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The other half of the housing crisis - 3/4/2009 7:12:54 AM

BoiJen

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This morning's yahoo headline in my email told me that Obama and his administration would be implementing a program that supposedly would allow 9 million homeowners to stay in their homes through refinanced loans and mortgages. GREAT!

But almost 1 in 5 (that 25%) of American homeowners are also facing foreclosure for a number of reasons. One of them is unpaid property taxes...

Many cities and states (counties, etc, which ever is appropriate) have not lowered property taxes to properly reflect the housing market and home values. In many areas one must be current with their taxes to have them re-evaluated and lowered. One must also pay the fee to have the property re-assessed. Then, if the proper assessment is made a refund may be issued. If the assessor argues that the home has not lost (I don't how they do it but they do) one must again pay to have an independent assessment made and argue it in a higher level of appeal, which also costs money.

There is no help or hope for people already behind on their property taxes and facing local gov't foreclosure as opposed to bank foreclosure. If they have fallen behind on their property taxes, or like in some cases it's their first home and the lender did not roll in the property taxes in the monthly payment (thank you sub-prime market), the local gov't will not re-assess a property.

For someone who is unemployed and already falling behind on bills, there's not much they can do. They cannot take out a loan because their credit score is falling and they have no income.

The stimulus package that passed offers no real change in the cost of property taxes. In fact, it's expected that state income taxes and property taxes will rise.

What do you think should be done to tackle this end of the housing crisis?

< Message edited by BoiJen -- 3/4/2009 7:23:59 AM >

Post #: 1

RE: The other half of the housing crisis - 3/4/2009 7:36:24 AM

camille65

Posts: 5746
Joined: 7/11/2007
From: Austin Texas
Status: offline

I have no idea what should be done, what could actually make things work.

My ex lives in Flint (

) and has a mortgage on his home. He has never been late in the almost 4 years of living there but the time is coming when he will run out of money since he cannot find a job. Time and time again he has gone to his bank requesting that refinancing be discussed. Each time he is turned down. They don't care.

He is now looking into ways to walk away from his house because he won't have another choice.

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Post #: 2

RE: The other half of the housing crisis - 3/4/2009 7:43:45 AM

BoiJen

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Joined: 3/7/2007
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He can attempt a short sale or go give the house back to the bank rather than having them take it. Though either way they don't show up much better at all on his credit report.

MsKitty and I are attempting a short sale for the house in Detroit we just moved from. I know of a couple of good real estate agents in the area if you would like some suggestions? You can message mine or MsKitty's profile on the other side.

(in reply to camille65)

Post #: 3

RE: The other half of the housing crisis - 3/4/2009 3:02:54 PM

Evility

Posts: 915
Joined: 12/19/2007
Status: offline

quote:

ORIGINAL: BoiJen
This morning's yahoo headline in my email told me that Obama and his administration would be implementing a program that supposedly would allow 9 million homeowners to stay in their homes through refinanced loans and mortgages. GREAT!

Yes, lets continue to bailout people who bit off more than they could chew. When we bought our home we wanted to live in the area we were renting in but the homes in our price range were not what we wanted and the homes we wanted were out of our price range. So we adjusted our sights and bought in another area nearby where our we could afford a house we wanted in our price range.

Yes, minimizing the number of foreclosures is good for the economy and overall this may help... but I think Obama's foreclosure plan is a huge slap in the face to homeowners who put critical thought into their budgets and their home purchases in the first place. If more people had followed our strategy we would not be in this housing mess we are in which was a catalyst to the bigger woes we are facing now.

(in reply to BoiJen)

Post #: 4

RE: The other half of the housing crisis - 3/4/2009 3:51:47 PM

awmslave

Posts: 599
Joined: 3/31/2006
Status: offline

The crisis is for banks only. For house owners there is no crisis as (if unable to pay) they can just move out and rent similarly as 100 million fellow citizens do. What about people who have difficulties to pay rent? Should US congress allocate some public money?

