How Facebook Saved My Ass, Part 2 or How The Collegiate Mafia Came Through Once Again

My recent mortgage foolishness has been a thorn in my side.

And that's putting it mildly.

For those of you who have been reading for quite some time, you know the past few years haven't been paradise.

Jesus take the wheel.

But as we all know, bad things happen to good people everyday. And in some cases, really, really bad things happen to really, really good people.

So in the grand scheme of things, my issues were (are?) a cake walk.

No one was bleeding, I could stil feed myself and I had a roof over my head.

Now my mortgage servicer was trying to affect the later.

Obviously, I was upset.

One of my dear friends who is a regular reader of this blog suggested that I contact a mutual friend of ours who might be in a position to offer some advice.

She also mentioned that she recently reconnected with her on Facebook.

At this point, the situation was (is?) dire----what did I have to lose?

So I reached out to our friend after many years.

I felt a little awkward as we haven't spoken in for some time but have many friends in common from our college days.

So I took a chance.

After a round of phone tag, we spoke and I explained my situation.

It's not that I want to antagonize Select Portfolio Servicing but I failed to understand why there was such a glaring hole in the Obama plan.

But don't get me on that soap box right now.

Let's just suffice it to say, I pray you all don't lose your jobs, run through your severance and savings.

Unless you're the auto industry or banking, let's just say your bailout options are severely limited.

But I digress...

Within hours, my friend received my information via e-mail and said that she would see what she could do.

Two days later, I received a much more sympathetic phone call from my mortgage servicer.

Now they wanted to give me "options."

To quote the late great Dinah Washington, "What a difference a day makes."

I wouldn't have been given "options" without the suggestion of my friend who in turn found our other friend on Facebook.

That's when I started to think, there actually might be something to this little thing.

So I had to check it out.

While my college network may not have as much prestige at The Northwestern Mafia, I may be able to argue that they aren't any less influential.

Legally Speaking

Boy oh boy do I get e-mails and comments.

While I read all of them, I rarely respond to individual requests or queries via the blog.

And by rarely I do really mean rarely.

But today is the day I diverge from standard operating procedure.

Why?

‘Cause if I get one more e-mail inquiring about reasonable and competent legal services, I’m gonna scream.

So kind readers, let me introduce you to John Elias, esq. lawyer extraordinaire.

John has represented me in two real estate transactions, is the lawyer for our condo association and is very experienced in the breath of condominium law in the state of Illinois.

And yes, he’s a personal friend.

Despite the fact I’ve know him for nearly ten years, I can honestly say this kid’s top drawer. Not only is he good but he also has a high work ethic.

Plus any lawyer who stayed with us during the foreclosures, liens and learning how to run our home as a business deserves a medal.

Child please.

So look to the left to find a link to his website.

If you tell him I referred you, your association will receive a free hour consultation.

Yes a free hour consultation----for your association, not you. So don’t go in there with a personal ax to grind. Remember, your unit is your home but the association is a business.

It wouldn’t hurt if you adhered to the following tips prior to making an appointment:

Make sure all of the members of your association board can be present

Have a copy of your declarations and bylaws at the meeting.

There is never a thing as too much paperwork. Executed contracts, turnover documentation and dates are extremely helpful.

If you feel this topic needs to be addressed, disclosure of your financial situation.

Prepare all of your questions and concerns prior to the meeting.

You’d be surprised at how quickly an hour can pass when you’re with a lawyer.

And no, I don’t know his hourly rate. He doesn’t ask me how much money I make (hint: That would be zero as I’m unemployed) and I don’t ask him how he runs his business.

I’m just saving you the trouble of asking.

But as with anything, please do your due diligence. Check (or ask) him about his education and credentials, how long he’s been practicing real estate law and any other thing that pops into your head.

Just because I’m giving him the thumbs up doesn’t mean you should follow me blindly.

‘Cause frankly speaking----isn’t that what got you all in your predicament in the first place?

What I’ve Learned

Believe it or not after months of determined pestering and a lucky break or two, my mortgage mess is finally settling down.

My mortgage company has the foresight to understand that all of a reduced amount is better than nothing at all.

But seriously folks, I’ve dodged a major bullet and am thanking the Lord that I still have a roof over my head.

