Monday, December 27, 2010

New IRS 1099 Requirements for Landlords -

Pass this on to your database: starting in 2011 there is a new tax requirement for all landlords
who receive $600 or more in rent for the year. The 1099 goes from the landlord to any service provider such as plumbers, carpenters, yard services and repair people.

The new requirement applies to owners of both residential and commercial property. Prior to 2011, this requirement had only applied to those involved in full-time property management now it covers all types of landlords.

Landlords will need to gather federal tax ID numbers from service providers in order to file the 1099’s. Failure to file the 1099’s with the IRS can result in fines of $50 per 1099 not filed with the IRS. In 2012 these requirements will expand to cover providers of goods to landlords.

NAR opposed this new law and is continuing efforts along with others in trying to get the new law repealed or modified. Congress took this action in order to assure that income paid to contractors can be verified through a section 1099.

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Monday, December 6, 2010

VESTING - Who is in Title to the Property?

Homes for sale in Lake Zurich,Arlington Heights and Long Grove,The Paul Paterakis Power Team,RE/MAX

•Vesting is determined by the last deed of record
• Many different forms of ownership
• The agent needs to make sure that the listing is signed off by the actual owners of the property

o Single: A sole person owning the property.
Watch out for Homestead!

o Tenants in Commons: undivided interest in the property by 2 or more people.
Can be equal or unequal shares of the property
No right of survivorship
Creditors can attach a claim against the entire property

o Joint Tenancy: undivided interest in the property by 2 or more people
Equal shares of the property
Right of survivorship
Creditors can attach a claim against the entire property

o Tenants By The Entirety: Husband and wife own the entire property.
Equal shares of the property
Must be their primary residence
Limited protection against credit

o Land Trust: The trustee is a bank or a trust company. The trustee executes the deeds
and mortgages upon the written direction of the beneficiary

If you sell a property where a Land Trust is in title you must have the following:
• Certified copy of the original trust agreement
• The Trust Department must execute any recordable documents

o Living Trust: The trustee is usually one of the individual owners of the property. The
living trust allows the property to pass in accordance with the trust without probate.

If you sell a property where a Living Trust is in title you must have the following:
• A properly certified copy of the original trust agreement

o Corporation
If you sell a property where a Corporation is in title you must have the following:
• Letter of Good Standing from the state:
• Copy of the Articles of Incorporation and ByLaws
• Resolution Authorizing Sale

o LLC: Limited Liability Corporation
If you sell a property where a LLC is in title you must have the following:
• Letter of Good Standing from the State
• Copy of the Articles of Organization
• Copy of the Operating Agreement

o Partnership
If you sell a property where a Partnership is in title you must have the following
• Copy of the Partnership Agreement
• Affidavit/Certificate that the Agreement has not been further Amended

Monday, November 29, 2010

Initiative to eliminate 8109 Federal Tax Deposit Coupons beginning in 2011 -

Initiative to eliminate 8109 Federal Tax Deposit Coupons beginning in 2011.The U.S. Department of the Treasury recently announced an initiative designed to increase the number of electronic transactions and reduce the amount of paper processing done by the agency.

The new program will reduce dependency on paper in several ways, one of which impacts Form 8109.

Electronic Federal Tax Payment System Businesses currently permitted to use Form 8109 federal tax deposit coupons for deposit of payroll tax liabilities will be required to use the IRS Electronic Federal Tax Payment System (EFTPS) beginning in 2011.

The only exception will be very small employers whose tax liability is less than $2,500 quarterly.

These employers will be able to deposit taxes with a timely filed Form 941.
Along with the obvious cost-saving benefits of this program, there are additional security and
convenience features associated with electronic payment options. According to IRS research, businesses using EFTPS for tax deposits are 31 times less likely to make a deposit error, and this change is expected to save an estimated $65 million in the first five years.

Businesses that make federal tax deposits using a paper 8109 coupon should be aware that this form of payment will cease beginning in 2011. Failure to make payments using EFTPS could result in a 10% failure-to-deposit penalty.

Details about EFTPS enrollment can be obtained at or by calling 1-800-555-4477 or calling
the Paul Paterakis Power Team at
847-366-3455 begin_of_the_skype_highlighting 847-366-3455 end_of_the_skype_highlighting today!

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Monday, November 15, 2010

The Foreclosure Freeze: What Happened And What Should We Do About It? -

Foreclosures ans Short Sales in IllinoisWhether it is the lender, real estate agent or the title company, every player in the real estate market has asked themselves the same question in the last month: How am I at risk when it comes to the halt in foreclosures?