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Post #: 5

RE: The other half of the housing crisis - 3/4/2009 4:40:29 PM

awmslave

Posts: 599
Joined: 3/31/2006
Status: offline

quote:

This morning's yahoo headline in my email told me that Obama and his administration would be implementing a program that supposedly would allow 9 million homeowners to stay in their homes through refinanced loans and mortgages. GREAT!

This is actually part of Obama bank bailout program: keeping property values artificially high at taxpayers expense. Otherwise, banks would take losses and be forced to sell properties for much less. Needless to say, such actions by administration prolong economic recession.

(in reply to BoiJen)

Post #: 6

RE: The other half of the housing crisis - 3/4/2009 5:51:27 PM

LookieNoNookie

Posts: 12216
Joined: 8/9/2008
Status: offline

quote:

ORIGINAL: BoiJen

This morning's yahoo headline in my email told me that Obama and his administration would be implementing a program that supposedly would allow 9 million homeowners to stay in their homes through refinanced loans and mortgages. GREAT!

But almost 1 in 5 (that 25%) of American homeowners are also facing foreclosure for a number of reasons. One of them is unpaid property taxes...

Many cities and states (counties, etc, which ever is appropriate) have not lowered property taxes to properly reflect the housing market and home values. In many areas one must be current with their taxes to have them re-evaluated and lowered. One must also pay the fee to have the property re-assessed. Then, if the proper assessment is made a refund may be issued. If the assessor argues that the home has not lost (I don't how they do it but they do) one must again pay to have an independent assessment made and argue it in a higher level of appeal, which also costs money.

There is no help or hope for people already behind on their property taxes and facing local gov't foreclosure as opposed to bank foreclosure. If they have fallen behind on their property taxes, or like in some cases it's their first home and the lender did not roll in the property taxes in the monthly payment (thank you sub-prime market), the local gov't will not re-assess a property.

For someone who is unemployed and already falling behind on bills, there's not much they can do. They cannot take out a loan because their credit score is falling and they have no income.

The stimulus package that passed offers no real change in the cost of property taxes. In fact, it's expected that state income taxes and property taxes will rise.

What do you think should be done to tackle this end of the housing crisis?

The first step in my opinion would be to deal with facts.

(1 in 5 = 20%)

(in reply to BoiJen)

Post #: 7

RE: The other half of the housing crisis - 3/4/2009 5:51:31 PM

TNstepsout

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Joined: 8/3/2005
Status: offline

Not only are they not lowering taxes, but in some cases they are raising them. The reason is that as new homes were being built by the thousands, cities had to add infrastructure to handle all the new people moving in. They had to build roads, schools, city building, post offices etc.... They had to employ more police, firefighters, city staff etc... Their budgets increased and as long as all these new homeowners were paying taxes everything was fine. As soon as people started losing homes to foreclosure and taxes went unpaid..... well they had problems. So once again, the irresponsible few are adding to the burdens of the responsible many.

Not only that but in many states cities have mandated that new developments must have a homeowners association. These associations help defer a lot of costs for the city. But HOA's are coming under fire in many states by people who don't want to pay added fees or live by the restrictions of the HOA. In many cases (Texas being one of them) state representatives are fighting to pass legislation that would effectively make HOA's unable to enforce restrictions and collect assessments. So when HOA's can no longer pay the bills and have to disband or file Bankruptcy, who do you think will pick up the tab?

(in reply to awmslave)

Post #: 8

RE: The other half of the housing crisis - 3/4/2009 11:59:12 PM

FullfigRIMAAM1

Posts: 1160
Joined: 11/20/2008
Status: offline

Can you rent the house to help you pay for the taxes while you wait for the mortgage relief?

