Homeowner's Dilemma: Pay Underwater Mortgages Or Abandon?

Debtor's Dilemma: Pay the Mortgage or Walk Away


Should I stay or should I go? That is the question more Americans are asking as the housing market continues to drag.

In good times, it would have been unthinkable to stop paying the mortgage. But for Derek Figg, a 30-year-old software engineer, it now seems like the best option.

Mr. Figg felt trapped in a home he bought two years ago in the Phoenix suburb of Tempe for $340,000. He still owes about $318,000 but figures the home's value has dropped to $230,000 or less. After agonizing over the pros and cons, he decided recently to stop making loan payments, even though he can afford them.

Mr. Figg plans to rent an apartment nearby, saving about $700 a month.

A growing number of people in Arizona, California, Florida and Nevada, where home prices have plunged, are considering what is known as a "strategic default," walking away from their mortgages not out of necessity but because they believe it is in their best financial interests.

A standard mortgage-loan document reads, "I promise to pay" the amount borrowed plus interest, and some people say that promise should remain good even if it is no longer convenient.

George Brenkert, a professor of business ethics at Georgetown University, says borrowers who can pay -- and weren't deceived by the lender about the nature of the loan -- have a moral responsibility to keep paying. It would be disastrous for the economy if Americans concluded they were free to walk away from such commitments, he says.

Walking away isn't risk-free. A foreclosure stays on a consumer's credit record for seven years and can send a credit score (based on a scale of 300 to 850) plunging by as much as 160 points, according to Fair Isaac Corp., which provides tools for analyzing credit records. A lower credit score means auto and other loans are likely to come with much higher interest rates, and credit card issuers may charge more interest or refuse to issue a card.

In addition, many states give lenders varying degrees of scope to seize bank deposits, cars or other assets of people who default on mortgages.

Even so, in neighborhoods with high concentrations of foreclosures, "it's going to be really difficult to prevent a cascade effect" as one strategic default emboldens others to take that drastic step, says Paola Sapienza, a professor of finance at Northwestern University. A study by researchers at Northwestern and the University of Chicago found that as many as one in four defaults may be strategic.

Driving this phenomenon is the rising number of households that are deeply "under water," owing much more than the current value of their homes. First American CoreLogic, a real-estate information company, estimates that 5.3 million U.S. households have mortgage balances at least 20% higher than their homes' value, and 2.2 million of those households are at least 50% under water. The problem is concentrated in Arizona, California, Florida, Michigan and Nevada.

Josh Cotner, who owns an insurance agency, says his mortgage balance is about $100,000 more than the market value of his home in Gilbert, Ariz. Mr. Cotner could rent a bigger home nearby for $600 a month, far below the $1,655 he now pays on his mortgage, home insurance and property tax. He says he recently stopped making mortgage payments because his lender wouldn't help him reduce the principal on his loan under a federal program in which he believes he is qualified to participate. Given the sometimes lengthy legal process of foreclosure, he may be able to stay in the home for at least another nine months without making any payments.

Banks warn they may get tough with strategic defaulters by pursuing legal claims on a borrower's other assets. "We will try to reduce people's payments if they have a hardship," says Thomas Kelly, a spokesman for J.P. Morgan Chase & Co. "But we have a financial responsibility to get people to pay what they owe if they can afford it."

Steven Olson, a loan officer and roof installer in Roseville, Minn., defaulted in 2007 on a plot of land in Florida he had bought as an investment. "I thought I could move on with my life," he says. But the lender, RBC Bank, a subsidiary of Royal Bank of Canada, sued him, seeking to make him pay more than $400,000 to the bank to cover its losses on the loan. Mr. Olson has hired a Florida lawyer, Roy Oppenheim, to resist the claim. An RBC spokesman declined to comment.

States where lenders generally can pursue such legal claims include Florida and Nevada but not California and Arizona, where laws generally prohibit lenders from pursuing other assets of mortgage borrowers. A new Nevada law will protect many borrowers from these judgments if they bought a home for their own use after Sept. 30, 2009.

Another risk for defaulters is that banks could sell the rights to pursue claims to collection agencies or other firms, which could then dun the borrowers for up to 20 years after a foreclosure. Such threats appear to deter some borrowers. A recent study from the Federal Reserve Bank of Richmond found that under-water borrowers were 20% more likely to default in a state where mortgage lenders can't pursue claims on other assets than in those where they can.

Brent White, an associate law professor at the University of Arizona who has written about this issue, says homeowners should make the decision on whether to keep paying based on their own interests, "unclouded by unnecessary guilt or shame." He says borrowers can take a cue from lenders that "ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility."