So as a public service to you kids, I’m going to part with some lessons that I’ve learned about Chicago real estate.


1. Your home is not a piggy bank.

Don’t assume that the value of your home will continue to increase exponentially. Eventually all of these sky high values will shake out and come back down to earth.


2. Just because you got lucky once doesn’t mean lightning will strike again.

Yeah you may have sold your “started condo” for over twice the price you paid for it but that type of success rarely repeats itself every two to three years. Don’t think that you’ll be able to do that every time you want to sell or refinance.


3. Adjustable Rate and Interest Only Mortgages are the devil.

If you ever get one of these mortgages, please read the fine print and fully understand what you’re signing. You know how grandma always said you’ve got to pay the devil his due? Well those cloven footprints in the flower bed weren’t made by the dog. The devil wants you to pay up. Right now.


4. The ‘hood matters.

If you start seeing more than three foreclosures within a half mile radius of your home you probably shouldn’t plan on using your equity to send the tots off to college. As much as it pains me to inform you of this but the value of your home is about to take a nose dive---big time.

The aforementioned ARM mortgages, shady financing and mortgage fraud has hit everywhere but “emerging” neighborhoods where housing stock is less expensive are more vulunerable.

In short, a neighborhood (such as Woodlawn) is trying to turn itself around by attracting middle class home owners. Since the prices are usually lower than a similar unit in Lakeview or Lincoln Park, investors swarm all over newly renovated or newly built condo developments.

If you have an over leveraged legitimate home owner or a shady investor, everyone in the neighborhood will feel the pain of their bad decisions for years to come.

When the shit starts hitting the fan and units (or single family homes) start to get foreclosed upon the financial blood bath begins.

I should know, I’ve been living through it and writing about it for the past two years. It ain’t pretty.


Man, if I knew then what I know now…

The Gift That Keeps On Giving

It’s difficult to realize that despite all of your hard work, that there are some things you just can’t control.

Such is the way of the foreclosures in my association and on my block.

Despite the fact the process started over two years ago, the repercussions of those foreclosures linger like a bad stench.

I was surprised to see a much lower value for my unit once the appraisal came back last Thursday afternoon.

I cursed the name of the former owners in our association who only seemed to care about their bottom lines and nothing else.

After gulping down that big glass of haterade, I rallied the forces of good and countered with supporting comps of units that weren’t exactly like mine but provided a basis for a much higher appraisal.

An extra $40,000 is nothing to sneeze at.

As of this writing, the appraisal department has the paperwork and will render a decision in the next day or two.

That still leaves me and any other people in my association who try to refi or sell in a hell of a predicament.

Do we accept shit comps from someone who can’t even pull values from around the corner? Do we fight it and hope for the best or do you lower your selling price (and grab your ankles) as the market is still very much tipped toward the buyer?

So like the nice article said, do some homework prior to plunking down your hard earned cash for a place.

If you’ve got a high number of foreclosures and investors with rental properties you may want to steer clear or have a diamond in the rough. It all depends on your outlook.

Let’s say you’re only going to stay for a short while or you’re not the type who’s not into community involvement.

My suggestion would be to head for the hills.

You’re the type of person who wants a ready made hood. A neighborhood with bright young things strolling the boulevards, people with good dental plans, shopping, nightlife and all of that jazz.

And if you have the money, and some do, head for one of the many neighborhoods in Chicago that will fulfill your urban desires.

But for those of us with Tiffany wishes in a Jewelry Exchange world, we have to look elsewhere.

If you are the type who can make a dollar out of fifteen cents and plan on staying put five years or longer, an “emerging” neighborhood may be for you.

You may not have the fabulousness of the ready made hood and you won’t have grocery store anywhere around you, but eventually you will be thought of as the forward thinking type as you had enough foresight to see potential.

Kinda like Gloria Estefan before Emilio got to her.

After all, anyone with money can buy fabulousness; it takes a special breed of person to make fabulousness.

You, my urban pioneer, can consider what type of new construction is (or may be) happening in the neighborhood over the next few years.

While prices may be depressed now, in a year and a half to two years, its gonna be a whole new ball game.

How so?

For those of you who don’t know, real estate appraisal comps are comprised of what has recently sold in your neighborhood or in my case my building and my neighborhood.

