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Dan Karachio
07-17-2009, 3:45 PM
Just got a notice today that Bank of America will no longer let us use our line of credit because of falling home values. We have been responsible and instead of refinancing (which would have been easy many times), we used our LoC for home repairs/modifications as needed. We never missed a bill. What makes me really mad is we sought assistance from BoA to get a better rate on our mortgage (from 6.25% to 4.5 or so a while back). Nope, we just didn't qualify. We had jobs, we paid on time, but we are technically under water a bit on our home value. Nothing they could do for us.

Maybe this isn't rational, but I am getting mad. Bank of America, Countrywide and others started this mess and while Goldman Sachs is rolling in bonus money people continue to lose jobs, home values are still dropping, foreclosures are still occurring. EDITED TO REMOVE POLITICAL RELATED COMMENTS.

Stephen Musial
07-17-2009, 4:09 PM
Have you checked with any other lenders in the area to see about a re-fi? Maybe BoA doesn't want to lose the interest so they're telling you that you're under water. Have you had a recent appraisal or local comps to compare?

Joe Scharle
07-17-2009, 4:15 PM
And yet, the same people keep getting re-elected!

Glenn Clabo
07-17-2009, 4:21 PM
Just a reminder...
Politics are NOT allowed on SMC.

Roger Jensen
07-17-2009, 4:41 PM
Hi Dan,

Sorry to hear about your situation. Unfortunately, it is far too common these days.

If your appraised value is less than your mortgage I don't know of anyone that would give you a line of credit on your home, not just BofA. Being a little bit underwater is like being a little bit pregnant. I assume the reason banks push these loans is that you have an asset worth something and they jump to the front of the line to get paid if you haven't paid off your LOC when you sell your house. If they don't believe there is going to be any money left over after selling the house they view it as an uncollateralized loan.

The irony is these are the types of decisions banks weren't making that got us into this mess (at least that is one theory). It is going to be very painful to get things back where they belong.

Perhaps a re-appraisal on your property will give you the relief you need.

Take care,

Roger

Mitchell Andrus
07-17-2009, 6:05 PM
I've been looking at homes in NC in the 500K to 700K price range.

One was listed at $537K and just sold for $490K. Three years ago it was appraised for $675K. That's a $185,000.00 drop in real value.

Can't blame the banks for being cautious.
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Mike Henderson
07-17-2009, 6:48 PM
And yet, the same people keep getting re-elected!
Actually, they aren't. In the last election, there was quite a turnover.

Mike

Jeff Wright
07-17-2009, 6:54 PM
Just got a notice today that Bank of America will no longer let us use our line of credit because of falling home values. We have been responsible and instead of refinancing (which would have been easy many times), we used our LoC for home repairs/modifications as needed. We never missed a bill. What makes me really mad is we sought assistance from BoA to get a better rate on our mortgage (from 6.25% to 4.5 or so a while back). Nope, we just didn't qualify. We had jobs, we paid on time, but we are technically under water a bit on our home value. Nothing they could do for us.

Maybe this isn't rational, but I am getting damn pissed off. Bank of America, Countrywide and others started this mess and while Goldman Sachs is rolling in bonus money people continue to lose jobs, home values are still dropping, foreclosures are still occurring and what the frick is anyone in Washington doing about it all? I voted for Obama, but I see nothing really happening with his stimulus bill other than to prop back up the banks so they can run the same schemes again. Where is "Main Street" in all this? Wall Street got the big payoffs with no strings. Meanwhile I understand they really haven't spent much of the 700 billion stimulus. I say scrap the whole thing - it was obviously created in a rush and it failed to change things for anyone outside the banks. What the hell was stimulated? With so much on the table I would argue every single American should be able to recognize some form of stimulus. Do you see any stimulus in your town or neighborhood (well, we did have our perfectly fine streets repaved compliments Obama)?

I suggest if you haven't already, contact a reputable mortgage BROKER, someone who has access to multiple sources of loans, not just one bank like B of A. Also, the government has raised the loan-to-value to 125% (yes that's right . . . they are willing to allow a loan that exceeds the value of a home's appraised value). But perhaps unfortunately for you, that applies to folks at risk of defaulting on their existing loan. It's the govt's intention to keep people in their current home to minimize the number of foreclosures going forward.