Here is quick overview of what recently went down that led to everyone asking that same question:

Bank of America and other mortgage companies have been under pressure to review their paperwork after employees and contractors said in sworn depositions that because of the enormous volume, they hadn't had time to read the documents, much less check them for accuracy. A Bank of America executive said in a February deposition in Massachusetts that she signed as many as 8,000 foreclosure documents a month without reviewing them. The deposition is similar to others taken from document processors at J.P. Morgan Chase and Ally Financial. The statements were taken by lawyers for homeowners contesting the seizure of their homes. Once this information was caught on by the general public, major lenders such as Bank of America, GMAC, and J.P. Morgan Chase all put moratoriums on foreclosures until their review processes could be completed.

By the end of October, we saw lenders already taking action, determined to get back to business even with state attorney generals investigating their foreclosure practices. For example, Wells Fargo announced that it was planning to submit supplemental affidavits for 55,000 foreclosures pending in the 23 states with judicial review of foreclosure proceedings. Bank of America already reopened over 100,000 foreclosure actions, stating that it had found no major problems in its foreclosure procedures. GMAC Mortgage also moved forward with an unspecified number of foreclosures.

Attorneys for both title companies and real estate brokers have been looking closely into what defenses are available to assure the continued ownership of the property. Some of the best possible defenses include:

  • The alleged deficiency in the lender’s foreclosure process may not have harmed the previous owner.
  • The foreclosure judgment is a final court order. It is too late for an objection on a technicality of the foreclosure process to be raised by the previous owner.
  • Because the new owner purchased in good faith, he or she may be protected under the law.

Fidelity National Title, the underwriter for Republic Title, has already entered into a master indemnity agreement with Bank of America and is working on similar agreements with other lenders. As for RE/MAX Showcase, please make sure that you have your clients sign the Addendum/Disclaimer for all REO/Foreclosure deals. I know the last thing you want is another document that must be explained to your client, but that piece of paper may be a big help to you months after the deal has closed.

Remember, you can’t fix what happened in the past, but you can learn from it and take measures to minimize your liability in future transactions.

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Real Time..Housing Trends NOVEMBER - 2010 Newsletter by The Paul Paterakis Power Team

Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.

Please click on this link to view the Housing Trends November - 2010 Newsletter

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, reports and other sources.

Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLSs and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and local community reports.

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.

Sincerely yours,

The Paul Paterakis Power Team RE/MAX Showcase 7159 RFD Long Grove IL 60060 847-388-7551 |

Moving toward a better future -

Forbes Magazine Publisher Rich Karlgaard did a great “Entrepreneurial Excellence Presentation

comparing our current environment from others in the past. He pointed out how from the “ashes” we

always have new “diamonds” and all we need is creativity and guts to improve, never give up when it
would be so easy to.

Today, there are indicators that point to a more positive future, such as global economic growth and
strong balance sheets for U.S. companies. Consequently, it’s a good time for individuals and
organizations to position themselves for the turnaround by exploring fresh approaches to how they do
business, Karlgaard said.

“The ones that are doing the right stuff now will prevail, and the ones that act defensively will not,” he
explained. Here’s some of the “right stuff” that you can do to prepare for future success, according to

1. Great design, whether it’s in retail spaces or on Web sites, can simplify systems
2. Speed, entails being in the right place at the right time with the right services
3. Intelligence, which means coming across as the smartest, most capable provider
4. Engagement, participating in conversations and, just as important, listening
5. Internal communication, set yourself up as a high-performing organization
6. External communication, organize people who support you on their own
7. Brand, three-dimensional that fulfills promises at every touch-point
8. Purpose, it provides a strong moral foundation under everything you do

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Wednesday, November 10, 2010

Be Your - Paul Paterakis Power teamChange, per Wikipedia, is the process of becoming different. Change can be something really simple like changing your clothes or your hair color or the leaves changing. BUT usually when we think of change – it can bring about anxiety and sometimes, it’s also very exciting.

We all know change is inevitable. If we stop fighting change and accept change- we may be surprised at the outcome. The story below is something I have shared before but it’s been so long, it’s definitely worth repeating. The moral of the story … accept who you are and where you are as it is exactly where you are supposed to be at this moment…enjoy.

