Dodge Ball

The bad news is that I’m still losing my job.

The countdown continues.

The good news is that I’ve renegotiated my mortgage (*again*) where I now pay $300 less a month.

Believe it or not, my mortgage is near what it was when I first moved in 2001.

While that frees up money, it would be nice if I continued to have a steady source of income.

Reducing instead of increasing debt would be welcome right about now.

My roller coaster life would kill a lesser person.

The Block Is Hot

The fallout from the subprime crisis has been all over the news since last summer.

Faithful readers will remember how I wrote about my own personal drama in this forum with my own adjustable rate mortgage.

It would have been easier for me to get into a size ten pair of skinny jeans than to refi nance my mortgage last year.

I know that things are still bad.

I predict that the market won’t straighten out until late ’09 or early 2010.

Despite those grim predictions, I get a feeling that things are looking up for the old hoody hoo.

Realtor’s trying to get rid of excess inventory in this market shouldn’t come as a surprise.

But it seems like there’s a breath of fresh air in recent listings. And when I say breath of fresh air I mean new condo construction.

Not only are there newly built inventory on 65th place, Dorchester and Kimbark but methinks there may be a real estate turn around lurking amidst this downturn.

Obviously it’s not over until the units sells but as a nearly seven year resident of Woodlawn, the price points of the current condo inventory thrill me to pieces.

The new condos behind me are listing from the high 200’s.

For someone who bought her humble little cold water flat for considerably less, when the market does turn around ,those of us who saw Woodlawn’s potential and bought in early will reap the benefits.

And when I say reap I mean raking in the scads of cash when I finally choose to sell.

While I’m not a fan of our city’s Olympic efforts and I don’t think we’ll get the games---if we did, the real estate market for the south east side is going to blow off the map.

But for now it’s all just speculation.

I feel it coming though---change is afoot.

Bender

Excuse my absence of late. I’ve been on a bender for the past week or so.

I figure my 39th birthday and a layoff are a good enough reasons to tip a few back.

Now granted a week and a half might have been a little excessive but hey you only live once.

Despite my partying ways, I did manage to act like an adult for part of the time and get some important business done and make some neighborhood observations.

First and foremost the mortgage deal is done.

That sound you hear is the collective sigh of relief that I won’t be shown the door---literally.

The best my mortgage company could do is to give me another ARM with a much lower interest rate.

I know, I know---it’s another ARM loan but at least it buys me a year or so. I can only pray that all these new condos being built sell like hotcakes so my property value shoots back up so I can refinance.

Did I mention how beautiful eastern Woodlawn is?

The worst-case scenario is that my mortgage goes up another $100 a month for another year. So that’s not too bad.

It’s better than the alternative that I was facing.

And yes I lobbied hard for a fixed rate with reasonable terms but that idea got the heave ho.

After all I’ve been trying to thread this needle since March.

But at least it’s done and I can rest a little easier.

I also applied for unemployment between cocktails.

For those of you who’ve had exposed to the public aid sector in the great state of Illinois it will not come as any surprise to you when I proclaim that no matter how special you may think you are, you will still be treated the same in the eyes of the employees of these respective offices---like you’re an idiot.

But in all fairness some of the clients of these services aren’t the sharpest knives in the drawer.

So I guess it’s safe to assume that starting with the basics is the best route.

Nonetheless, I was in the unemployment office for three---count ‘em---three hours last Tuesday.

God that sucked.

But it had to be done.

Since I have no money coming in, it might behoove me to make the magic happen.

Don’t worry (yet) my resume is being reviewed by my HR friend and I hope to have it out on the streets tomorrow.

If all goes well, I’ll be working in October.

Until then my only question is where did all these blonde stay at home moms come from? Woodlawn is crawling---well at least for Woodlawn---with Lakeview/Lincoln Park type moms with $300 strollers.

The things you see when you’re home during the day.

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…

Bad Sign, Getting Worse

As luck would have it, my refi dreams are down the shitter.

Apparently either due to the foreclosures in the area as well as neighbors who want a quick sale and sell cheaply, the property value in the hoody hoo has dropped over $30,000.

I’m sure inflated appraisals by bootleg appraisers might have had something to do with this as well.

All of these factors have led to a no go on the refi as the loan to value ratios don’t work.

What does this mean for me?

It means that every six months until I can actually refinance my interest rate adjusts upward.

When my rate adjusts in July I may be looking at an additional $300 tacked onto my mortgage payment.

Now as much as that sucks if I work a little bit harder at the second job and stay in one weekend a month, I can make that up with no problem.

The shit hitting the fan comes in January of 2008.

That’s when the rate adjusts again and another $300-$400 gets tacked on to the first rate adjustment.

It’s gonna get ugly real quick like.

But instead of letting this situation control me, I’m exploring some options and will report back when the workable solutions have firmed up.

Until then I have to repay personal debts and batten down the financial hatches.

It’s gonna be a bumpy ride.

Bad Sign

My mortgage person is missing in action.

After the appraisal flap, I take no news as bad news.

None of you have any idea how much of a serious monkey wrench has been thrown in my personal financial plans.

I anticipate my monthly mortgage payments will go up another $300-$400 dollars a month until I can find a new deal.

While I’ve started working on another lender, I’m battening down the hatches to prepare for the upcoming storm.

I should be able to ride it through for a month or two but if it’s extended for a longer period, I'll be in trouble.

Additionally, the mortgage adjusts every six months so God only knows how high that bad boy will go.

I’ll tell you one thing---I have no intentions on finding out.

Let's all keep our fingers crossed.

The Appraisal

There's a reason why all of the little things matter.

High foreclosure rates paired with too high a number of rental units equals appraisal disaster. At least it did for me when I got an appraisal last week as a part of my refi of an ARM mortgage.

You see I was one of those people who actually paid attention to the fine print.

I actually knew that my mortgage payment would be adjusting in May and didn't want a $350 surprise when I went to pay my June mortgage.

So I investigated rates and the like with my current mortgage holder, decided that they were smoking crack as there terms were nutty; and choose to look elsewhere for reasonable financing.

I found a lender (my bank) and everything has gone through with flying colors until we hit a small stumbling block called the appraisal.

The appraiser and I don't exactly see eye to eye on the value.

In fact, there are 55,000 little reasons why we're not seeing eye to eye.

I know you're asking yourself, Woody---what the hell? How in God's name could there be that much of a disparity in what you think your unit is worth vs. what an appraiser thinks your unit is worth?

At this time and in this place the value of some Woodlawn real estate isn't too bright.

The real estate chickens have come home to roost. Foreclosures seem to haunt those of us who continue to live in a neighborhood long after the banks have taken over the properties.