Shoreline Towers condo association plans to be a buyer in foreclosure market
Homeowners group would rent them out until market improves, then sell units
By Mary Ellen Podmolik
Tribune reporter
Shoreline Towers Condominium is tired of fretting over the double-whammy of falling property values and lost assessments as foreclosures pop up in its building.
Deciding it has had enough, the board of Shoreline's homeowners association is taking matters into its own hands by knocking on neighbors' doors and asking them to approve a novel plan that would make the homeowners association a landlord in its own building.
Foreclosure problems aren't unique to Shoreline. Homeowner associations in Chicago, its suburbs and throughout the country are dealing with the fallout of foreclosures and the crippling effect they can have on operating budgets, capital reserves and building cachet. For some, the recourse has been to delay building maintenance and improvement projects. For others, the answer has been found in raising assessments, a move that could backfire among owners already stretched thin financially.
At Shoreline Towers, a 378-unit building along the lake in the city's Edgewater neighborhood, where there's recently been an average of 12 to 14 foreclosures at any given time, board members are trying a new tack. If they receive the required 66 2/3 percent majority approval needed from owners, the association will buy up to eight foreclosed condos during the next two years and rent them as apartments until the housing market improves. Then they'll resell them.
That may take several years, given the economy's ills and the glut of condos in Chicago, many of which are for sale by investor-owners, developers and lenders at rock-bottom prices. But Shoreline's experiment, if it works, could offer an alternative to well-capitalized associations elsewhere.
"A significant number of associations could entertain this idea," said David Hartwell, a Chicago attorney who counsels Shoreline's association as well as many others in Chicago. However, he added, "There are some associations that are so far behind the eight ball already that they don't have the capability of doing this even if they want to."
The board's plan was crafted over the past five months as the housing industry's meltdown landed on its doorstep. According to board President Edward Frischholz, average sales prices of units that sold in the building this year have ranged from $95,000 to $135,000, down $15,000 to almost $44,000 from what similar units sold for, on average, during the past four years.
Foreclosed, empty units also mean lost assessments, at least initially. With an average monthly assessment of $500, Shoreline's association is short at least $6,000 a month from a dozen foreclosures.
One of the foreclosed units the board seeks to buy, priced by the lender at $115,000, had a four-year average sales price of more than $217,000. Because that unit is listed on a multiple listing service, the association's planned purchase would lower comparable sales in the building, a point Frischholz concedes. Likewise, other purchases also would affect the comparable sales figures.
"It does, but what other alternative do we have," said Frischholz, who has owned in the building since 1989. "At least we're acquiring an income-producing asset. If units start selling for 50 cents on the dollar, that means other units start selling for less too. This was an evolutionary process we undertook to protect our property values."
So far, proxies are running 9-1 in favor of the board's proposal.
The plan is not without risks. As part of a separate refinancing, the association has negotiated a $2.5 million line of credit to make the cash purchases. If the units don't rent for sufficient sums, the association could be jeopardized, noted Shirley Feldmann, whose Association Advocates Inc. works with homeowner associations.
Nevertheless, if it can make the numbers work, she credits Shoreline's association for acting like a corporation, not the loosely knit group of homeowners she finds in other buildings.
"They need to remember that their association is a business," she said. "If they take the value of their units and add it up, that's the value of the corporation."
Shoreline's board thinks its plan will work for a number of reasons, chief among them the "right of first refusal" clause contained in Shoreline's condo declaration. It gives the association the right to turn away a prospective buyer and purchase a property for the same price. The $115,000 foreclosure, for instance, was to be purchased by someone else before the board intervened.
Such clauses, which some buildings have done away with, are thought to keep riff-raff out of a building, and Frischholz acknowledges that the board wants owners who can afford higher prices.
"The bank will put whoever they can get in there," he said. "We don't want to have another person who is going to get foreclosed on."
Another plus going for Shoreline is its location on North Sheridan Road, just a block south from Loyola University Chicago's Lake Shore campus, which gives it a pool of potential renters.
Shoreline, built in the 1960s, also has its financial condition in its favor. Cash reserves are half of what they once were but still stand at $600,000.
While the plan wasn't originally intended as a marketing tool, real estate agents say if approved, it could help sales in the building.
"If I was buying into that building, I would feel stronger about it, and I can definitely say that to a client," said Eva Bergant, an @Properties agent who has a listing in the building. "They're taking their own financial security into their own hands."
Monday, August 10, 2009
Wednesday, August 5, 2009
South Loop, Contemporary Architecture
I'm hosting an open house on Sunday, August 9 at a great one bedroom plus den in the South Loop.