Again, I am expert in nothing, so seek a reputable EXPERIENCED mortgage broker for advice.

As for B of A's reluctance (or refusal) to extend a loan that exceeds your home's value . . . that appears to me to be just good business practices. I doubt you would want to lend your OWN money on something that was worth less than your loan amount . . . unless you were in the practice of giving money away.

Howard Norman
07-17-2009, 7:02 PM
I had heard that this was happening but you are the first one that I have heard of directly. Banks are going to be doing a lot more of that I am sure. As others have said you might be able to refinance with another lender.

Jim Becker
07-17-2009, 8:55 PM
I'm certainly hoping that home values will stabilize and then start to rise again, but I know my own property is down well over $200K from what it "should" be marginally worth in a good market at present. It hasn't fallen so far that it would affect our loan and line as it did for you, but I still remain concerned about things until I see some positive movement. The good news today, at least, was the housing starts numbers for June moved up. I hope that trend continues as it will also help for resale and property valuations.

Dan Karachio
07-17-2009, 9:39 PM
Thanks all. I'm really not in any hot water with any of this, it is the "principal" of the whole thing that makes me mad (ha ha, crack myself up). Our home value is down about 40k, the LoC was small (20k) and has no balance and we have no plans on moving soon or anything else. We haven't owned the house long, so the 40k drop in value means we have less than 20% equity in the home. I thought this was exactly the situation Obama's plan would help with, but if it was, nobody I talked to seems to get it. Seems you have to be under duress. I'll take being a little frustrated over duress any day!

However, I will follow the advice here and check with a real mortgage broker. A lower rate (rate adjustment, not refinancing) is all I was looking for. I'd love nothing more than to dump Bank of America - they do not impress me with anything remotely related to customer service.

P.S. Glenn, very sorry about political subjects. I assumed, incorrectly, off topic was okay. Do you want me to edit? I will now if I still can.

Jeff Wright
07-17-2009, 9:44 PM
. . . The good news today, at least, was the housing starts numbers for June moved up. I hope that trend continues as it will also help for resale and property valuations.

Jim . . . I reacted a bit differently to that news today. We already have a glut of housing stock . . . all we need is to add to that stock and extend the absorption rate out even further. Yikes!!! Housing starts might be good news for folks like Toll Bros and others (IF they can sell them), but it puts a further burden on minimizing the housing inventory overhang. :(

Keith Outten
07-17-2009, 9:47 PM
Two years ago in our area the County hired an outside firm to assess our property. The result was that the assessed value of our homes was doubled. Many seemed to enjoy the idea that they could borrow against their homes and enjoy the windfall. What many didn't realize is the impact it has had on our children, they can't afford homes here so they are forced to leave the area.

The idea that anything can double in price overnight is impossible to comprehend, that it could be our homes is unforgivable and the impact it has had on families has been devastating for many.

The banks have had their problems dealing with the changes, the insurance agencies have been able to increase premiums and enjoy a financial boom. Many home owners have had to sell and move away because they couldn't afford the taxes on their homes anymore, some were homes that had been in their families for generations.

My point here is that when the value of homes fluctuate sharply, either up or down, the impact can be devastating.
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Pat Germain
07-18-2009, 9:51 AM
^^ Very good points, Keith. I'm originally from Orange County, California where home prices were skyrocketing since the 1970's. My cousins, who still live there, had to live with their parents and rent condos for many years. They just couldn't afford even the most modest home. After years of saving for down payments, they were able to buy.

When I was visiting a few years ago, some of these cousin homes were going for a cool million. They were nice homes, but not what you'd think from a million dollar price tag. Of course, now those same homes aren't worth nearly a million. Not a problem for my cousins who are staying put. But if they want to sell, they're in serious trouble.

Things look pretty gloomy right now. But I'm confident the economy and home prices will start rising again. There are still many people around the planet who want to live in the USA; especially in Orange County, CA. And many of those people have money. The demand is still there. We just have to let the dust settle so people can see clearly.

