Chicago Real Estate Lawyer - Rachell M. Horbenko

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Thursday, September 25, 2008

Sunrise Equities Allegedly Ripped Off Investors

I meant to blog about this yesterday and I didn't have time, so here it is.

If you saw the Chicago Tribune yesterday, you might have seen the article "Dozens of Muslims Lose Life Savings to Real Estate Developer".

Basically 150 investors filed involuntary bankruptcy petition in Federal Court to freeze the assets of Sunrise Equities, a Chicago-based developer with offices on Devon Avenue, a largely Muslim area.

According to the attorney representing some of the investors, the CEO of Sunrise Salman Ibrahim has not been seen since August, and his offices are closed and mail is spilling out of his mailbox at home.

These 150 investors allege they have lost more than $50 million dollars. Apparently some prominent religious leaders in the community including the Shariah Board of America endorsed the company and dozens of people invested.

According to the company's website, Sunrise has developed more than 100 units in the city and was working on an additional 250 units. The Shariah Board says is approved Sunrise because they were not giving interest on the people's investments, which is against Islamic law. They were giving profit-sharing checks instead over time.

This strikes me personally because I have a client who purchased a condominium from Sunrise, who was supposed to close in the end of June, and has yet to close. We are currently working to try to get her earnest money refunded and cancel her contract. Seeing this article is very disturbing indeed!

Thanks to Kari Johannsen for pointing this article out to me! You can find it in its entirety on the Chicago Tribune website.

4:15 pm cdt

Friday, September 19, 2008

Prices and Rates Are Low, But Can You Afford to Buy?

Today I was in a closing and while we were waiting for the lender to fund, we were all reminiscing about the good ol' days in lending, when buyers put virtually nothing down and rates were low and everyone walked away happy.

Money Magazine's October edition had a great article about this trend ("Can't Anybody Afford My Home?"). Prices have dropped, and rates are good, but buyers are having a harder and harder time affording a home. Down payment and credit requirements have increased so substantially that it is excluding a lot of potential buyers.

For example, according to the article, a home with a sales price in 2005 of $425,000 might only require a downpayment of $21,250, and would have an interest rate of 5.65%, amounting to a total monthly cost of $2,995. That same home now would have a sales price of $395,250 but would require a whopping downpayment of $79,050! The rate would be about 6.88% and would cost $2,460 (because of the more massive downpayment). The required pretax income to buy the 2005 home would be $80,000 a year, while buying the 2008 home would require a pretax income of $92,000 a year.

The housing market is still declining, nationwide, at least, with the bottom of the market now estimated to be in late 2009. However, with the current market conditions, it is going to be more and more difficult to buy. Fannie Mae and Freddie Mac in November will require a 740 credit score, up from 680.

For more information, check out the following websites:

www.cnnmoney.com/realestate

www.realtytrac.com

www.rentometer.com

www.esri.com/data

2:05 pm cdt

Wednesday, September 10, 2008

MLS Reporting During the Short Sale

The National Realtor Association magazine had an interesting question posed in its Legal Q&A section this week I wanted to share:

"If I am the listing agent and I have received a contract that is signed by the seller and the buyer but the lender must agree to the terms of a short sale, must I post that there is a contract pending in the MLS?"

The answer, in short, is yes. You must report any contingencies as they occur in the MLS. Look at your local rules as well to see if there are specific rules on this. Status changes must be made within a certain number of hours (24-48 typically). Also, make sure that when taking a short sale listing, you disclose it as such, and make the commission payment to a cooperating broker contingent upon lender approval.

4:00 pm cdt

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