How Rashawn Thomas worked with GLCU HUD-Certified Housing Counselors to avoid losing his home.

As temperatures plummeted to below-zero and a winter storm moved into Chicago, Rashawn Thomas was preparing to celebrate Christmas. He’d be celebrating in his home, which had not been a certainty until December 21, 2022.

On that date, Rashawn shared with his housing counselor, Wilane Boone, that he’d be receiving $60,000 in mortgage assistance that would enable him to avoid losing his home.

“I am so overjoyed and over-the-moon grateful! I don’t know how to thank you,” Rashawn wrote. “I am so very happy that my house has been saved. This is the best Christmas of my life!”

Facing Ballooning Payments and Bankruptcy

A few years prior, Rashawn had purchased the home with his life savings and later took out a Home Equity Line of Credit (HELOC) with his bank, where he was making on-time biweekly payments. When his bank merged with another financial institution that was unable to accommodate Rashawn’s payment schedule, his new loan was modified to include a balloon payment of $84,000 – a sum due within 6 months.

Unfortunately, Rashawn did not receive the proper disclosures detailing the total costs of the modification and was pressured to sign off on the modified loan without truly understanding the terms.

When the balloon payment came due, he fell behind, and filed for Chapter 13 bankruptcy under the guidance of several attorneys.

Advocating for Affordability

Rashawn was introduced to Wilane Boone, a HUD-Certified Housing Counselor at Great Lakes Credit Union, by employees at the Illinois Homeowner Assistance Fund (ILHAF) after he failed to qualify for mortgage assistance.

“I made an appointment to meet with someone in person, and I’m so thankful it was Wilane,” Rashawn said. “I had been dealing with four so-called lawyers who claimed to be professionals in their fields, [and] all four attorneys failed to see the predatory nature and errors of the loan.”

“Instead, they forced me into bankruptcy to try and save my home,” Rashawn added.

Not Wilane. Upon review of Rashawn’s case, Wilane uncovered that the bank did not provide Rashawn with the proper disclosures. Additionally, since the amount due to the bank equaled the total cost of the loan, Rashawn did not qualify for the State’s Homeowner Assistance Fund.

Going Above and Beyond

Wilane spoke to Rashawn’s bank and advocated that they provide Rashawn a reinstatement figure representative of the debt owed before the balloon was due, which would allow Rashawn to qualify for the mortgage assistance fund and pay off his bank.

After Rashawn filed a complaint with the Consumer Financial Protection Bureau, the bank agreed to the resolution, and Wilane worked with the State Housing Authority to ensure Rashawn’s eligibility for ILHAF.

“When I met with Wilane, she was able to find the errors in the loan and identify it as predatory within 45 minutes,” recalled Rashawn. “She could have just ‘done her job,’ helped me to apply to ILHAF, and sent me out the door. Instead, she went above and beyond. She truly advocated for me and helped me navigate a new and complicated process. For that, I will be forever grateful!”

Rashawn’s foreclosure and bankruptcy are now dismissed. He has an affordable mortgage payment and is continuing to work with his counselor, Wilane, to improve his credit.  

If you, or someone you know is in need of free financial counseling assistance, do not hesitate to visit us at https://wp-glcu.resultspw.com/education-and-housing-counseling/ and schedule a free screening.

For home buyers on a budget or who want some of the perks of apartment life, buying a condo is one option. 

According to the Institute for Housing Studies at DePaul University, the majority of neighborhoods in Cook County have condos, with a higher concentration in urban areas with high property values. If you’re considering buying a condo, here are a few key things to consider.[1]

Lifestyle: Condos are often located in busy, urban areas. Additionally, shared walls can make it so that you can hear your neighbors at any time of the day or night, similar to an apartment. Increased interaction with your neighbors isn’t all bad, however. 

Many condo communities offer regular social events, making it easier to get to know your neighbors. Having a group of neighbors so close by can also be a benefit in case of an emergency.

Affordability: Condos are often more affordable than single-family homes, particularly in urban areas or for first-time homebuyers. However, condos come with additional fees, called Homeowners’ Association (HOA) fees to offset the cost of shared maintenance. These fees are paid in addition to the mortgage. They are applied toward things like repairs, maintenance of amenities, and building updates. Condos have reserves to pay for large purchases. A condo with healthy reserves can indicate better financial health overall. 

There is no firm rule, but prospective buyers can ask to see a reserve study, which details the size of the reserve and any recent repairs or larger capital expenditures. If a condo has insufficient reserves to cover projects, the board can level an assessment, which requires condo owners to pay an additional amount of HOA fees.

Privacy and Freedom: For those who value being able to decorate and renovate exactly how they want, a condo might not be the best choice. The HOA can dictate how members can renovate and decorate, whether they can have pets, and what kind of outdoor decorations they can display. 