The River – excerpt from ‘Peace is Every Step’ by: Thich Nhat Hanh

Once upon a time there was a beautiful river finding her way among the hills, forests, and meadows. She began by being a joyful stream of water, a spring always dancing and singing as she ran down from the top of the mountain. She was very young at the time, and as she came to the lowland she slowed down. She was thinking about going to the ocean. As she grew up, she learned to look beautiful, winding gracefully among the hills and meadows.

One day she noticed the clouds within herself. Clouds of all sorts of colors and forms. She did nothing during these days but chase after clouds. She wanted to possess a cloud, to have one for herself. But clouds float and travel in the sky, and they are always changing their form. Sometimes they look like an overcoat, sometimes like a horse. Because of the

nature of impermanence within the clouds, the river suffered very much. Her pleasure, her joy had become just chasing after clouds, one after another, but despair, anger, and hatred became her life.

Then one day a strong wind came and blew away all the clouds in the sky. The sky became completely empty. Our river thought that life was not worth living, for there were no longer any clouds to chase after. She wanted to die. “If there are no clouds, why should I be alive?” But how can a river take her own life?

That night the river had the opportunity to go back to herself for the first time. She had been running for so long after something outside of herself that she had never seen herself. That night was the first opportunity for her to hear her own crying, the sounds of water crashing against the banks of the river. Because she was able to listen to her own voice, she discovered something quite important. She realized that what she had been looking for was already in herself. She found out that clouds are nothing but water. Clouds are born from water and will return to water. And she found out that she herself is also water.

The next morning when the sun was in the sky, she discovered something beautiful. She saw the blue sky for the first time. She had never noticed it before. She had only been interested in clouds, and she had missed seeing the sky, which is the home of all the clouds. Clouds are impermanent, but the sky is stable. She realized that the immense sky had been within her heart since the very beginning. This great insight brought her peace and happiness. As she saw the vast wonderful blue sky, she knew that her peace and stability would never be lost again.

That afternoon the clouds returned, but this time she did not want to possess any of them. She could see the beauty of each cloud, and she was able to welcome all of them. When a cloud came by, she would greet him or her with loving kindness. When that cloud wanted to go away, she would wave to him or her happily and with loving kindness. She realized that all clouds are her. She didn’t have to choose between the clouds and herself. Peace and harmony existed between her and the clouds.

That evening something wonderful happened. When she opened her heart completely to the evening sky she received the image of the full moon – beautiful, round, like a jewel within herself. She had never imagined that she could receive such a beautiful image. There is a very beautiful poem in Chinese: “The fresh and beautiful is travelling in the utmost empty sky. When the mind-rivers of living beings are free, that image of the beautiful moon will reflect in each of us.”

This was the mind of the river at that moment. She received the image of that beautiful moon within her heart, and water, clouds, and moon took each other’s hands and practiced walking meditation slowly, slowly to the ocean.

There is nothing to chase after. We can go back to ourselves, enjoy our breathing, our smiling, ourselves, and our beautiful environment.

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Monday, November 8, 2010

“Playing” with the IRS code to stimulate the economy won’t be easy -

The top earning 10% of households pay 73% of all federal income taxes. That’s the exclusive club we are in as tax payers!Consider the fact that a full 47% of U.S. households currently do not pay any income taxes at all. The bottom 40% of nearly half of the taxpayers actually make a profit on federal taxes—they pay no tax and get a check from the government.

With the economy in the doldrums and house prices stalled, short sales boom -

The federal government’s massive HAMP rescue program failed when lenders balked at any reductions in mortgage principle. Lowered interest rates and longer terms reduced monthly payments somewhat but not nearly enough, many borrowers re-defaulted.

That was then. With the home market possibly poised for another slip downward, lenders are more willing to deal. CoreLogic says short sales have tripled since 2008 with 400,000 likely to close in 2010.

A recent Washington Post story tells us it’s happening as well in the D.C. metro area, a region envied everywhere for its many thousands of well-paying government jobs. Fannie Mae says it did 36,534 short sales in this year’s first half.

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Monday, November 1, 2010


Short sales in illinois,60047,powerteamhomes.comRealtors can never get old or outdated, our industry changes so fast that it leaves us no time or choice:

always moving forward and always learning new models and how to deal with a crazy and non-stop real
estate environment. If that wasn’t enough, Illinois is requiring all Realtors to move up to Broker status
by 2012 at the tune of many more hours of class time and studying!

As the national/global meltdown began we found ourselves selling homes with no equity and in most
cases way below the even mark. Besides retooling ourselves, it was not an easy task to sit with sellers
and tell them the value of their homes had gone south, they were up-side-down and yes, we’ll need
your check book at the closing table.