I'm sorry about the situation you find yourselves in. I don't understand the inanity banks were operating under, by going from 0 to some insane interest rate forcing people to lose property; than instead of working with people to stay in their homes, they wait until the credit rating is ruined, force them out, and take a loss, which the government is now covering, so that in the end, no one wins. M

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Post #: 9

RE: The other half of the housing crisis - 3/5/2009 1:33:42 AM

corysub

Posts: 1492
Joined: 1/1/2004
Status: offline

quote:

ORIGINAL: BoiJen

He can attempt a short sale or go give the house back to the bank rather than having them take it. Though either way they don't show up much better at all on his credit report.

MsKitty and I are attempting a short sale for the house in Detroit we just moved from. I know of a couple of good real estate agents in the area if you would like some suggestions? You can message mine or MsKitty's profile on the other side.

I've only just started to hear that term "short sale".. What is that exactly...is it a type of mortgage?

(in reply to BoiJen)

Post #: 10

RE: The other half of the housing crisis - 3/5/2009 2:22:48 AM

DeviantlyD

Posts: 4375
Joined: 5/26/2007
From: Hawai`i
Status: offline

quote:

ORIGINAL: corysub

I've only just started to hear that term "short sale".. What is that exactly...is it a type of mortgage?

I started to give my explanation...then thought f.i. and I'm providing a link instead.

http://www.nolo.com/definition.cfm/Term/51715E63-5BC5-4DCE-B5E96F71DFF3D5AB/alpha/S/

(in reply to corysub)

Post #: 11

RE: The other half of the housing crisis - 3/5/2009 3:23:27 AM

ThatDaveGuy69

Posts: 978
Joined: 6/22/2007
Status: offline

Short answer for "short sale": A short sale is where the mortgage holder is willing to accept less than the full payoff amount for the property. If the mtg value is $150,000, the bank might do a short sale for $130,000 and write-off the other $20,000. They do this to cut their loss on the property. You have to be careful, though, because some (very few) lenders will try to come after you for the rest. They might also send you a tax form stating you have an additional $20k of "income" because they "gave" you that as part of the settlement.

As for trying to deal with the bank while your mtg is still current - most banks still don't get it. They won't talk to you until you get behind on your payments. Of course then they can tack on all sorts of penalties and late fees...

I'm in the same boat. I lost my $80k/yr job 18 months ago. Throughout last year I could only find part time work. I currently have a FT job but I'm only making 1/2 what I used to. The house is deep into foreclosure but the bank put off the sale to try to work with us. Too bad their new terms aren't very realistic. But when it gets back into court they can say they tried. Assholes.

I feel bad for anyone who is losing their home. Although I feel slightly less bad for ppl who took on $500k mtg's with only a $50k income. Obviously they were misled (lied to?) but a little simple math should tell you that won't work.

They thing just plain sucks.

~Dave

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Post #: 12

RE: The other half of the housing crisis - 3/5/2009 3:53:19 AM

sravaka

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Joined: 6/20/2008
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quote:

If the mtg value is $150,000, the bank might do a short sale for $130,000 and write-off the other $20,000. They do this to cut their loss on the property. You have to be careful, though, because some (very few) lenders will try to come after you for the rest. They might also send you a tax form stating you have an additional $20k of "income" because they "gave" you that as part of the settlement.

Trying to come after your for the rest is illegal in some states (Arizona, e.g.), though that doesn't mean the bank won't try to trick you into it anyway. It can be worth talking to a lawyer to get good local information.

You can also get around reporting as income the difference between what you owe and what the bank accepts if you can demonstrate that you are insolvent.