Noncompliance with the HOA’s terms, whether through nonpayment of HOA dues or through another breach, may result in fines or even legal judgments.

Amenities: Depending on the size, location, and price of the condo, many offer amenities like lawn care, weekly social events, snow removal, and even a pool. These can be an attractive perk for homeowners who would otherwise not be able to afford them.

Financial Management in Community: Being part of an HOA means that financial decisions are made with group input. The board of directors has a responsibility to act in the best interest of the HOA as a whole. The HOA should have a healthy budget and reserves, meeting at least four times per year. In addition to reviewing the budget and reserves, attending HOA meetings and talking to prospective neighbors are good ways to assess the financial and community health of the condo.

Condo ownership isn’t for everyone, but it can be ideal for those looking for an affordable option and a close-knit community. If you’re considering buying a condo or want to know more about homeownership options, our HUD-certified counselors are here to help. Contact us at 224-252-2620 or housing at glcu dot org.

  [1] For further reading on aspects of condo ownership compared to owning a single-family home, see https://www.investopedia.com/articles/mortgages-real-estate/09/issues-purchasing-condo.asp

Do you want to buy a home but are worried that you do not have enough saved for the down payment? You’re in luck! If you are an Illinois resident, you may qualify for the myriad of down payment assistance programs offered through the State and local municipalities.

The Illinois Housing Development Authority, IHDA for short, offers down payment assistance in various tiers. The amounts range from $6,000 to $10,000. There are different repayment requirements for each amount listed. For example, the $6,000 down payment assistance amount is 4% of the home purchase price for a maximum of $6,000. You do not have to pay this back as it will be forgiven over a 10 year span as long as you remain in your home.[1] The $10,000 in down payment assistance covers 10% of the purchase for a maximum of $10,000. This assistance is paid back monthly over ten years at a 0% interest rate. IHDA has a list of participating lenders on their website.

The Federal Home Loan Bank of Chicago has two programs, Downpayment Plus & Downpayment Plus Advantage, that also offer down payment assistance. Downpayment Plus is a matching program that provides down payment and closing cost assistance for income-eligible homebuyers. The assistance is provided in the form of a forgivable grant paid on behalf of the borrower at the time the borrower closes on mortgage financing with a participating FHLBank Chicago member financial institution. Grants are forgiven on a monthly basis over a five-year retention period. Downpayment Plus Advantage is a similar program but assists income-eligible homebuyers participating in homeownership programs offered by nonprofit organizations that provide mortgage financing directly to the homebuyer; it is not a matching program. Nonprofit organizations providing direct first-mortgage financing, such as Habitat for Humanity or Neighborhood Housing Services, must partner with an FHLBank Chicago member financial institution to access DPP Advantage funds. Grants are forgiven on a monthly basis over a five-year retention period.[2] The maximum grant amount for both programs is $6,000.

Local organizations and counties also offer their own down payment assistance programs. The MMRP Purchase Assistance Grant provides up to $15,000 in down payment assistance for the purchase of a home in one of the City of Chicago’s 10 Micro Market Recovery Program (MMRP) Areas. This grant is available to low and moderate-income households earning up to 120% of the Area Median Income (AMI) for the Chicago Metropolitan Area.[3] It does require that you be a first-time homebuyer or not have owned a home in the previous 3 years.  More information can be obtained by contacting Neighborhood Housing Services of Chicago.

Community Partners for Affordable Housing, CPAH, provides eligible Lake County, Illinois homebuyers with up to 5% of the purchase price to help with down payment and closing costs. Assistance is provided in the form of a 0%-interest deferred loan with no monthly payments, forgiven at a rate of 1/60th every month. Loan forgiveness begins 60 days after closing. The loan is fully forgiven after 5 years and 60 days in the home. Other eligibility factors require that you put down $1,000 or 1% of the purchase price, whichever is greater, and that you qualify for financing with a CPAH Participating Lender.[4]

Kane County, Illinois offers a First-Time Homebuyer Loan Program that provides up to $10,000 in down payment and/or closing-cost assistance to first-time homebuyers in the form of a zero-interest, deferred-payment loan.  No interest accrues on the loan, and no payments are due until the home is sold, the title is transferred, or the home is no longer used as the homebuyer’s principal residence. Up to an additional $10,000 may be available if the home purchased is located within the city limits of St. Charles, under these same terms and conditions.[5] A nice perk with this program is that Kane County does not require First Mortgage Lenders to be pre-qualified. Homebuyers may work with a Lender of their choice to obtain their first mortgage.