So we transacted higher numbers of short sales by spending countless hours negotiating with lenders
who were not happy to take less, tax issues and homeowners associations just to mention a few. Along
with that we usually have one or more junior liens just to spice up the equation and they will kill a deal
for just a few hundred dollars, just because they can in a short-sale scenario.

The fine printing was hiding the other eight hundred pound gorilla: deficiency judgments; just when you
thought you had it all covered, the lender wanted to recover the unpaid part of the short sale from the
homeowner after the fact. Some lenders packaged the unpaid balances/individuals and “sold” them in
“bundles” (here we go again with bundles) to collection agencies who will tie you up in knots for the
next several generations.

If the short sale didn’t do the homeowner in, then foreclosure came in from the back side and put the
homeowner out on the street. Now Realtors are doing BPO’s and watching vacant properties fall apart
for months/years while the lender/new owner follows the due process to regain possession, along with
ownership, of the same home.

Three to four months after the judge awarded the property, on the conservative side, the home comes
out of redemption and the real work begins for the needed repairs. Now the home is ready and a buyer
buys it in good faith. This should be a happy beginning for a new homeowner who got in at a nice
reduced price and has a growing family.
Not so. That final judicial deed could in fact be tainted. As the homeowner’s loan was sold a few times
from one holder to the other via “securitized bundles” the paperwork did not necessarily follow as it
should have. The big guys were too busy making huge money on each bundles’ turn that there was no
time for the paperwork. Now the final note holder may not have the “paper right” to foreclose on the
non-paying borrower/homeowner.

Realtors are still in all of this and left watching out for their clients as well as their very own survival. As
they submitted offers on foreclosed homes, on line or in hard copy form, the lender/seller would require
them to fill in certain blanks assuming all liabilities on the property from general conditions to possible
title problems the lenders created.

The Paul Paterakis Power Team and RE/MAX Showcase quickly brought liabilities back on the lenders’ laps where they belong with our own Addendum/Rider which allowed us to submit all offers and prevented us from assuming the lender’s liabilities via their required fields. Imagine a seller, other than lenders/sellers, who tell the world, including Realtors: when you submit an offer and purchase this property you are taking on all the past liabilities on the same property including clean title to it! Is this not absurd? Look out, it’s very real and lawsuits are going on right now in various parts of the country on this very issue.

Currently we are in a moratorium phase with only a handful of lenders closing transactions, but not
really resolving title issues. We are looking at a future full of lawsuits and if the national/global economic
meltdown didn’t shut a company down, these kinds of lawsuits will. The damages and legal fees will be

Very sad and painful to accept the fact that entities outside of real estate made billions on the way up
with all that “bundling”; they are now making as much money on the way down and we are left holding
the bag and paying for their careless quick money turnovers. Inflated home prices going up, blow out
home prices going down and a few more years needed to “stabilize” the market.

On the positive side just under ninety percent of homeowners with a mortgage remain current while
more than a third of all homes in the U.S.A. have no mortgages on them at all. The good numbers are
huge compared to the distressed mortgages and homeowners. Going forward changes will be needed to
assure ourselves and future generations that this misery will not be repeated again.

When we talk about low accident rates or any kind of low statistics it is very easy to accept them on
their face value; however, we must keep in mind that even a small one percent foreclosure rate is
everything to that one individual who is now on the street while the other ninety nine individuals are
just fine.

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Monday, October 25, 2010

Deep Thoughts on the National Moratorium on REO/Foreclosures -

Foreclosures ans Short Sales in IllinoisThe magnitude of the moratorium on REO/Foreclosure properties and how it came about is national and Congress or President Obama will have to address it quick. The best way out of it is to stop all lawsuits, let the foreclosure judgment stand and let the lenders do all the necessary paperwork through the various “bundles”. Be sure that the last lender who is holding the mortgage note and foreclosing on a non-paying-homeowner has the “paper right” to do so. Every coin has two sides…Suspension of REO/Foreclosures opens up a much larger window for short sales. Buyers and sellers now have more time to take advantage of a short sale. Those pasty junior liens, besides the first position lender, debate and mess us up in a transaction right up to the closing table but, once closed, it’s a done deal. Unless the RESPA did not match the disbursement sheet or some “side deals” were made at the closing table by unscrupulous attorneys.