But it isn't just a matter of the borrower's personal interest, says John Courson, chief executive of the Mortgage Bankers Association, a trade group. Defaults hurt neighborhoods by lowering property values, he says, adding: "What about the message they will send to their family and their kids and their friends?"

In Mesa, another suburb of Phoenix, low prices are helping to draw buyers who may walk away from other homes. Christina Delapp bought a house out of foreclosure in July for $49,000 in cash. She says she will stop paying the mortgage on another home she still owns in Tempe if she can't sell in the next few months for more than the $312,000 that she owes.

Ms. Delapp, who has been jobless for 18 months, says that the new home is part of her survival strategy. "I feel very fortunate," she says. "Regardless of what happens to my credit, we've managed to put together the best safety plan that I possibly could."

Mr. Figg says that deciding to default on his loan was "the toughest decision I ever made." He worried that if he ever loses his job he would be marooned in a home that he couldn't sell for enough to pay off his loan, limiting his ability to find work in other parts of the country: "I couldn't move up. I couldn't move down. I couldn't move out of the city. It was a very claustrophobic situation."

By moving to an apartment, Mr. Figg expects to lower his costs by about $700 a month. He plans to put that into his savings account and says he is willing to rent for the next five years or so.

Lenders are guilty of having "manipulated" the housing market during the boom by accepting dubious appraisals, Mr. Figg says. "When I weighed everything," he says, "I was able to sleep at night."



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Sources: Wall Street Journal, Google Maps

Property Taxes & Politics: Underwater Homes Taxed Too High

Home prices up, more borrowers Underwater. CNBC's Diana Olick reports that while home prices show a slight gain, about 25 percent of homeowners owe more on their mortgages than they are worth.

Visit msnbc.com for breaking news, world news, and news about the economy

The Truth about Property Taxes


I hope you’ve been following the eight-part series in this newspaper by D.L. Bennett and John Perry on Atlanta’s property tax meltdown. This exhaustive investigation is why we need newspapers. You simply aren’t going to get this quality of extensive journalism from radio or TV, and Atlanta’s various magazines are too full of plastic surgery ads and pictures of society-types stuffed into too-small gowns at their various functions to have room for such a report. (Ouch!)

The bottom line here? You are supposed to pay property taxes based on the value of your home. In case you haven’t checked lately, the value of your home has probably gone down. Now, check your property tax bill. Has it gone down? Well, it should have. Trouble is you most likely live in a tax jurisdiction where the political class is so addicted to your money they will go through any contrivance necessary to make sure your tax bill stays right where it is — or goes up.

I have a home in Atlanta. We just got nailed with a 42 percent increase in our property tax rate. Why? Because the city government is, and has been for a long, long time, a bloated and inefficient jobs program for graduates of the pathetic Atlanta government school system — and I used the term “graduates” advisedly.

When the esteemed Bill Campbell was flying the Jolly Roger from that tall building on Mitchell Street, the AJC regaled us with descriptions of how many more city employees Atlanta had per capita than most other major cities of the same size. Well, see if you remember this: Shortly after Campbell took office, he held a press conference. Sitting at a table with Campbell were officials of various government employee unions. Campbell proudly announced to the media that he had just entered into a “contract” with these unions whereby he pledged that as mayor he would never take any action that would result in the loss of one union job. Sweet.

A few torturous years later, Campbell was helping provide employment for unionized prison guards.

And you wonder why the city couldn’t allow your property taxes to drop?

I could spend the rest of this page entertaining and amazing you with Bill Campbell stories (remember the stolen car in his driveway?), but I want to bring up another Atlanta mayor: Andrew Young. Young came up with an amazing idea. Atlanta, you see, owns Hartsfield-Jackson International Airport, the most important economic entity in the Southeast. However, FAA regulations forbid the city from making one cent from the operation of the airport.

So, Young thought that the city should explore either selling or leasing Hartsfield to give Atlanta property owners some tax relief. Some studies showed that selling or leasing Hartsfield could wipe out residential property taxes for the entire city.

The idea went nowhere.

Why? That would be because Hartsfield was a power base for Atlanta politicians. The people who held the jobs at Hartsfield, their friends and families, represented a huge number of votes.

Political power, then as now, won out over financial responsibility. The city of Atlanta still makes nary a cent from the operation of an even bigger and more important Hartsfield-Jackson.

That’s the true story behind this property tax scandal. Politicians love power, and you gain power by spreading money around.