The building is 1440 S Michigan, one of the examples of modern architecture built by CMK. This low rise building (6 floors) consists of 100 condos with a landscaped center courtyard. The high concrete ceilings and exposed ducts make it a popular soft loft.
Unit 315 features a balcony, updated kitchen, large bathroom with a deep soaking tub, and in unit washer/dryer. The kitchen has stone counters and backsplash. The oversized island is great as a breakfast bar. The large one bedroom floorplan has a den which makes a great home office or guest area. It can easily be separated by french doors or left open to the living room.
If you are looking for a great buy (deeded parking included) with a convenient location, stop by on Sunday.
1440 S Michigan, Unit 315
Sunday, August 9
noon - 2 pm
Saturday, July 11, 2009
Mortgage tips
Here's a recent article regarding mortgages that I found helpful for new buyers, repeat buyers and those hoping to refinance.
I recommend two Chicago based mortgage bankers:
Lane Sears with RWF - 312.242.5252
Eric Johnson with Chicago Bancorp - 312.738.6040
Window Shopping - 5 Tips for Prospective Home Buyers
RISMEDIA, June 26, 2009-(MCT)-After a recent spike seen in mortgage rates, some consumers are wondering whether they’ve missed their chance to refinance into an ultra-low rate.
Fear not: While the conforming 30-year fixed-rate mortgage hit a daily average of 5.81% last Thursday, it averaged 5.53% on Tuesday, said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information. And it’s possible that rates could continue to fall.
“Predicting interest rates is like predicting who is going to win the World Series in January,” said Guy Cecala, publisher of Inside Mortgage Finance. That said, he calls the recent spike “somewhat of an aberration,” and expects rates will continue to drift down.
Why the recent run-up in rates? Over the past month or two, “the economic skies have brightened somewhat,” Gumbinger said in an e-mail, and the threat of “trillion-dollar budget deficits for the foreseeable future, the potential for significant inflation, and few clues as to how the government might extricate itself from intrusions into markets” created a landscape that was not appealing to investors.
But now, rates are retreating partly because inflation doesn’t seem as immediate a threat as investors feared, Cecala said. In his opinion, nothing fundamentally has changed in the economy over recent weeks to warrant the rate rise, yet he expects volatility through the remainder of the year as investors debate the economy’s health.
“Realistically, I think that the rates will drift under 5% again. It may take a month, may take two months,” he said.
It’s also important, however, to realize that extremely low rates likely won’t be around forever, said Bob Walters, chief economist of Quicken Loans, in a statement.
“Luckily, we have seen rates drop some this week, which should help many consumers breathe a little easier,” Walters said. “But the fact remains, the government’s plan of purchasing mortgage-backed securities cannot go on indefinitely, and when it ends, we will most certainly see a spike in rates. The hope is that the Fed can keep rates low long enough to kick-start a housing recovery. Whether that will work remains to be seen.”
“Volatility is the key word in the mortgage industry these days when it comes to rates,” said Kyle Kerwin, senior vice president of mortgage lending for Signature Bank of Arkansas.
Here are five tips for those shopping for a mortgage today, particularly those who need to refinance an existing loan:
1. Get started on paperwork. Once you’ve found the mortgage professional you’d like to work with, get started on the necessary paperwork, said Dan Green, loan officer with Waterstone Mortgage in Cincinnati and author of TheMortgageReports.com. Rates move regularly, and if paperwork has been started your file can be processed more quickly when rates hit a low. When you start the application process, your credit score will be pulled and you’ll need to submit support documentation including W-2 forms and pay stubs. You might be asked for updated documents nearer to closing.
2. Make sure your credit is in good shape. Check credit reports and fix problems as soon as possible, said Mary Curran, president of Highland Financial Mortgage Corp. in Northbrook, Ill. Even seemingly small charges can haunt a borrower: A forgotten, unpaid parking ticket, for example, can noticeably affect a credit score, she said.
3. Decide at what rate it makes sense to pull the trigger. If you have a 6% rate now, rates would have to hit 5% or lower for it to make financial sense to refinance, Cecala said. Talk with your mortgage professional about what’s best for your particular situation.
4. Stick to your guns. Once you determine the rate you’d need to get, it’s probably wise to stick to that decision. Consumers sometimes gamble that rates will go lower, and the plan can backfire if rates reverse course, Kerwin said. A couple of weeks ago, rates were close to 4.5% in his market, “and people wanted to hold out for an extra eighth of a percent.”