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Wednesday, October 20, 2010

New Inductee into the RE/MAX Hall of Fame! - - Paul Paterakis Power team - Paul Paterakis Power team

Congratulations! to Paul Paterakis of The Paul Paterakis Power Team -RE/ MAX Showcase of Long Grove, Illinois on being inducted into the RE/MAX Hall of Fame. This is RE/MAX's highest honor given to an agent.

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Tuesday, October 19, 2010

Exercise is no fun, how about just not sitting? -

My friend’s grandmother, born in a small town in Italy, grew up in a family that could not even afford a horse and buggy. She walked to school, church, the library etc. Walking was a way of life. Due to the time involved in walking from place to place and because there were always chores to do around the house, there was very little time for sitting down. If she were alive today she would most definitely wonder why people spend so much time sitting during the day!

According to research from the Cancer Research Center at University of Queensland, prolonged sitting is very bad for our health. Absence of whole body movement is associated with obesity, abnormal glucose metabolism and the metabolic syndrome, researchers looked at breaks in sitting time and how this corresponded with biological markers of metabolic risk such as weight, height, HDL cholesterol, waist circumference and resting blood pressure. This study provides evidence of the importance of avoiding prolonged uninterrupted periods of sedentary or primarily sitting time. They explained that when the large muscles in the legs and buttocks, which are designed to be standing and maintaining posture, are immobilized for long periods of time, there is a failure to activate an enzyme called lipoprotein lipase, which is responsible for reducing the above mentioned risks.

A follow up study by the same researchers found that television viewing time was associated with increased risk of all-cause and cardiovascular mortality. “In addition to the promotion of exercise, chronic disease prevention strategies could focus on reducing sitting time, particularly prolonged television viewing” says Dr. Hunter Yost, M.D. The most serious and well known complication of prolonged sitting is venous thrombo-embolism (VTE), a condition in which blood clots occur and travel through the veins. When a blood clog forms in the deep veins of the legs, thighs or pelvis, it is known as deep vein thrombosis (DVT). When this blood clot breaks off from its original location and travels through the venous system, it can become lodged in the arteries leading from the heart to the lungs: a very serious condition.

For the majority of people who don’t want to engage in “formal exercise,” follow my grandmother’s advice who would come to us kids sitting around and after looking right in our eyes…we knew, we better get up and do something. She would send us across the farm to pick up a tomato for her when she had hundreds of them in the next room! Today I fully understand what she was doing and why. As we go through our day to day activities let’s make it a point to get up and walk at least every hour.

Maybe when at our desk and need a form we’ll get up and get it instead of calling staff to email it to us or looking for a quick answer by just calling out to someone across the office. We forget that the body we currently are in is the only one we have: no returns or exchanges; let’s do our part to protect and preserve it any way we can.

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Monday, October 18, 2010

Deep Thoughts on Election Madness -

As we enjoy our second “late summer” I could not help but to take a moment and remember Nat King Cole singing about those “lazy, hazy, crazy days of summer.” It may have been the last quiet moment as Nat was obviously not thinking about the 2010 primary election season in Illinois and all over the country.

There has been no “down time” as negative TV commercials, flyers, letters and hit pieces are crowding our mailboxes and roadside signs are jockeying for positions on street corners. Live and recorded telephone calls and campaign workers knocking on doors: it’s all a regular feature of the campaign cycle. The November 2nd election is fast approaching, it will be one for the record books as far as the most governors (37), the most U.S. senators (37) since 1962 and who controls Congress. Over 150 measures are on ballots in 35 states; reapportionment changes will shape state and local politics for a decade in 88 of the 99 state legislative chambers. It was not until 1920 that women were granted the right to go to the polls and vote after 33 of them were wrongly convicted of “obstructing sidewalk traffic” by demonstrating back in November 1917.

One of their leaders, Alice Paul, made sure that the men of her time understood that “courage in women is often mistaken for insanity”. Today we need the women’s vote more than ever before. Whatever you do, please take time to understand the real issues; don’t focus only on their accusations: based on them no one should be elected! Dig in and find out more on which candidates, regardless of their affiliation, deserve your vote.

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Monday, October 11, 2010

Near Complete Stop to Foreclosures Nationwide -

Foreclosure/Short Sale -

What started out within a few lenders has now turned into a major halt to the nation’s REO and foreclosure business by Freddie Mac, Fannie Mae, Bank of America, GMAC, JP Morgan Chase, Wells Fargo and many other large and small lenders.

