Angelo Cusinato |CRMS, CMC|Mortgage Specialist

Last week I visited with the Lake County Board of Review. It was a 15 minutes time slot that reminded me of how it felt when I was asking my father to borrow the car. The assessor's web site identifies comparables. They pick those that favor their positon, I pick those that support my position. Guess what? They win. I also tried to present comparables that supported the fact that even if my home and others in the development were determined to be taxed consistently within the development, our development was being taxed too high relative to other developments in the township. I explained how I made my selection and felt that I was playing by their rules yet they seemed to be changing the rules during the meeting if they were not going to accept my comparables. I guess they did not want to hear someone question the system.

While the assessor was professional, the board seemed to be exhausted from days of 15 minute pleadings and seemed to shut off listening. They were quick to say "this meeting is over" - thanks dad.

Next step - spend time preparing for a presentation at the state level. Before long you will be able to place an "over/under" bet in Las Vegas on our final results. Wish us luck!

BANKS REFUSE TO HELP HOMEOWNERS!

GREED again hurting the housing market

If it doesn't cost the bank and doesn't increase their risk, then why are the banks refusing to help the housing industry?

Market conditions are beginning to offer many homeowners an opportunity to refinance their first mortgage to a lower payment or safer mortgage loan. For those that have a second mortgage or home equity line of credit, the lender in the second position must agree to subordinate (stay in second place) to the new first mortgage.

If this were to happen, the homeowner would have a lower first mortgage payment making it easier for them to afford their home and most agree that the risk to the second mortgage holder would be reduced.

This should be a WIN! WIN! But it isn't.

Agreeing to subordinate is currently optional! In most cases, the second mortgage lender refuses to subordinate. They want out! They want to force the homeowner to pay them off! If the homeowner cannot obtain a new second mortgage or pay the mortgage off with savings, the bank refuses to help and the homeowner continues to pay a higher payment on their old mortgage. The bank says no one can make us help - too bad!

My suggestion -

Force the banks that depend on the Treasury, Fed or State for their charter to subordinate second mortgage loans and equity lines of credit if the new first mortgage improves the homeowner's financial position.

The replacement loan would have to meet certain conditions.

1) If the current first is a fixed rate loan, then the new loan balance should be no higher than the current principal balance and also be a fixed rate loan resulting in a lower monthly payment.

2) If the current first mortgage is an ARM then the new loan must again have a balance that is no higher than the existing loan and either be:

A) A fixed rate loan with a lower payment than the ARM has or is expected to have within the next 6 months.

B) An ARM that results in a lower payment than the ARM has currently or is scheduled to have within the next 6 months (calculated at the current index value plus margin).

If the new loan is an interest only loan, then the term must be at least 5 years and may not have the potential for negative amortization.

NO appraisal, NO credit report, and NO ncome documentation should be required by the second mortgage lender because the objective is to maintain or reduce the risk due to the first mortgage with all other things affecting the risk of the transaction remaining the same.

Is there a politician or journalist out there that cares? Please contact me if you have questions or need some hard facts.

Have a great day!

If you are looking for something new and exciting to do this weedind, take the kids to see the ski jumping (and more) in Fox River Grove ( September 20 and 21). Check out www.norgeskiclub.com for details and directions. Get there early(1 PM Saturday, Noon Sunday) and see the top ski jumpers of the nation compete for points used to qualify for the US Olympic team. Best of all, you will not be standing in snow and freezing. Instead enjoy great food, beverage, and a bonfire. Pleanty of Photo OPS so bring your camera! See you there!

I recently received notice of a 21% increase in my Lake County IL 2008 real estate tax assessed valuation. In 2007, I along with many of my neighbors, were facing a similar increase and protested to the Lake County Board of Review. They agreed with our position and rolled back the 2007 increase. Now, with a year to do their homework and modify their mechanics, the assessor's office found a way to increase the assessment again. This time, we have the ability to protest in another way and that is "MATTER OF LAW". The following is the meat of our protest and I thought some of you might appreciate the sections that are copied below. Wish us luck!

The Lake County Board of Review rules for 2008 set forth a set of "reasonable rules for the guidance of persons doing business with the Board and for the orderly dispatch of business." The rules include an Appeals Based upon Matters of Law, which states:

"Prior Board of Review Decisions. Owner occupied residential property assessment appeals based up on prior year Board of Review decisions should contain the Notice of Finding from the Board of Review from the general assessment year or from the subsequent year where applicable. Aside from substantial cause, prior year decisions on owner-occupied residential properties should be carried forward until the next general assessment year, subject to the Chief County Assessment Officer's equalization. Cases based solely on this reason will be set for review only after a review by the Board or its staff."[i]

Furthermore, Illinois Property Tax Code Article 16 Division 2 Section 16-80 "Reduced assessment of homestead property." states:

"Sec. 16-80. Reduced assessment of homestead property.

In any county with fewer than 3,000,000 inhabitants, if the board of review lowers the assessment of a particular parcel on which a residence occupied by the owner is situated, the reduced assessment, subject to equalization, shall remain in effect for the remainder of the general assessment period as provided in Sections 9-215 through 9-225, unless the taxpayer, county assessor, or other interested party can show substantial cause why the reduced assessment should not remain in effect, or unless the decision of the board is reversed or modified upon review. (Source: P.A. 88-455; 89-126, eff. 7-11-95; 89-671, eff. 8-14-96.)."

[i] Lake County "2008 Rules of the Lake County Board of Review"

http://www.co.lake.il.us/elibrary/publications/boardofreview/2008%20board%20of%20review%20rules%20for%20internet.pdf

highlights - Before a real estate transfer(buy-sell) or refinance can take place in Cook County (beginning 7/1/2008), data must be entered into a database to determine if it is an exempt or "subject to counseling" transaction. This information must be verified by the title company before funding.

If you are, or are helping a First Time Homebuyer, you should know about this new regulation. The state of Illinois is trying to protect First Time Homebuyers. The new regulation identifies mortgage loan features that may lead to confusion or misreprentation and requires that the buyer meet with a counselor. At that meeting, they will be asked to confirm that they understand the mechanics of the loan. The counselor does not have the authority to stop the borrower from proceeding with the loan or with the mortgage broker.

Features that would require counseling - 1) Interest - only, including an equity line second(combo), 2) Pre-payment penalty, 3) Adjustable rate loan where the first adjustment is three years or less, 4) negative amortization or deferred interest, and 5) costs and fees greater than 5% of the purchase price.

I see a few problems with this regulation. 1) The counseling is a cost that is absorbed by the mortgage broker, paid by the mortgage broker, and at risk to the mortgage broker if the borrower backs out of the purchase or changes mortgage companies. 2) By including a purchase money equity line under the "interest only"category, it is likely that this alternative to private mortgage insurance may be kept off the table when presenting differnt mortgage alternatives to First Time Homebuyers. In this way, the buyer avoids counseling and stretching the mortgage approval process by at least one week. 3) Pre-payment penalties are often used to protect the lender when they offer a lower interest rate on their five or seven year adjustable rate loans.

While the First Time Homebuyer may need more education to make sure they understand their mortgage, This regulation will also affect someone that refinances their home into a loan that has one of these features. Now when a homeowner refinances from an interest only ARM to a new interest only ARM, they will need counseling. Amazing but true. Welcome to Cook County.