Brad Wood
07-18-2009, 9:57 AM
As much as i am Mr. Anti Bank (I'm a credit union supporter / member / employee), this is not really BOFA being mean or unfair. We are having to go through and re-evaluate our HELOC's (home equity line of credit) and they are getting dropped on people. A HELOC is just what it implies by its name, and if the equity drops, especially if you go upsidedown on the mortgage, then there becomes an issue of secured Vs. unsecured loan.. a line of credit is a loan and it is secured against the equity of your house. There are regulatory issues related to secured Vs unsecured loans, how they are treated on the FI's books, interest, risk, etc.
I could be wrong here, but allowing a 125% LTV mortgage doesn't include any HELOC's... you can't go finance your 100k house and then get a 25k HELOC that is considered secured. the 125% LTV means you can get a 125k loan on a house that is listed for 125k, but valued at 100k.
There are companies out there that will give you a unsecured LOC, but the interest rate is more like a credit card - upwards to 20%

edit: now, with all that said - if you are looking for better customer service and want to work with people that are looking out for your best interest, go get refi'd through a credit union. The CU I work for has been in business for 68 years and two months ago we broke an all time record on mortgage bookings. We still offer better interest rates than banks, and we (CU's in general) would never book a loan that was not in the best interest of the member... which is why, with just a coupld small exceptions nationally, CU's are not in the trouble banks are in.

Dan Karachio
07-18-2009, 11:38 AM
I hear you Brad, but I can't get passed the idea it was the banks and their ideas on home values that got us all into this mess in the first place. In a way I'm glad. I looked at the HELOC as a safety net, but now am much more motivated to save and have a nice buffer to hold me off for anything from a new furnace to losing work. I just may check out a credit union!

I'm glad I never went for a refi option to get my hands on some cash. So many of my neighbors and family did. Sure this ended up funding all kinds of home projects thereby employing craftsman and contractors like the people on this board, but it was all a house of cards. Now we get to enjoy the collapse of next house of cards, healthcare. Can't wait. It's going to be a blast!

Brad Wood
07-18-2009, 12:12 PM
I hear you Brad, but I can't get passed the idea it was the banks and their ideas on home values that got us all into this mess in the first place. In a way I'm glad. I looked at the HELOC as a safety net, but now am much more motivated to save and have a nice buffer to hold me off for anything from a new furnace to losing work. I just may check out a credit union!

I'm glad I never went for a refi option to get my hands on some cash. So many of my neighbors and family did. Sure this ended up funding all kinds of home projects thereby employing craftsman and contractors like the people on this board, but it was all a house of cards. Now we get to enjoy the collapse of next house of cards, healthcare. Can't wait. It's going to be a blast!

I don't disagree with your feelings on the subject at all... the mess, house of cards, etc... two different topics really, I was just trying to shed some light on the why they are doing what they are doing at this time... the fact that "they" caused a lot of this is the first place is certainly frustrating, but it is what it is at this point.

A lot of people got caught up in this whole mess and many are quick to point out that they wouldn't have the troubles if they hadn't tried to get into a house they couldn't afford, or take advantage of their equity when they should have left it alone, etc, etc. I have some other commentary here, but it begins to border on politics, so I will refrain.
While I agree that the banks/lenders did not twist any arms when people were going through the boon years leading up to where we are now, I think the lenders really took advantage of people that really didn't understand the full meaning of what they were doing, and the risk they were taking... it was all a bunch of smoke and mirrors based on the assumption that housing would continue to skyrocket... just like continuing to "let it ride" when you are at the poker table, eventually it was going to come crashing down... but lenders and brokers were very deceptive and really didn't provide full disclosure in the sense that they didn't warn the borrower of the risk they were taking - and the borrower was eager to come out on top and was likely somewhat blinded by the short game.

oh well, enough I suppose. Go check out the credit unions. I disagree with going to a broker, I think they were part of what got us to where we are.

Greg Cuetara
07-18-2009, 11:05 PM
I agree that if you have a line of credit based upon the equity in your house the LOC can only be for as much equity you have in the house. If you have zero equity then your credit line is zero.

I certainlly do not understand how the banks got so much money and are just holding it. I went in to see if I could refi and the broker said it would cost me at least $2,500....i was like what??? In a few months I will pay you that in interest so why isn't it free or at least a minimal cost.

