Chicago Landlord

Some one asked me the other day if a bank had to honor a lease agreement in a foreclosure. I was not sure what the answer was, but I know they don't want to. A recent report from the Lawyers' Committee for Better Housing stated that in 2010 there were 5,940 buildings with 17,467 rental units foreclosed on in the city. That is a lot of tenants getting displaced. The answer is that banks do need to honor the lease agreements or if there is no written agreement they need to give at least 90 days notice. Instead banks are giving tenants 7-14 days notice of eviction or trying to buy them out with only $200 and no notice. Tenants do have rights in a foreclosure situation. I know for sure banks don't want to be landlords and truthfully you may not want them to be your landlord, look at the mess they have made of the housing market, do you really trust them to fix your leaky toilet. It is probably best to comprimse and find a new apartment, but there is no need to rush and I think tenants should negotiate better buy-outs. If you have a year lease the bank should be paying you atleast a few months rent to buy you out of the agreement and to cover your cost of moving.

IHDA or the Illinois Housing Development Authority has re-started one of its programs for assisting first-time home buyers – the MCC Tax Credit Program. Unfortunately their website has very little useful information. A lender I often work with (and highly recommend) Tom McGrath from Wintrust (TMcGrath@wintrustmortgage.com) said calling IHDA is not any better. You can contact Mr. McGrath directly if you want more information about qualifying for the loan program.

Here is what I have been able to find out: The program allows you to receive a tax credit of approximately 20% of the interest you pay on your mortgage each year for the 30-year life of the loan. The idea is that you might be able to borrow more money with this program that you can without. The tax credit amount will increase the amount of income you have for the loan process and allow you to buy a slightly more expensive property, or you can just enjoy the money saved and use it to improve your new home. The links below give a little more information on the loan program.

There are income limitations: $75,100 for a household of 1-2 people; if you are buying in a target area then your income can go up to $90,102. You might be surprised at what neighborhoods are considered target neighborhoods. I know parts of Humboldt Park qualify for example. If you want to find out more about target neighborhoods you will have to contact your lender or mine above. The purchase price for one unit is capped at $349,020 and for two units (yes that means a two-flat) is capped at $446,800 unless you are in a target neighborhood and then once again it is higher.

http://www.ihda.org/admin/Upload/Files//b9b13984-8b09-40d2-bf0f-b57dd053ba8f.pdf

http://www.ihda.org/admin/Upload/Files/lender/programs/mccprogramdescription.pdf

In January I reported that the Small Business Jobs Act was going to require Mom & Pop landlords to track and report repairs of over $600 to the IRS, form 1099. Becuase of the National Association of Realtors and other organizations the law has been repealed, now only professional landlords and property managers have to track and report repairs. Small landlords that are not in the business of real estate do not have to track these repairs.