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Post #: 13

RE: The other half of the housing crisis - 3/5/2009 4:19:51 AM

Louve00

Posts: 1674
Joined: 2/1/2009
Status: offline

A short sale is legal, *IF* your bank (or the one holding your mortgage allows it) You need their permission before you can sell it for less. I know everyone has a different situation, no ones is exact. I was/am falling behind on my mortgage. The best recourse for me was a load remodification.
http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ExecutiveSummary.pdf
BoiJen, I am certainly not an authority on the issue, but in Florida, the county assess your property taxes and they are usually well below the value of the real estate value. So, I'm not sure if spending the $350-$400 to have your property re assessed would be worth it (although, it may, like I said I'm not an authority and don't know how much money you're talking and how badly you want to keep your home). If your credit is suffering, and you don't want to walk away from your home, I would look into a loan modification. At the very least, I'd contact a real estate lawyer and find out my options. There are options out there.

_____________________________

For the great majority of mankind are satisfied with appearance, as though they were realities and are often more influenced by the things that seem than by those that are. - Niccolo Machiavelli

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Post #: 14

RE: The other half of the housing crisis - 3/5/2009 5:28:22 AM

ScooterTrash

Posts: 1407
Joined: 1/24/2005
From: Indiana
Status: offline

quote:

ORIGINAL: Louve00

..........but in Florida, the county assess your property taxes and they are usually well below the value of the real estate value.

I think this was more true in the past than now, in most areas. A lot of states just went through reassessment in recent years and in many cases the assessed value is actually higher than what the market value would be. That being said, I think it may depend a lot on location and how recent the assessment was done.

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Post #: 15

RE: The other half of the housing crisis - 3/5/2009 6:29:30 AM

BoiJen

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Joined: 3/7/2007
Status: offline

The house that MsKitty and I have and are working on short sale is actually in Detroit. The city asses the taxes and have the house assessed at 35K where as when the bank assessed it last year it was at 12K and to bust it all off MsKitty paid 70K because She bought at the absolute height of the bubble, it was Her first home, and She had a crappy real estate agent and had no idea how bad She was in until it was too late. Her household income was 65K/yr at that point and drastically changed when She had to shed 40K of that income. This leaves the unpaid taxes accumiliating at almost 4K a year. That's 30% (roughly) of the value of the home (I can do my math I just messed up in the OP) and we can't afford to have it reassessed or to pay the back taxes in one lump, so we're fucked.

It's absolutely correct that a mortgage company will NOT modify a loan or even consider a short sale if you are current. "If you can keep current now, why can't you stay current?" They have no interest in working with borrowers.

However, in most localities, if the gov't takes the home because of unpaid property taxes, the individual is still responsible for the upkeep and maintence of the property. Meaning they can be fined if the grass isn't cut, if someone slips and falls in front of the home on ice, it's the former owner's fault, AND the former homeowner is evicted. It's a shitty situation. Whereas, if the bank takes the home, the bank becomes responsible for the property.

So, mortgage companies actually have programs in place to help people they just won't do it very often because it kills their profit margin. But localities in charge of property taxes have no relief programs set up...what good does it do to help the banks if the state is going to fuck you anyways?

The boi

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Post #: 16

RE: The other half of the housing crisis - 3/5/2009 6:46:31 AM

Louve00

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Joined: 2/1/2009
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Actually, the banks would modify a loan, as long as your mortgage payment is 40%-50% of your monthly income. (see the link I posted). And the new law that was just signed in says if a homeowner falls into that 40-50% range, the gov't will provide them incentives to lower your mortgage to 38% of the payment. In addition, the gov't would provide additional funds, matching $ to $ to bring that mortgage payment down to 31% of the homeowners monthly income. The BIG problem is getting connected to the right department in your mortgage company. That is where you will get the run around. And that is why I retained a lawyer, and am making progress. As long as your mortgage payment is 40-50% of your monthly income, according to this new law passed, they do not have much option but to seriously consider you. I had to start by writing a hardship letter, and sending them my last year taxes. I am making headway too. My lawyer all but guarantees me I will see a reduction of approx $300 on my monthly mortgage payment. For me, that will be like a stimulus check every month!

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For the great majority of mankind are satisfied with appearance, as though they were realities and are often more influenced by the things that seem than by those that are. - Niccolo Machiavelli

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Post #: 17

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