On another note one thing to really keep in mind with housing prices is that they were bloated and were not real numbers. Appraisers marked up houses to sell for more so that agents could make more and banks could lend more. It was a big scam that is catching up to all of us. I can say my house was up 100k 4 years ago but that is not a real number and can not be used to show a loss. If you pay 500k for a house and sell it for 400k you have lost 100k....if you pay 500k and sell for 500k but could have gotten 600k last year you didn't lose 100k....you broke even. I think Keith hit the nail on the head saying that it is a shame people are being priced out of neighborhoods...and can't afford the taxes etc. Even if you own house you don't really own it.

Keith Outten
07-19-2009, 8:15 AM
My concerns aren't just for this point in time. If my assessment is increased on a two year cycle it won't take many years before my farmhouse is valued at over a million dollars, then two million dollars two years later and so on. The fact is I won't be able to pay the taxes on my home in a few years when I reach retirement age.

The situation is compounded by the recent doubling of our home assessments and our insurance premiums which means we have less money for savings every month that we will need in a few years to offset the cost of home ownership at retirement. Sooner or later the bank mortgage goes away, the costs I am concerned about are the ones that continue on for life.

At every assessment for the last ten years I have complained to our local Equalization Board. In a nutshell I have told them that I don't ever intend to allow the County to tax me out of my home. The increases in home assessments have been shocking when compared to salary increases over the last ten years and this trend must be reversed, not just level out.
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Jason Roehl
07-19-2009, 8:21 AM
Yeah, you don't have to write too many property tax checks to realize that you never really own your own home or land. :mad:

Don Bullock
07-19-2009, 9:56 AM
I'm certainly hoping that home values will stabilize and then start to rise again, but I know my own property is down well over $200K from what it "should" be marginally worth in a good market at present. ...

I'm in the same financial situation on my house value. While homes in the market where we are seem to be selling, including ours (it's in escrow), the paper hit of $200K for us is quite a bit. Fortunately we were able to purchase a foreclosed property that was at least $300K below where it's paper value was just a few years ago. Perhaps on paper we even made money, but it's not money in my pocket that I can spend.

Yes, the banks may have been mainly responsible for the housing/banking mess, but remember it was their customers who kept refinancing, taking out equity and loans with big "balloon" payments. Many gambled that the rise in housing prices would never stop. Unfortunately when their "gamble" crashed it took all of us with it. Housing values are something that could be debated forever without agreement. In the end, a house is only worth what banks are willing to loan on it. Very few own their homes outright.

The biggest question we have left on the sale of our house is the appraisal. If it comes in high enough, the house is sold. If not, we're back to deciding on its "paper value." When times were "good" many praised the system, gladly sought loans and were, for the most part, happy with what the banks told them about the value of their homes. Now, the table have turned.


As for Keith's concern about the rise of property taxes, that's one advantage of living in California (I know some of you feel there are none;):D). In retirement, even though we are buying a new home and selling a home, we will be paying the same property taxes. Because we are over a certain age and the counties we are moving from and into allow us to transfer our tax base from the old home to the new home, our tax bill on the new home will be substantially less once our old home is sold. In addition, our property tax bills in California can only go up 1% a year. Property tax wise, we're going to be doing well. I won't go into income tax except to say that our income is lower in retirement.

Jim Rimmer
07-19-2009, 5:50 PM
I guess BofA is going through some soul searching. A few months ago they begged us to open an account and would even gave us $50 so we did. Yesterday we got a letter saying they would be charging $20 a month if we don't meet one of several criteria, all of which center around a large ($5K) minimum average balance. So, Monday the wife will be going to BofA to close our small account and take our money and their $50 to another bank. :rolleyes:

Keith Outten
07-20-2009, 8:01 AM
I want to see a law passed that will make your primary residence tax exempt at age 65. If a salary cap is preferred that would be fine, limiting the exemption to incomes under $100,000.00 or less.

It seems to me that the total taxes paid on a home throughout a working career is enough and it has to have an end to prevent people from losing their homes.

Maybe I can start a State-wide movement to stop this kind of Governmental abuse. It may very well be time to raise the stars and bars flag once again here in Virginia as a protest against taxing people out of their homes :)
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Robert Parrish
07-20-2009, 8:43 AM
I agree with you Keith, but I would go a step farther and say we should not have to pay income taxes after age 65. My father is 98 and is still paying taxes!! Here in Florida we do have some relief from property taxes with our "Save Our Homes" law. My property tax was capped in 1998 and only increased at 3% per year. We passed an amendment last year to make it portable so we don't get hit with a big increase when we move within Florida.