Lower taxes ... less money to spread around ... diminished power. I think I saw Einstein draw that equation on a blackboard once.




Broken Tax System hurts the Poor

Georgia’s property tax system is broken and homeowners in our most vulnerable neighborhoods are paying the greatest price. The AJC’s “Property Tax Meltdown” series highlights the need to reform systemic flaws that grossly over tax low-income and high-foreclosure neighborhoods and often under tax more stable affluent neighborhoods and commercial properties.

Fairness and due process are the foundation of a trusting relationship between a government and its people. But metro assessment practices have essentially violated that trust by over-billing low-income residents living in high-foreclosure neighborhoods by up to triple their fair share of property taxes.

Georgia law is pretty simple. Local assessors must set values at a price that a willing buyer would pay to a willing seller. In a competitive marketplace that value is the sales price at the time of purchase. Until very recently, it was a standard practice for assessors to exclude sales of foreclosed homes from their valuation formulas. In 2008, thanks to a change in state law, assessors can no longer legally ignore the devastating impact of foreclosures on our neighborhoods.

Across all five metro counties, low-income residents of high-foreclosure neighborhoods suffer the most from flawed assessments and the resulting tax burden. During the late 90s, these neighborhoods were the victims of mortgage fraud, flipping and predatory lending. As a result, they have been over-assessed for nearly a decade.

By contrast, owners of higher-end homes would often contest their tax assessments because their neighbor was paying less. Few have argued that they couldn’t sell their house for the assessed value. This bears out in the AJC’s research — in Atlanta’s most stable zip codes, assessed values are still only 84 to 88 percent of demonstrated market sales, despite the depressed market. This was especially true with commercial properties. Fulton County’s commercial digest was grossly undervalued. Until last year, Fulton’s commercial properties had not received a complete revaluation since 1991.

Property tax values in low-income, minority neighborhoods were already inflated prior to the onset of the foreclosure crisis. Now, these homeowners are living in the neighborhoods most ravaged by foreclosure. According to ANDP’s research, at the end of 2008 homes selling in southwest Atlanta’s Pittsburgh neighborhood were selling for a fraction (on average 20 percent) of the county’s assessed value. Fulton recently made a 27 percent average adjustment, but these residents are still paying $1,300 dollars more in taxes annually than they should.

The crisis is affecting homeowners and renters alike in our most damaged neighborhoods. Nonprofit affordable apartment communities are being assessed at up to three times market appraisal values. The increase in rent to cover the higher tax bill is squeezing residents, many of whom are minimum wage earners.

AJC’s research shows a similar story. Atlanta’s 30310 is the region’s most overassessed. It has a foreclosure rate of 8.5 percent, average annual income of under $28,000 and minority population of 96 percent. The stories are similar for low income neighborhoods along Atlanta’s southern crescent from Atlanta and south Fulton to Clayton and south DeKalb.

Providing tax equity is critical to stabilizing our most vulnerable neighborhoods. Some governments waive local property taxes in empowerment zones, which attracts new homeowners and investors to disadvantaged neighborhoods. Metro Atlanta is currently pursuing a strategy of dis-empowerment. We are driving out residents and investment by doubling taxes in struggling neighborhoods.

Acknowledging critical local government revenue shortfalls, some seem to argue that counties should ignore state law by not assessing homes for what they are actually worth. We should not ask any taxpayer to pay more than their fair share just because deficits are looming. The tax assessor’s job is to set fair values across the digest. After a level playing field is set, local government officials must determine the millage rate required to meet critical local needs.

If assessments are not adjusted to market levels in our most vulnerable neighborhoods, our region will pay the ultimate price in vacant and abandoned homes, blighted, crumbling communities, increased crime, and a deteriorating tax base.




(Oct. 02, 2009) Anthony Foxx: No Property Tax hike for Streetcar

Democratic mayoral candidate Anthony Foxx said Thursday he wouldn't raise property taxes to pay for a streetcar, despite his vote to move ahead with the project and suggestions from city staff that a hike may be needed.

"We aren't proposing or considering any increase in property taxes, and now would be a terrible time to think of that," he told the Observer. "I will not raise property taxes for the streetcar."

The streetcar and property tax issues came up when Foxx and Republican John Lassiter spoke to a luncheon of the Charlotte Regional Mortgage Lenders Association at the Myers Park Country Club.

Lassiter has also opposed Property Tax increases.

The rivals, both at-large city council members, were on opposite sides last month when council Democrats overrode Mayor Pat McCrory's veto of $4.5 million to start design work on the line.