There are down payment assistance opportunities in other counties and cities throughout Illinois from Madison County down south to Rockford up north. Madison County Community Development offers a 5-year forgivable loan, based on 80% of area median income or less, for closing costs and down payment. This loan, for up to $5,000, will be forgiven only after five full years’ occupancy. Homebuyers who receive funds must obtain one-on-one pre-purchase counseling from a HUD-certified agency. A list of agencies may be obtained from a participating lender.[6] The city of Rockford offers a Homebuyer Assistance Program that provides financial assistance to make the purchase of a home more affordable to income-eligible homebuyers. The city of Rockford determines the amount of financial assistance, up to a maximum of $14,999, based on the applicant’s income, debt, and anticipated mortgage. The homebuyer must live in the home from the time of purchase through the end of the forgivable loan; approximately 6 years.[7]

You may be wondering why there are so many down payment assistance programs available to homebuyers. The Community Reinvestment Act (CRA) of 1977 required federally regulated banks to make an effort to lend to low and moderate income clients in their service area.  As a result, most of the larger federally regulated banks and mortgage lenders in our country have created CRA home loan programs.[8] Some of the programs mentioned above are the result of this initiative.

References:

[1] “IHDA Mortgage Program Directory.” IHDAmortgage.org, Illinois Housing Development Authority, www.ihdamortgage.org/program-directory.

[2] “Downpayment Plus Programs: FHLBank Chicago.” FHLBC.COM, Federal Home Loan Bank of Chicago, www.fhlbc.com/community-investment/downpayment-plus-programs.

[3] “Grants at Nhschicago dot org.” NHS Chicago, Neighborhood Housing Services of Chicago, www.nhschicago.org/purchase-assistance/mmrp-purchase-assistance-grant/.

[4] “Down Payment Assistance.” CPAH Down Payment Assistance, Community Partners for Affordable Housing, www.cpahousing.org/home-buying/down-payment-assistance/.

[5] “Pages   – First-Time Homebuyer Program.” Kane County – Established January 16, 1836, Kane County Office of Community Reinvestment, www.countyofkane.org/Pages/ocr/firstTimeHomebuyer.aspx.

[6]Madison County HOMEbuyer Program, Madison County Community Development, www.co.madison.il.us/departments/community_development/homebuyer_program.php.

[7]Homebuyer Assistance Program, City of Rockford Community & Economic Development Department, cdn.rockfordil.gov/wp-content/uploads/2020/08/Homebuyer-Brochure-08.19.2020.pdf.

[8] “First-Time Home Buyer Loans – Conventional, CRA, FHA, HUD, USDA, State Bond and VA Loans.” CRA Home Loan Programs, First Home Advisor, 12 Mar. 2019, firsthomeadvisor.com/home/loans/.

Buying a home is typically the largest purchase that many Americans will make in their lifetimes—and most won’t own their home outright for 15 to 30 years, depending on their mortgage term. As you pay off your mortgage month by month, the percentage of property that you own increases. This is called “equity,” which Investopedia.com defines in real estate as the difference between the market value of the home and how much is still owed to the mortgage lending institution. When you need extra funds, it is possible to take out an equity loan against the value of your dwelling.

How much can you borrow?

When considering a home equity loan, it is important that you understand how much you can reasonably expect to borrow. Since the loan is based on the equity you have in your home, the house and the property’s fair market value must be determined first. While Kimberly Dawn Neumann of Realtor.com says that there is no special mathematical formula for determining fair market value, it is generally defined as the price your house would fetch if it was sold.

A licensed appraiser will look at your property and consider factors such as location, condition and size to quote a dollar amount. Once the fair market value is determined, the amount you still owe on your home is subtracted to determine how much equity you have. Investopedia.com explains that your lender will typically let you borrow between 80 and 90 percent of your home’s equity depending on your credit history.

What is a home equity loan used for?

If you are looking to borrow against the equity in your home, chances are that you need assistance in making another big purchase. Hal M. Bundrick, CFP, a NerdWallet.com columnist, certified financial planner and investment specialist, takes a harder stance and advises that you should only tap into the equity of your home for one of two reasons: the home needs significant repairs, such as a new air conditioner or water heater; or you want to upgrade your home in a way that increases its value. When it comes to the repairs or other maintenance expenses, those costs help to not only keep the value of your biggest investment stable, but could also increase its fair market value. Certain remodeling projects can do the same thing if the upgrades are chosen wisely for the appeal they will add to your home if you were to sell it.

If you are seriously considering applying for a home equity loan, remember that this is a piece of your home being put up as collateral for a loan. Investopedia.com points out that these loans typically have reasonable interest rates and might initially seem like a good way to pay off other high-interest debt, like that accrued from credit cards. However, if your home equity loan goes bad, you could lose your house quickly.

Before deciding whether or not a home equity loan is right for you, examine all of your options and consider speaking to a financial advisor.