Steve Rozmiarek
07-20-2009, 9:50 AM
You know, I used to be an optimist. The mortgage mess has effected every single part of the economy to such an extent the damage keeps compounding. Add that to the governments, federal, state and local, all seeming to want to play catchup on tax collection, and I'm no longer optimistic that this will ever get "better".

The mortgage issues of the rest of America have finally come home to roost here. We still have really nice houses for $200,000, but the problem is that the banks won't loan money for ag land. They are killing this industry too, by acting like a piece of farm ground is similar too an expensive home. Never mind the fact that the land actually provides income...

The mortage issue ruined the economy, to the extent that many people now are in the position of relying on the government for help getting out of their various holes. Trouble is, to pay for all of that, taxes have to go up, compounding the problem. We're on the verge of nationwide bankruptcy I think.

I'd love to go into a new week with a glimmer of hope for my kids future, anybody have any to offer?

The one simple solution, force the stupid banks to loan money somehow, seems to be on no ones agenda. Businesses can fix this mess, but we need capital to do it. Government just makes it worse.

I'm noticing a new phenomenom locally, a barter economy. Basically IOU's being traded as currency. Now that's a sign to be optimistic about!

Bonnie Campbell
07-20-2009, 2:20 PM
Forcing the banks to make loans before seems to be what got us into this fix.....

Roger Jensen
07-20-2009, 2:59 PM
Similarly, eliminating the tax on home appreciation was the singe biggest driver in increasing home sales. Buying and selling homes was the best investment vehicle you could make due to the tax savings. Without that change in the early 90's folks wouldn't have had the capital to flip houses, which drove prices up.

Pat Germain
07-21-2009, 8:55 AM
I'd love to go into a new week with a glimmer of hope for my kids future, anybody have any to offer?

The stock market is up. The DOW has recovered all 2009 losses. A few big banks are raking in obscene profits again. GM finally went ahead and declared bankruptcy and stopped burning through billions of tax-payer dollars. Most home developers have finally stopped building, which will help the housing market to stabilize. Interest rates are still low, when you can get a loan. There are some great deals and incentives to be had on new cars. And at the end of the month, we'll be able to get up to $4,500 from the government for trading in a older, gaz guzzler on a car that gets good mileage. (Whether we think this is a good idea or not, it will allow a lot of people to upgrade to a newer, safer vehicle with good fuel economy.)

I mean no disrespect to the many Americans still suffering in a lousy economy. But there are a few bright spots here and there.

Curt Harms
07-21-2009, 9:38 AM
the hangover is memorable too:eek:.

Brian Elfert
07-21-2009, 12:07 PM
I want to see a law passed that will make your primary residence tax exempt at age 65. If a salary cap is preferred that would be fine, limiting the exemption to incomes under $100,000.00 or less.


That would REAL fair to those of us in our 30s and 40s. So we let those still working pay 30% to 50% more on our property taxes. The city, county, and school district are not going to suddenly slash expenses by up to a third to make up for the loss of revenue. Those of us in our 30s and 40s are already paying tons of money into social security that we'll likely never see a dime of.

There will be millions of baby boomers reaching age 65 over the next ten to fifteen years. I've seen estimates that baby boomers own 40 million homes.

Brian Elfert
07-21-2009, 12:15 PM
Just got a notice today that Bank of America will no longer let us use our line of credit because of falling home values. We have been responsible and instead of refinancing (which would have been easy many times), we used our LoC for home repairs/modifications as needed. We never missed a bill. What makes me really mad is we sought assistance from BoA to get a better rate on our mortgage (from 6.25% to 4.5 or so a while back). Nope, we just didn't qualify. We had jobs, we paid on time, but we are technically under water a bit on our home value. Nothing they could do for us.


If your 1st mortgage is owned by Freddie Mac or Fannie Mae (Many are) there is a refinance program you are eligible for even if your first mortgage alone is 105% of the home's current value. They ignore all second mortages when doing the calculations. For Freddie Mac you must refinance through your current loan holder.

Chase/Washington Mutual did refuse to refinance my home under this plan because I am already at 5.5% fixed. The loan officer simply said even if it dropped to 4.75% the fees wouldn't be worth it. I could have called back and forced the issue, but they said they were 60 to 90 days behind in processing and rising rates would have killed the deal. I could have saved about $150 a month at 4.75%. Rates today are between 5.25% and 5.5%.