The project, which would run from Johnson C. Smith University through uptown to Eastland Mall, would cost over $450 million. It's unclear where the money would come from.

"I could not promise to build something I didn't know how to pay for," Lassiter told the mortgage group.

Foxx defended his vote. He said the line would bring economic development to neighborhoods that need it. One study showed new development could generate $112million in new property taxes over 20 years.

"The future of our city is dependent on making every part ... a great place to live in," he told the group.

On Monday the city staff outlined ways to pay for the line to the council's Transportation Committee, which Foxx chairs. One option called for creating a special taxing district along the line and enacting a 4-cent tax hike for every $100 of taxable value. Another called for a citywide tax increase of 2 cents.

The city's current tax rate is 45.86cents.

"By supporting the streetcar, I'm not committing myself to a property tax increase," Foxx said later.

During the meeting, he defended his vote for a 2006 city budget that raised property taxes 9 percent - the first increase in at least a decade. Lassiter voted against the budget.

Foxx said the tax hike helped pay for the 70 new officers the police chief requested, more than in the no-new-tax budget supported by Lassiter and McCrory. It also brought in money for new roads and neighborhood improvements.

He suggested that without the tax hike, Charlotte's crime rate might not have gone down. Police say it's down 20percent from a year ago.

"You can't out a price on (a) family's sense of safety, put a value on the life saved because we had the additional police officers," he told the group.

Lassiter has criticized "unnecessary and unmanaged government spending" that he says had nothing to do with police, roads or neighborhoods.

Thursday he alluded to this year's General Assembly actions that raised the state sales tax by a penny and enacted surcharges of 2 percent or 3percent on some taxpayers. He told the mortgage lenders that he'll keep taxes down.

"We're in a high-taxed city in a high-taxed state," he said. "We've got to right the ship."



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Sources: Atlanta Journal Constitution, MSNBC, CNBC, McClatchy Newspapers, Charlotte Observer, Charmeck.org, The Real Estate Blogster, Google Maps

Property Tax Re-Assessments Are Catching Up With Falling Home Values

MSNBC, Elkhart Project----

After a long winter, this is high season for road repair, and the Elkhart County Highway Department has a busy schedule. But deep budget cuts have forced changes in that schedule to try to get the same work done with less money.

Instead of working a traditional workweek of five, eight-hour days, road crews now work four, 10-hour days. The hope is that those longer days will reduce the downtime that comes at the end of each day’s shift.

“You’ve got to secure the site — there's an hour. You’ve got to clean up — there’s an hour. And then you have to go back to the shop — there’s a half-hour,” said Rick Easton, one of the crew recently installing a new drain pipe on a county road. “So I’ve lost two and a half hours.”

It’s just one of the ways local governments across the country are coping with one of the steepest drops in tax revenues in decades, forcing them to try to maintain the same level of local services with a lot less money.

“We’re trying it this summer because we have to do something,” said Jeff Taylor, manager of the Highway Department. “There is no more money.”

It’s been almost two decades since the last time a weak housing market cut so deeply into property tax revenues, the main source of funding for many cities, towns and counties across the country. While most local finance and budget officials keep a close eye on economic forecasts, the scope and speed of the current housing collapse caught many by surprise, according to Christopher Hoene, research director at the National League of Cities.

To make matters worse, the process of updating tax assessments can take years. That means that local governments now in the throes of budget cuts can expect further cuts in coming years.

“The reality for local government is they’re probably in (fiscal year) '09 seeing the decline in property taxes in concerted fashion for the first time,” said Hoene. “That means 2010 and 2011 are likely going to be more of the same. Even if a recovery in the housing market begins right now, they’re still a couple of years away from seeing any rebound in those revenues. We’re just entering the woods.”

The problem is not limited to residential properties. A decline in commercial real estate values is also cutting into local tax bases.

“We’ve got a ton of businesses that have gone out of business and we’ve got empty buildings here that people have picked up and left or filed bankruptcy,” said Elkhart Fire Chief Mike Compton.

Other sources of revenues are also down. Local governments that rely on sales taxes have been hit by the drop in retail spending. And state governments have cut back on revenue they pass through to municipalities.

In Elkhart County, the bulk of the Highway Department's funding comes from state gasoline taxes, which have fallen as people drive less due to the recession. At the same time, the housing boom created subdivisions in unincorporated areas outside the reach of city and town governments. That’s created many more miles of new county roads to maintain.

“That new house does nothing for us in terms of new income,” said Taylor. “What it does is causes us to bring resources from somewhere else and place them in that subdivision. And now our level of services begins to drop."

