois, lenders who are the successful bidders of condominium property at foreclosure sale are liable for assessments beginning on the first day of the month after judicial sale. Moreover, missed assessment payments operate as a lien on the condominium unit. The condominium statute states that making the post-sale payment for assessments “confirms the extinguishment” of any lien for unpaid assessments. So lenders have the personal obligation to pay assessments beginning the month after judicial sale, with the knowledge that there may be a lien against the property because the prior owner failed to pay assessments. But in mortgage foreclosure actions, the judicial sale is not final until the court confirms the sale: until then, it is merely an irrevocable offer to purchase the property. A lender could potentially wait months between the judicial sale and when the judge confirms the sale.

In 1010 Lake Shore Ass’n, judicial sale occurred on June 17, 2010. The lender failed to pay monthly assessments, and on May 17, 2012, the association filed a lawsuit for possession and unpaid assessments. It claimed that the lender owed it approximately $62,000.00 in unpaid assessments. The association eventually moved for summary judgment. The lender responded that it only owed $43,000.00 of post-sale assessments—the rest of the amount demanded was the debt of the prior unit owner. The trial court entered judgment in the association’s favor in the amount of approximately $70,000.00.

The appellate court affirmed. It held that the judgment was appropriate because the lien for unpaid assessments was not extinguished. It held that liens for unpaid assessments are not extinguished unless the lender pays assessments following the judicial sale. It reasoned that the condominium statute states that post-sale payment “confirms the extinguishment” of the lien, so the lien for unpaid assessments was not fully extinguished. Justice Liu dissented, and argued that under the foreclosure law all claims were barred on completion of the foreclosure, so section 9(g)(3) of the condominium statute offered an alternative method to extinguish the lien for unpaid assessments.

To read the complete article – please use the link below.

Lenders on the Hook

It’s Official: The Fed Finally Raises Rates

December 16, 2015

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It’s finally here – the dreaded Mortgage Rate Hike.

For a more detailed look at this subject – please read the article below.

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The Federal Reserve made the long-awaited, much-anticipated announcement on Wednesday afternoon that federal funds target rate will increase by 25 basis points from its near-zero level where it has been since 2006.

The announcement came as the Fed wrapped its eighth and final Federal Open Market Committee (FOMC) meeting of 2015 on Wednesday afternoon. The vote was unanimous.

After a widely-expected rate increase did not happen at the September FOMC meeting, the Fed stated that “In determining how long to maintain this target range, the Committee will assess progress—both realized and expected—toward its objectives of maximum employment and 2 percent inflation.” Another FOMC meeting came and went in October, albeit with much less fanfare than the September meeting, without the Committee raising the federal funds target rate.

“The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective,” the FOMC said in its statement Wednesday. “Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”

The Fed’s decision to raise short-term interest rates took into account, “a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.” In what many analysts and economists saw as the final piece of the puzzle, the November employment summary released by the Bureau of Labor Statistics in early December reported 211,000 jobs added in November, an unemployment rate of 5.0 percent, and an average monthly job gain of 218,000 for the three-month period from September to November.

To read the complete article – please use the link below.

Fed Finally Raises Rates

Here’s what Home Price Growth and Declining Negative Equity Mean for the Housing Market in 2016

December 16, 2015

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This seems like good news for the housing industry. The only drawback is that it can also indicate that another unsupportable “Housing Bubble” is forming but most indicators point towards to a good 2016.

For a more detailed look at this subject – please read the article below.

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The number of residential homes with negative equity, also referred to as being “underwater” or “upside down,” has been steadily declining in the last few years while the number of homes with equity has been on the rise.

That is a combination that bodes well not just for housing, but for the overall economy, according to CoreLogic’s Q3 2015 Negative Equity Report released on Tuesday. The report found that 256,000 residential properties regained equity in the third quarter, bringing the nationwide total to about 46.3 million, which calculates to approximately 92 percent of all homes with an outstanding mortgage.

“Homeowner equity is the largest source of wealth for many Americans,” said Anand Nallathambi, president and CEO of CoreLogic. “The rise in home prices, expected to be at least 5 percent in 2016, will continue to build wealth and confidence across America. As this process continues, it will provide support for the housing market and the broader economy throughout next year.”

The number of residential properties with a mortgage that had negative equity as of the end of Q3 was at 4.1 million, or about 8 percent of all homes nationwide. This represented a decline of nearly 5 percent from Q2 2015 and nearly 21 percent from Q3 of 2014, when 5.2 million homes (10.4 percent) had negative equity, according to CoreLogic. The aggregate value of the negative equity in those 4.1 million homes in Q3 was $301 billion, nearly a 12 percent decline from Q3 2014 when it was reported to be $341 billion.

To read the complete article – please use the link below.

Negative Equity Rate Decline