Because of the low selling foreclosures in my building (a 2 br for $108K), and three other low selling foreclosures down the block (on average $130K a piece) I should have anticipated that I would have trouble.

Had my appraiser simply taken into consideration the recent sales of the condos around the corner I’d have a whole different ballgame.

Now I don’t have all of the bells and whistles that the units around the corner have (stainless appliances, granite, half bath or parking space) but according to a friend’s calculations that should of only knocked my appraisal down $20,000---not $55,000.

But on the bright side when the proposed developments behind me either get built or sell, real estate in east Woodlawn is quite literally going to go through the roof.

That will take about two to three years to happen, but I’m not in a hurry.

I’ll simply continue to make improvements to my unit so it can be on par with my new neighbors.

Cliff Notes, Part II

Now that I’ve been through the basics of what you should be looking for in terms of paperwork, let’s move on to more advanced methods of developer justice 101.

1. Start Writing Letters

The bar to your left has links to most local, state and federal government officials. Let them hear about your extreme displeasure with your developer. I’m sure that he or she is attempting to build or develop other properties in your ward, without your alderman’s say so it ain’t gonna happen. An unhappy alderman is one headache that a developer doesn’t want. Plus with an election cycle quickly approaching I’m confident that your alderman will listen to your concerns.

If you don’t know who your alderman is, find out---and quick. Be nice to him or her and their staff. You do not want to piss them off.

Hopefully at some point all of this effort will blossom into a full blown “damn the torpedoes” campaign to get the laws changed to protect the consumer as far as condominiums are concerned.

2. Be Nosy

The Federal Bankruptcy Clerk’s Office is a treasure trove of information. See if your developer has filed before. It’s public record you know---free and open to all who can pass through the metal detectors and have a picture ID. Be care of the reporters and camera people at the George Ryan Trial. They can be a bit testy.

Click on the link to the left for the Clerk of the Circuit Court of Cook County. Choose the “chancery” drop down and the “defendant” option to see if your developer has ever been in foreclosure. Choose the “civil” drop down and the “defendant” option to see if your developer has been party to any lawsuits.

Enter the legal name of your condo association in the “civil” and “defendant” options to see if you guys are parties to any lawsuits. That’s how I found out that we had open litigation against our association.

Check the incorporation status of your developer’s business by going to the Secretary of State’s website link on the left.

Go to the city and pull all of the open violations (if any) for all of the addresses in your association.

3. Ask Uncomfortable Questions

Do you have your developer’s license?
Did you file a copy of the property report with the city?
(If I understood you correctly) Why did we have to file our own articles of incorporation with the state?
We would like to see the accounting and the assessments that you as the developer paid into our bank account.

4. Be An Even Bigger Pain In The Ass

File a fraud complaint with the Department of Consumer Services. Include as much paperwork to support your case as needed. More than likely the city will tell you that there is nothing that they can do. The laws concerning fraud with respect to condominiums has not yet been addressed and therefore isn’t on the books. But---and this is a big but---in the informal hearing your developer may be cocky enough and stupid enough to incriminate his or herself. Did I mention that the informal hearings are tape recorded?

Best of all you can get a copy of that tape and use it in any future civil litigation. Priceless, huh?

Happy hunting my new condo owning friend, I hope it all comes out in the wash. Don’t forget to apply for the refuse rebate from the city. It sounds like you kids are gonna need the cash.

Cliff Notes, Part I

My new condo owning friend:

I know the urge to throttle your developer and/or inject damage upon his prized possessions is great, but a cooler head must prevail.

I also must remind you that I am not a licensed attorney, a law school graduate or have applied to or passed the Illinois State Bar Exam.

I have on the other hand been in quite a few bars (of the entertainment variety) in Illinois.

Yes, it sounds like you kids are in a sticky wicket but I urge you to gather together your troops their real estate contracts and closing documentations ASAP. Please do so while everyone remembers where they stuck everything or before Fluffy or Fido scent marks the closing documents.

It is imperative to fully understand what was and what was not promised in writing via the contracts.

Additionally, it would be helpful to find any advertising or promotional material about the offering of your development.

The point is that you need to find something somewhere that lists what your bootleg developer was going to do with respect to the renovation.

Those are just the basics. If you really want to start rattling cages you can move onto some more basic sleuthing techniques that I’ll give you in the next post.