So Government Leaders are trying to squeeze every dollar. Taylor says the shift to a four-day workweek was imposed partly to make up for several unfilled positions. But the experiment has created unexpected results. With more equipment idle on Fridays, shop mechanics — who still work five-day weeks — can get more done. But there's a downside, too.

"When we go to four, 10-hour days and I lose a day to rain, I’ve lost 25 percent of my workweek," said Taylor.



A Flood of Property Tax Appeals...Is Charlotte, NC Listening?


I found this recent article (below) on Property Tax Appeals to be extremely interesting as it hits close to home for my community.

In Charlotte, NC (my region) where the City & County Officials haven't allowed a Tax Assessment to take place since 2003, they've once again refused to re-evaluate Property values.

This time "the powers that be" cited the Recession as an excuse for not doing so.

However for most Middle Income to Lower Income Homeowners of African-American or Hispanic origin living in Charlotte-Mecklenburg, both our Property Taxes and our Storm Water Rates have continued to increase almost annually.

I have talked to many Minority Homeowners living in Charlotte-Meck. County who've done nothing more to improve the value of their property, other than keeping their grass cut and keeping the exterior of their homes clean and neat.

Yet...their property taxes have increased by $500. to $1,500.00 dollars!

In many instances this Unfair Taxation practice occurs soon after closing on the property.

How can this be when Wealthy and Middle Income Caucasian Homeowners many who dwell in homes valued from $300,000. to $1 Million Dollars, have NOT experienced a Property Tax or Water/ Storm Water Rate Increase in years??

Middle to Lower Income Minority Homeowners residing in Charlotte-Mecklenburg are NOT receiving better services from the City or the County (Public Safety, Education, Jobs, Well-Managed Homeowner Associations, Water/ Storm Water, Trash, Economic Development, Neighborhood Stabilization, Mass Transportation i.e. Clean, Properly Functioning City Buses which run on schedule, etc) but for some reason their Property Taxes and Storm Water Rates keep rising.

When approached or questioned Charlotte-Mecklenburg City/ County Officials consider this to be a moot issue.

Either they just don't want to discuss it or they can't give a logical reason for refusing to re-assess the Property Values of Wealthy and Middle Class Caucasian citizens, while consistently raising everyone else's Property Taxes and Water/ Storm Water rates.

Inquiring minds would like to know why?

Since they've ignored the concerns of their constituents on this subject, perhaps the U.S. Dept of Dept of Justice and the IRS needs to investigate or conduct an audit on both City and County Tax Assessment records.

Maye then Char-Meck Officials will be able to conjure up some type of formula or equation for having allowed such Financial Injustice to be placed on the backs of Minority Middle Class and Lower Income citizens for decades.

Or...after reading the article below published by both the NY Times and MSNBC, Charlotte-Meck Officials will be compelled to fix this mess without Federal Government interference.

I have a simple solution to what ails most of Charlotte-Mecklenburg including this Unequal Property Tax problem: Politically Balanced, Bi-Partisan NEW Leadership!

I'm going to miss outgoing Mayor Pat McCrory (Rep.) because I think he's done a pretty good job at putting Charlotte on the national map.

However with a Politically Balanced, Bi-Partisan NEW City Council and Board of County Commissioners in place (A More Accountable Checks & Balance System), its less likely this type of Corruption will continue to plague one of the fastest growing regions in the Southeast.

President Barack Obama has set the standard for including both key Political Parties to help establish Fair Policies and Regulations. (Housing, Jobs, Hate Crimes, Health Care Reform, Credit Card Regulation, Education, etc.,)

No doubt Charlotte-Mecklenburg should follow suit.


MSNBC, NY Times---- (The Related Article)

Homeowners across the country are challenging their property tax bills in droves as the values of their homes drop, threatening local governments with another big drain on their budgets.

The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust.

“It’s worthy of a Dickens story,” said Gus Kramer, the assessor in Contra Costa County, Calif., outside San Francisco. “These people are desperate. They know their home’s gone down in value. They’ve watched their neighborhoods being boarded up. They literally stand in there and say: ‘When can I have my refund check? I need to feed my family. I need to pay my electric bill.’ ”

The tax appeals and reassessments present a new budget nightmare for governments. In a survey conducted by the National Association of Counties, 76 percent of large counties said that falling property tax revenue was significantly affecting their budgets, said Jacqueline Byers, the association’s research director.

Officials in some states say their property tax revenue is falling for the first time since World War II.