Jeffrey Makiel
07-21-2009, 1:12 PM
I want to see a law passed that will make your primary residence tax exempt at age 65. If a salary cap is preferred that would be fine, limiting the exemption to incomes under $100,000.00 or less.

It seems to me that the total taxes paid on a home throughout a working career is enough and it has to have an end to prevent people from losing their homes.

Maybe I can start a State-wide movement to stop this kind of Governmental abuse. It may very well be time to raise the stars and bars flag once again here in Virginia as a protest against taxing people out of their homes :)
.

Most folks over age 65 today have a pension plan.

Most folks over age 68 are on Social Security to supplement their income.

Most folks over age 65 have Medicare Parts A, B & D.

Most folks over age 65 in New Jersey that have an income less than $40K receive assistance on their property tax via the Homestead Rebate Tax or the Property Tax Relief program.

Most folks over 65 had two or three kids in public schools at a K-12 cost of $120K per student x 3 = $360K in today's cost.

This is probably a golden time for senior citizens albeit not ideally perfect. All of the programs above either no longer exist for the younger generations, or are degrading at a rapid pace.

Please, no more exemptions. Fix the root problem instead.

-Jeff :)

Jim Becker
07-21-2009, 9:01 PM
I want to see a law passed that will make your primary residence tax exempt at age 65. If a salary cap is preferred that would be fine, limiting the exemption to incomes under $100,000.00 or less.

I like your idea in general, Keith, but that income cap may be a little low by the time some folks arrive at age 65 in certain areas; particularly couples who both worked in careers and have retirement benefits from careful savings. (Close to 30% of my income goes toward retirement automagically)

Frank Hagan
07-21-2009, 9:10 PM
That would REAL fair to those of us in our 30s and 40s. So we let those still working pay 30% to 50% more on our property taxes. The city, county, and school district are not going to suddenly slash expenses by up to a third to make up for the loss of revenue. Those of us in our 30s and 40s are already paying tons of money into social security that we'll likely never see a dime of.

There will be millions of baby boomers reaching age 65 over the next ten to fifteen years. I've seen estimates that baby boomers own 40 million homes.

The age group between 65 and about 75 has the most disposable income of any group. After that, they become poor as they spend their savings (and have health expenses). A special subsidy to the people who are the wealthiest as a class doesn't make sense to me either (and I'm closer to that group than the 30 year old group!)

For property tax, I think a zero-based system is best. You pay property tax on the actual value of the house at the time you purchased it. You know what the taxes will be as long as you live there. If you move up into a more expensive house, you know you will pay more. There's a built in inequity for those who buy your house for more money than you did, but they have the ability to see and plan for the higher tax bill.

That's basically what Prop. 13 did in California. The sentiment in the state changed when people on fixed incomes were being forced out of homes they owned outright, with no mortgage, to pay property taxes that went up every other year. With ballooning valuations, the taxes easily exceeded the old mortgage payments and the incomes of the poor and others on fixed incomes.

Keith Outten
07-22-2009, 12:40 AM
My concern is for the lower end of the income spectrum. I expect that a couple with over 100K in income could afford to pay their property taxes and would not be in danger of losing their home to the taxman. In our neck of the woods there are a lot of people who live on nothing but Social Security, many of them never made even half of the 100K limit per year.

I don't think that items like boats and motor homes should be exempt from personal property taxes

Jeffrey Makiel
07-22-2009, 7:10 AM
My boss once made a profound statement to me. He said that New Jerseyans never really own their home, they just lease one from the local government.

-Jeff :)

Brian Elfert
07-22-2009, 12:45 PM
Again, who is going to pay the property taxes that those over 65 with incomes under $100,000 don't pay under this proposal? Most folks over 65 aren't making over $100,000 a year.

California has dug itself a deep hole partially as the result of Prop 13. Does Prop 13 actually limit the dollar amount one pays in property tax, or just the assessed value? If only the assessed value is fixed then the taxing authority could still increase the tax rate to raise more money.

I suspect things like Prop 13 aren't helping the housing market. Someone may decide to stay in a home they have lived in for say 10 years instead of buying a larger home for a growing family simply because the property taxes are so much lower.

