1. Chapter 11 Industry Issues

2. Introduction
Times of adversity, as we see some of our real estate markets, bring about increases in mortgage fraud, short sales, foreclosure and unlicensed activity with some people trying to ash n on the hardship of others.
This Chapter covers each of theses industry issues, including property management as I relates to these industries.
Page 173

3. Mortgage Fraud.) Schemes Identity Theft Deed Scams
Unrecorded Second Mortgages
Inflated Appraisal
Equity Skimming
Equity flipping
Property Flipping
GREED
Page 223

4. Short Sales Definition
A lender accepts less than the amount of he mortgage balance due on the property
Generally occurs when a home owner get dealing with the mortgage and may default
Lender will net more by this methods than taking he property back in foreclosure
Deficiency Judgment
IRS consequences to deficiency $$$
Page 224

5. Short Sales Fraud These tranacion are usuallyu very challenging
“buyers” are not really buying but from the deal for friends or relative who eventually gets it back
Buyer ”front" for investors who intend o buy it for ivest,en purpewses or sell to another legitimate buye a a higher price
Pay a secndary lender under the table to remove their lien so is lien holsder wil agree to short sale
These tranacion are usuallyu very challenging
Page 224

6. HAMP/HAFA HAMP HFA for non HAMP qualifiers
Home Affordable Modifiaion Program
Stops foreclosure
Provides for loan mods ( reduces mionhtky poayuenst)
Loans after 1/109
Ends 12/31/12
HFA
Home Affordable Foreclosure Program
for non HAMP qualifiers
Incentices for Short sales and Deed in Lieu
$$ Incenties for Borrows
$$$ Incentive for Lenders to chose over forclsure
Page

7. Foreclosure Judicial Foreclosure
A legal Process whereby the property is sold t satisfy the debt.
AT the end of he sale the property is free of the foreclosed mortgage an “Junior liens.
Page 177

8. Foreclosure Judicial Foreclosure In Illinois)
Property is sold by eh court
After Borrower defaults and loan Is “accelerated”
File a suit to foreclose
Sold to highest Bidder
Page 225

9. Foreclosure Redemption Rights After Default by Before the sale
Loan can be reinstated ( pay all payment due plus other charges) ( 90 days after service of Summons)
Loan can redeemed up to 7 months after service of summons and before entry if judgment.
30 days after Judgment ( defaulted owner must vacate)
New owner gets Sheriffs deed.
Page 226

10. Foreclosure Deficiency Judgment
If the sale doe not provide enough money to cover the debt
Mortgaaee may file a “deficiency judgment” from the balance .
Page 226

11. Foreclosure Deed In Lieu of Foreclosure
Friendly Foreclosure
Deed In Lieu of Foreclosure
Borrower gives lender the deed and lender cancels the debt
Some disadvantages to the lender vs. foreclosure
Page 227

12. REO
Real Estate Owned
Lender owned property after foreclosure or Deed in Lieu
Assume payment of taxes, insurance and the eventual sale of eh property.
Lenders become Property Managers
Sometimes sell as is =, sometimes they will rehab
Environmental problem can be a big lender risk ( typically I commercial property)
Page 226

13. Unlicensed Activity
Those engaging in the real estate business in violation of eh License Act
IDFPR fines up to $25,000/occurrence
Page 226

14. Disability Considerations
Landlord Must make Reasonable Accommodation at their expense
Disabled tenants an make modification at their expense but must return to its previously condition
Cant increase Security deposit but can create an escrow account
Page 177

15. Exceptions to Acts Single Family House Owner
Never RACE
Owner Occupied less than 4 units
Single Family House Owner
Private Clubs or Religious Organization for just their member
Housing for eh elderly( all over 62 or 80% over 55)
Cant Advertise or use a Licensee
Page 177

16. Property management Achieve owners objective Generate Income
Property Managers Responsibilities
Achieve owners objective
Generate Income
Preserve or increase the value of he property
Typically need a license if you do this for “others”
Page 177

17. Property management
Property Management Agreement( page 229)
Page 229

18. Blockbusting Steering Redlining Don’t Limit “Choice”
Illegal practice of encouraging people to sell because of racial “Change” in eh neighborhood)
Steering
Don’t Limit “Choice”
Illegal practice of channeling home sellers to particular neighborhoods based on their “class”
Redlining
Illegal practice of not making loans based on eh location of a property”
Page 179

19. Advertising Language should not indicate and preference or limitation
Use the Fair Housing Logo an “ we do business in accordance with the Federal Fair Housing Laws
Use a Variety of Media
Page 180

20. Management Functions 2. Tenant Selection 3. Collecting rents
1. Set Rental Rates with Owner
2. Tenant Selection
3. Collecting rents
Page

21. Chapter 11 Industry Issues Review Quiz