Some tax rates rising:

The recession has already taken a significant toll on states’ budgets, as rising joblessness, a weak business climate and a drop in consumer demand have cut sharply into receipts from taxes on sales, personal income and business earnings.

The pain at the state level is trickling down to county and local governments. To compensate, about 10 percent of large counties are raising the tax rates associated with home values to minimize the revenue loss, the county association said.

Even so, most counties simply have to absorb the lost revenue. Municipalities are laying off workers, renegotiating labor contracts, freezing salaries and cutting services.

The revenue losses are coming as homeowners prod towns for new assessments, and as municipalities conduct regular revaluations of their real estate. While declining residential values weigh heaviest on many governments, the value of commercial real estate is also sliding as businesses shut down and move out of storefronts or shopping malls.

Property taxes are meted out by a disparate patchwork of cities, towns, counties, and school and fire districts, all with their own rules. Because tax formulas vary widely county to county, not every decrease in assessed values automatically lowers a household’s property taxes.

From a trickle to a flood:

But officials across the country say there is no question that the number of appeals has risen from the usual trickle to a flood.

In suburban Atlanta, thousands of people lined up at government offices to file their requests for reassessments before a March 31 deadline. In parts of Ohio, appeals have multiplied fivefold. Tax lawyers in the northern suburbs of New York say they have never been so busy, and some towns have hired extra employees to sift through the paperwork and are spending hundreds of thousands of dollars on legal fees to deal with the cases in tax courts.

The call for counties to acknowledge the falling price of homes is loudest in states where taxes are highest, or the housing crisis has hit the hardest.

“We’ve been absolutely getting killed,” said Robert W. Singer, the mayor of Lakewood Township, N.J., and a state senator, whose town is setting aside $2 million to pay tax refunds to homeowners. “We’ve never had this before. Usually they’re undervalued. Now, everyone’s overvalued.”

The appeals are not just coming from individual homeowners.

Condominium associations and entire subdivisions are pushing for new tax assessments, as are companies that own office towers, industrial parks and shopping malls.

New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year.

“I don’t know what else to do,” said Ms. Tombro, 63, who has gone back to work selling antiques to pay her tax bill.

In the Inland Empire of California, near Los Angeles, Joylette Lynch, 70, is challenging the assessed value of her home as she tries to scrape together $1,158 a month to pay her mortgage, taxes and other bills. Her two-bedroom house in a community for older residents was worth as much as $280,000 three years ago, but houses on her block are now selling for less than $100,000.

“If the house is not worth what I bought it for, why am I paying the same amount in taxes?” she asked.

Ms. Lynch, meanwhile, lost her job at a Bed, Bath & Beyond this year, and is behind on her mortgage payments. Shaving a few hundred dollars off her annual tax bill of $4,300 might not keep her out of foreclosure, but it would help, she said.

“Everything’s in God’s hands now,” she said.

Looking for relief:

Officials say stories like these are common as unemployment hits 9.5 percent and people seek to trim their budgets. Appraisers and assessors, normally concerned with land values and comparable sales, are becoming ersatz crisis counselors.

Jeff Furst, the appraiser in St. Lucie County, Fla., said a 62-year-old man recently walked into his office and described how his wife had been laid off and his salary had been cut in half. He was struggling to pay his taxes and looking for relief, Mr. Furst said.

“We’re hearing from people like this every day,” Mr. Furst said. In St. Lucie, which sits along the Atlantic, property tax revenue is expected to fall 20 percent, and tax appeals are 10 times as high as they are normally. “Most people are going to see a significant decline in their tax bill.”

Mr. Kramer, the assessor in Contra Costa County, said homeowners started swamping his office with requests for new assessments in December. As many as 500 people would call in one day. His voice mail message now begins: “If you’re calling to request an informal review of your property value due to the declining real estate market.”

Contra Costa has now reduced the recorded value of more than a third of the 350,000 privately owned properties in the county.

Lisa Driscoll, the county’s budget director, said property tax revenue had been growing about 8 to 9 percent a year but was now projected to decline 5 percent next year. The county has cut $50 million from its budget to offset the decline in real estate and other taxes.

Come hell or high water:

Bonnie Grassley’s house in Fort Pierce, Fla., reflects the rise and fall of the broader economy. Its assessed value topped $153,000 in 2006, as Florida’s housing market caught fire. Now, it is worth $77,500.

Though her tax bill is only $150 a month, Ms. Grassley is out of work, spending her savings, and says she hopes a reassessment will save a couple hundred dollars a year.