For HomeSteps a foreclosure program,Properties with Sales Pending: Per Freddie Mac, buyer must be notified,through the buyer’s attorneys and buyer’s agents, that all buyers who are under an executed, approved contract, may keep their contracts in place while the issue is being addressed and resolved. However,should any buyer wish to terminate his or her contract, Agents must work with the assigned closing agent to terminate the contract of sale and promptly return the earnest money deposit.

Buyers must be notified, through the buyer’s agents per Freddie Mac, with which Freddie Mac has only accepted verbal offers but have not executed a written contract, that the property is being taken off the market temporarily to address title related issues. Once the property is available, Agents must notify all listing agents affected, and reach out to the buyer's agents to resubmit their offer, with direction from Freddie Mac.

How did it happen? Some bank employees in multiple unrelated cases
around the country testified in court that they could not “verify the accuracy of every foreclosure” put in front of them as they were receiving between 10,000 and 18,000 cases per month. This brought into question the validity of some completed and ongoing foreclosure actions. If the foreclosure was defective because the lender bringing the foreclosure action did not have the legal authority to foreclose, then the buyer at the sheriff’s sale, along with successive purchasers, could be challenged on the validity of the title they are holding. As Wall Street was “re-packaging” loans prior to the meltdown that started in 2007 the actual“final” owner may or not have had legal title to the promissory note and mortgage therefore creating the gap causing the current issues.

If the mortgage holder who brought the foreclosure action did not have the authority to bring the action or otherwise failed to comply with the requirements of the foreclosure statues, then the court has the power to vacate the foreclosure judgment(s) for an ongoing transaction as well as prior closed ones. Lenders will not resume foreclosures until the flaws in the process are resolved, they need time to confirm that the foreclosure was properly initiated by a legally authorized party and that the due process was completely followed.

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Monday, October 4, 2010

Newest Credit Card Restrictions Take Effect -

By now, most of us have already noticed that our credit card statements have taken on a more reader friendly look than they have in prior years. Information such as when payments are due, the amount owed, the consequences of making late payments and how much we are paying in fees and interest on different types of accounts are now easier to find. The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 was passed by Congress with the intent to protect credit card users from unfair rate hikes and hidden fees. The bulk of this new Act has already taken effect, but the final phase came into force on August 22, 2010.

Here is a breakdown of some of the most important provisions of the law:

  • Credit card statements must clearly disclose the following:
    1. How long it would take to pay off a credit card balance if the cardholder makes only the minimum payment each month.
    2. The total cost in interest and principal payments if a cardholder makes only the minimum payment each month.
    3. The late payment deadline and postmark date.
  • Credit card companies must give the consumer advance notice of forty-five days prior to significant changes to credit card terms. This includes change of interest rates and the benefits/rewards structure of a credit card.
  • Bills must be sent out no later than twenty-one days before the due date.
  • Retroactive interest rate increases are banned except when a cardholder is more than sixty days late paying a credit card bill.
  • The interest rate cannot be increased within the first twelve months and promotional rates must have a minimum of six months in duration.
  • The practice of double-cycle billing is no longer allowed. This is a practice by which credit card companies would use their customers' average daily balance from the current and previous month to calculate finance charges.
  • Over credit limit fees are prohibited unless consumers specifically agree to allow the transaction to go through instead of being denied.
  • Payments must be considered on-time if the payment is received by 5 p.m. on the due date.
  • Credit cards cannot be issued to people under the age of twenty-one unless they have an adult co-signer or show proof that they have the means to repay the debt.

The newest provisions that recently took effect on August 22, 2010 cover the following:

  • Credit card companies can no longer charge more than $25 for late payments except in extreme circumstances. A consumer may be charged more than $25 if the credit card company can show a pattern of repeated violations or if a card issuer can show that a higher fee reasonably offsets its own costs in dealing with the violation that spurred the penalty.
  • Customers may not be charged for not using their cards.
  • Penalty fees cannot exceed the dollar amount incurred by the consumer’s violation that spurred the fee. For example, if a customer is late making a $10 minimum payment, the fee can’t exceed $10. Or, if a customer spends $5 over his or her credit limit, the credit card company may not charge more than $5 as a penalty fee.
  • Credit card companies may only charge one fee per infraction.
  • If a credit card company increases the Annual Percentage Rate (APR), it must explain to the customer why.
  • The credit card company must review the cardholder’s account six months after increasing the interest rate, and return the APR to the previous lower level if the cardholder has been on-time with payment.

These provisions were enacted to put a stop to unfair and deceptive credit card practices, but consumers must also analyze their own financial habits to make sure that they are not building up a credit card balance by paying off their monthly credit card balances and spending only what they can afford.

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