5. Remember, rates are still good. Yes, rates could fall and create another record low as a result of a swoon in the stock market, a collapse of a major bank or a deepening of a recession, Gumbinger said. But it isn’t likely that many consumers would crave those economic shocks. “Why would anyone wish for those things again to simply get a rock-bottom, ultra low mortgage rate? If it means saving $250 per month on your mortgage but it costs you $50,000 in your 401(k), how could this be seen as any kind of benefit?” he said.
Author: Amy Hoak
©2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
Read more: http://rismedia.com/2009-06-25/mortgage-window-shopping-5-tips-for-prospective-home-buyers/#ixzz0KyBmeQEt&C
I recommend two Chicago based mortgage bankers:
Lane Sears with RWF - 312.242.5252
Eric Johnson with Chicago Bancorp - 312.738.6040
Window Shopping - 5 Tips for Prospective Home Buyers
RISMEDIA, June 26, 2009-(MCT)-After a recent spike seen in mortgage rates, some consumers are wondering whether they’ve missed their chance to refinance into an ultra-low rate.
Fear not: While the conforming 30-year fixed-rate mortgage hit a daily average of 5.81% last Thursday, it averaged 5.53% on Tuesday, said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information. And it’s possible that rates could continue to fall.
“Predicting interest rates is like predicting who is going to win the World Series in January,” said Guy Cecala, publisher of Inside Mortgage Finance. That said, he calls the recent spike “somewhat of an aberration,” and expects rates will continue to drift down.
Why the recent run-up in rates? Over the past month or two, “the economic skies have brightened somewhat,” Gumbinger said in an e-mail, and the threat of “trillion-dollar budget deficits for the foreseeable future, the potential for significant inflation, and few clues as to how the government might extricate itself from intrusions into markets” created a landscape that was not appealing to investors.
But now, rates are retreating partly because inflation doesn’t seem as immediate a threat as investors feared, Cecala said. In his opinion, nothing fundamentally has changed in the economy over recent weeks to warrant the rate rise, yet he expects volatility through the remainder of the year as investors debate the economy’s health.
“Realistically, I think that the rates will drift under 5% again. It may take a month, may take two months,” he said.
It’s also important, however, to realize that extremely low rates likely won’t be around forever, said Bob Walters, chief economist of Quicken Loans, in a statement.
“Luckily, we have seen rates drop some this week, which should help many consumers breathe a little easier,” Walters said. “But the fact remains, the government’s plan of purchasing mortgage-backed securities cannot go on indefinitely, and when it ends, we will most certainly see a spike in rates. The hope is that the Fed can keep rates low long enough to kick-start a housing recovery. Whether that will work remains to be seen.”
“Volatility is the key word in the mortgage industry these days when it comes to rates,” said Kyle Kerwin, senior vice president of mortgage lending for Signature Bank of Arkansas.
Here are five tips for those shopping for a mortgage today, particularly those who need to refinance an existing loan:
1. Get started on paperwork. Once you’ve found the mortgage professional you’d like to work with, get started on the necessary paperwork, said Dan Green, loan officer with Waterstone Mortgage in Cincinnati and author of TheMortgageReports.com. Rates move regularly, and if paperwork has been started your file can be processed more quickly when rates hit a low. When you start the application process, your credit score will be pulled and you’ll need to submit support documentation including W-2 forms and pay stubs. You might be asked for updated documents nearer to closing.
2. Make sure your credit is in good shape. Check credit reports and fix problems as soon as possible, said Mary Curran, president of Highland Financial Mortgage Corp. in Northbrook, Ill. Even seemingly small charges can haunt a borrower: A forgotten, unpaid parking ticket, for example, can noticeably affect a credit score, she said.
3. Decide at what rate it makes sense to pull the trigger. If you have a 6% rate now, rates would have to hit 5% or lower for it to make financial sense to refinance, Cecala said. Talk with your mortgage professional about what’s best for your particular situation.
4. Stick to your guns. Once you determine the rate you’d need to get, it’s probably wise to stick to that decision. Consumers sometimes gamble that rates will go lower, and the plan can backfire if rates reverse course, Kerwin said. A couple of weeks ago, rates were close to 4.5% in his market, “and people wanted to hold out for an extra eighth of a percent.”
5. Remember, rates are still good. Yes, rates could fall and create another record low as a result of a swoon in the stock market, a collapse of a major bank or a deepening of a recession, Gumbinger said. But it isn’t likely that many consumers would crave those economic shocks. “Why would anyone wish for those things again to simply get a rock-bottom, ultra low mortgage rate? If it means saving $250 per month on your mortgage but it costs you $50,000 in your 401(k), how could this be seen as any kind of benefit?” he said.