“My home means everything to me, and it’s all I really have,” Ms. Grassley said. “I’m determined to keep it, come hell or high water. It’s a terrible way to lose your home, just over taxes.”



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Sources: MSNBC, Elkhart Project, NY Times, Charmeck.org, Flickr, Google Maps

A Flood Of Property Tax Appeals... Is Charlotte, NC Listening?

I found this recent article (below) on Property Tax Appeals to be extremely interesting as it hits close to home for my community.

In Charlotte, NC (my region) where the City & County Officials haven't allowed a Tax Assessment to take place since 2003, they've once again refused to re-evaluate Property values.

This time "the powers that be" cited the Recession as an excuse for not doing so.

However for most Middle Income to Lower Income Homeowners of African-American or Hispanic origin living in Charlotte-Mecklenburg, both our Property Taxes and our Storm Water Rates have continued to increase almost annually.

I have talked to many Minority Homeowners living in Charlotte-Meck. County who've done nothing more to improve the value of their property, other than keeping their grass cut and keeping the exterior of their homes clean and neat.

Yet...their property taxes have increased by $500. to $1,500.00 dollars!

In many instances this Unfair Taxation practice occurs soon after closing on the property.

How can this be when Wealthy and Middle Income Caucasian Homeowners many who dwell in homes valued from $300,000. to $1 Million Dollars, have NOT experienced a Property Tax or Water/ Storm Water Rate Increase in years??

Middle to Lower Income Minority Homeowners residing in Charlotte-Mecklenburg are NOT receiving better services from the City or the County (Public Safety, Education, Jobs, Well-Managed Homeowner Associations, Water/ Storm Water, Trash, Economic Development, Neighborhood Stabilization, Mass Transportation i.e. Clean, Properly Functioning City Buses which run on schedule, etc) but for some reason their Property Taxes and Storm Water Rates keep rising.

When approached or questioned Charlotte-Mecklenburg City/ County Officials consider this to be a moot issue.

Either they just don't want to discuss it or they can't give a logical reason for refusing to re-assess the Property Values of Wealthy and Middle Class Caucasian citizens, while consistently raising everyone else's Property Taxes and Water/ Storm Water rates.

Inquiring minds would like to know why?

Since they've ignored the concerns of their constituents on this subject, perhaps the U.S. Dept of Dept of Justice and the IRS needs to investigate or conduct an audit on both City and County Tax Assessment records.

Maye then Char-Meck Officials will be able to conjure up some type of formula or equation for having allowed such Financial Injustice to be placed on the backs of Minority Middle Class and Lower Income citizens for decades.

Or...after reading the article below published by both the NY Times and MSNBC, Charlotte-Meck Officials will be compelled to fix this mess without Federal Government interference.

I have a simple solution to what ails most of Charlotte-Mecklenburg including this Unequal Property Tax problem: Politically Balanced, Bi-Partisan NEW Leadership!

I'm going to miss outgoing Mayor Pat McCrory (Rep.) because I think he's done a pretty good job at putting Charlotte on the national map.

However with a Politically Balanced, Bi-Partisan NEW City Council and Board of County Commissioners in place (A More Accountable Checks & Balance System), its less likely this type of Corruption will continue to plague one of the fastest growing regions in the Southeast.

President Barack Obama has set the standard for including both key Political Parties to help establish Fair Policies and Regulations. (Housing, Jobs, Hate Crimes, Health Care Reform, Credit Card Regulation, Education, etc.,)

No doubt Charlotte-Mecklenburg should follow suit.



MSNBC, NY Times----

Homeowners across the country are challenging their property tax bills in droves as the values of their homes drop, threatening local governments with another big drain on their budgets.

The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust.

“It’s worthy of a Dickens story,” said Gus Kramer, the assessor in Contra Costa County, Calif., outside San Francisco. “These people are desperate. They know their home’s gone down in value. They’ve watched their neighborhoods being boarded up. They literally stand in there and say: ‘When can I have my refund check? I need to feed my family. I need to pay my electric bill.’ ”

The tax appeals and reassessments present a new budget nightmare for governments. In a survey conducted by the National Association of Counties, 76 percent of large counties said that falling property tax revenue was significantly affecting their budgets, said Jacqueline Byers, the association’s research director.

Officials in some states say their property tax revenue is falling for the first time since World War II.

Some tax rates rising:

The recession has already taken a significant toll on states’ budgets, as rising joblessness, a weak business climate and a drop in consumer demand have cut sharply into receipts from taxes on sales, personal income and business earnings.

The pain at the state level is trickling down to county and local governments. To compensate, about 10 percent of large counties are raising the tax rates associated with home values to minimize the revenue loss, the county association said.

Even so, most counties simply have to absorb the lost revenue. Municipalities are laying off workers, renegotiating labor contracts, freezing salaries and cutting services.

The revenue losses are coming as homeowners prod towns for new assessments, and as municipalities conduct regular revaluations of their real estate. While declining residential values weigh heaviest on many governments, the value of commercial real estate is also sliding as businesses shut down and move out of storefronts or shopping malls.

Property taxes are meted out by a disparate patchwork of cities, towns, counties, and school and fire districts, all with their own rules. Because tax formulas vary widely county to county, not every decrease in assessed values automatically lowers a household’s property taxes.

From a trickle to a flood:

But officials across the country say there is no question that the number of appeals has risen from the usual trickle to a flood.

In suburban Atlanta, thousands of people lined up at government offices to file their requests for reassessments before a March 31 deadline. In parts of Ohio, appeals have multiplied fivefold. Tax lawyers in the northern suburbs of New York say they have never been so busy, and some towns have hired extra employees to sift through the paperwork and are spending hundreds of thousands of dollars on legal fees to deal with the cases in tax courts.

The call for counties to acknowledge the falling price of homes is loudest in states where taxes are highest, or the housing crisis has hit the hardest.

“We’ve been absolutely getting killed,” said Robert W. Singer, the mayor of Lakewood Township, N.J., and a state senator, whose town is setting aside $2 million to pay tax refunds to homeowners. “We’ve never had this before. Usually they’re undervalued. Now, everyone’s overvalued.”

The appeals are not just coming from individual homeowners.

Condominium associations and entire subdivisions are pushing for new tax assessments, as are companies that own office towers, industrial parks and shopping malls.

New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year.

“I don’t know what else to do,” said Ms. Tombro, 63, who has gone back to work selling antiques to pay her tax bill.

In the Inland Empire of California, near Los Angeles, Joylette Lynch, 70, is challenging the assessed value of her home as she tries to scrape together $1,158 a month to pay her mortgage, taxes and other bills. Her two-bedroom house in a community for older residents was worth as much as $280,000 three years ago, but houses on her block are now selling for less than $100,000.

“If the house is not worth what I bought it for, why am I paying the same amount in taxes?” she asked.

Ms. Lynch, meanwhile, lost her job at a Bed, Bath & Beyond this year, and is behind on her mortgage payments. Shaving a few hundred dollars off her annual tax bill of $4,300 might not keep her out of foreclosure, but it would help, she said.

“Everything’s in God’s hands now,” she said.

Looking for relief:

Officials say stories like these are common as unemployment hits 9.5 percent and people seek to trim their budgets. Appraisers and assessors, normally concerned with land values and comparable sales, are becoming ersatz crisis counselors.

Jeff Furst, the appraiser in St. Lucie County, Fla., said a 62-year-old man recently walked into his office and described how his wife had been laid off and his salary had been cut in half. He was struggling to pay his taxes and looking for relief, Mr. Furst said.

“We’re hearing from people like this every day,” Mr. Furst said. In St. Lucie, which sits along the Atlantic, property tax revenue is expected to fall 20 percent, and tax appeals are 10 times as high as they are normally. “Most people are going to see a significant decline in their tax bill.”

Mr. Kramer, the assessor in Contra Costa County, said homeowners started swamping his office with requests for new assessments in December. As many as 500 people would call in one day. His voice mail message now begins: “If you’re calling to request an informal review of your property value due to the declining real estate market.”

Contra Costa has now reduced the recorded value of more than a third of the 350,000 privately owned properties in the county.

Lisa Driscoll, the county’s budget director, said property tax revenue had been growing about 8 to 9 percent a year but was now projected to decline 5 percent next year. The county has cut $50 million from its budget to offset the decline in real estate and other taxes.

Come hell or high water:

Bonnie Grassley’s house in Fort Pierce, Fla., reflects the rise and fall of the broader economy. Its assessed value topped $153,000 in 2006, as Florida’s housing market caught fire. Now, it is worth $77,500.

Though her tax bill is only $150 a month, Ms. Grassley is out of work, spending her savings, and says she hopes a reassessment will save a couple hundred dollars a year.

“My home means everything to me, and it’s all I really have,” Ms. Grassley said. “I’m determined to keep it, come hell or high water. It’s a terrible way to lose your home, just over taxes.”


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Sources: NY Times, MSNBC, Census.gov, Flickr, Google Maps