Author: Amy Hoak
©2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
Read more: http://rismedia.com/2009-06-25/mortgage-window-shopping-5-tips-for-prospective-home-buyers/#ixzz0KyBmeQEt&C
Tuesday, November 25, 2008
Chicago home sales & price data
This reinforces my belief that the Chicago home market is strong compared to the National news we continually hear.
Chicago home prices down less than U.S. index
Nov. 25, 2008
Crain’s Chicago Business
(AP) — Chicago home prices fell less than a widely watched national index, which on Tuesday showed prices dropping across the county by the sharpest annual rate on record in the third quarter.
The Standard & Poor's/Case-Shiller U.S. National Home Price Index released Tuesday tumbled a record 16.6 percent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.
Chicago-area prices were down 10.1 perc. in September compared with September 2007.
The monthly indices also clocked in record declines. The 20-city index fell by 17.4 percent in September compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 18.6 percent, the biggest decline in its 21-year history.
No city in the Case-Shiller 20-city index saw annual price gains in September — for the sixth straight month.
Chicago home prices down less than U.S. index
Nov. 25, 2008
Crain’s Chicago Business
(AP) — Chicago home prices fell less than a widely watched national index, which on Tuesday showed prices dropping across the county by the sharpest annual rate on record in the third quarter.
The Standard & Poor's/Case-Shiller U.S. National Home Price Index released Tuesday tumbled a record 16.6 percent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.
Chicago-area prices were down 10.1 perc. in September compared with September 2007.
The monthly indices also clocked in record declines. The 20-city index fell by 17.4 percent in September compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 18.6 percent, the biggest decline in its 21-year history.
No city in the Case-Shiller 20-city index saw annual price gains in September — for the sixth straight month.
Thursday, November 20, 2008
Old Town Tribute
This past Monday afternoon, 11/17/08, I was in a crowd of people that stood shivering at the corner of Wells & Schiller in Old Town. The city dedicated "Marion Konishi Way" a new honorary street preserving the memory of Marion Konishi. In 1968, Mrs. Konishi opened the first sushi bar in Chicago located in Old Town, Kamehachi of Tokyo. She was honored as being an entrepreneur, a pioneer and a champion of Asian Americans. The restaurant, Kamehachi is still a favorite, and now has multiple locations, the two best known are 1400 N Wells & 240 E Ontario.
After the touching dedication in which supporters including Alderman Burnett spoke about her contributions to the community. The unveiling of the sign was done by Mrs. Konishi's great-grandchildren. This was followed up by a sumptious spread of sushi, sashimi and cooked items too!
Old Town is full of traditions: the Dr Scholl's factory, now Cobbler's Square, a loft rental complex; Kamehachi, celebrating 40 years; and Chicago's own Second City Comedy Club; to name a few.
Old Town: A great place to visit, a great place to live.
For more information on the dedication, go to ABC:
http://abclocal.go.com/wls/story?section=resources&id=6506466
Friday, October 24, 2008
Sheridan Park, Chicago Neighborhoods
Are you looking for a great community, with reasonably priced property, close to the lake? Try Sheridan Park.
I have a new listing at 4628 N Racine, Unit 1N. This property has 3 bedrooms, 2 baths, (includes a master bath with tiled shower, double bowl vanity, and granite vanity top) great layout, parking, and private back porch. The kitchen is gorgeous with a tiled backsplash, granite counters, and SS appliances. The entire property has oak hardwood floors. (exept the utility room, complete with side-by-side washer & dryer)
It is in a well kept 8 unit building with an inviting front porch. The fenced in yard is a favorite for both the kids and dogs in the building.
Location, location, location - it is located one block from Borders, one block from a pet supply store, two blocks from Starbucks, two blocks from an el stop.
To see this great home, contact me or stop by at the open house on Sunday, October 26 between noon & 2pm.
Thursday, July 31, 2008
Mortgage Info
Here is another option as many lenders are only able to provide loans at 90% to value, people are turning to FHA loans for condos, not just single family homes.
If you are not able to put 10-15% down on a purchase, I can hook you up with a lender to assist you in putting together an FHA approved loan.
Don't despair - call now!
If you are not able to put 10-15% down on a purchase, I can hook you up with a lender to assist you in putting together an FHA approved loan.
Don't despair - call now!
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