Larry Edgerton
07-22-2009, 10:26 PM
I recently sold my commercial woodworking shop because it would no longer support the taxes, and the building and properties were paid off. I am not alone.

The answer to our situation is that we have to stop demanding more and more from the government as a nation. I realize that most of us here are hard working individuals that do not ask for much, but the attitude, as a nation, that we are entitled to this or that has brought us to this point.

Look at the cost of educating our children. Compare what it costs today to what it cost 30 years ago and then compare scolastic accomplishments. The difference is not justified.

We have to learn to say "No, we can not afford that" to some of the off of the wall requests. Flame me if you wish but the cost of the special needs programs are way out of line with the actual value delivered and I am not really willing to finance that. There I said it, ogre that I am, I am not willing to pay for whatever someone dreams up, just so that everone has an equal opportunity. Life is not fair.

Healthcare....... Political, but I will pay for my own, thank you, but not for yours.

Government waste. Why should government programs be so inefficient? Why should most contracts go to minoritys when 65% of us are white? Shouldn't the contracts go to the most efficient, no matter what race? Why are state workers allowed to waste our money, shouldn't they be able to be fired just like any other job? There is so much cost that can be cut in government that it is staggering, but as with any bureauocracy they are self perpetuating, creating their own security by perpetuating the need for their services by getting nothing acccomplished.

It is said that any democracy will fail when the government realizes that it can control its own future by voting in what the people want, thereby collapsing under its own weight. That is what is happening now, and I am sorry that I had children, because I fear for their futures, and especially my grandchildrens futures.

This home equity problem is not your real problem, it is just one small symptom of a nation that is ill. We need to make some hard decisions, but those decisions are not being made. We need to just say no......

Steve Rozmiarek
07-23-2009, 12:47 AM
This home equity problem is not your real problem, it is just one small symptom of a nation that is ill. We need to make some hard decisions, but those decisions are not being made. We need to just say no......

Well said Larry.

Frank Hagan
07-23-2009, 1:28 AM
Again, who is going to pay the property taxes that those over 65 with incomes under $100,000 don't pay under this proposal? Most folks over 65 aren't making over $100,000 a year.

California has dug itself a deep hole partially as the result of Prop 13. Does Prop 13 actually limit the dollar amount one pays in property tax, or just the assessed value? If only the assessed value is fixed then the taxing authority could still increase the tax rate to raise more money.

I suspect things like Prop 13 aren't helping the housing market. Someone may decide to stay in a home they have lived in for say 10 years instead of buying a larger home for a growing family simply because the property taxes are so much lower.

Prop 13 passed in 1978. It has nothing to do with the state's problems now, 31 years later. Our budget problems have to do with spending that exceeds the growth in population and inflation. The housing market in California is (was) one of the strongest precisely because of things like Prop. 13. Homeowners know how much they are going to pay for the life of their loan.

Prop. 13 allows the property tax to be 1% of assessed valuation, plus any bonded indebtedness. The voters can also vote in special assessments if they like. In most areas, the tax rate is 1.25% because of prior bond debt or taxes passed by the voters. Assessed values can only go up 2% or 3% a year, a safety valve because of our historic volatility in home prices (previously, the counties would assess higher, but never adjust down). The assessed value is the price you paid for the house, as long as it is close to market value (no cheating by paying your parents $1 for a house).

Many counties also have a separate assessment, called "Mello-Roos", that is usually a 20 or 30 year bond payment for infrastructure (Mello-Roos fees are "voted in" by the landowner ... usually a developer that owns a large tract of land ... and the payments are divided up equally among the new property owners.) Like your property taxes, the Mello-Roos fees cannot increase much, so you have a baseline to budget for, and you aren't forced out of your home because of ever increasing taxes.

Taxes may be a necessary evil, but they are also an instrument of tyranny. Economic freedom is one of the primary freedoms that allows all others to be secured; without John Locke's "Life, liberty and pursuit of property" we would all still be serfs.

Mike Henderson
07-23-2009, 10:30 AM
Prop 13 has been a lifesaver for many people in California but it has had some problems.

One is what you mention, it's very hard for someone to move to a new house if they've lived in their present house for a long time. Even if the new house was of less market value than their existing house, their property tax would go up because the sale price was greater than the existing assessed value. There's been some laws passed that allow someone to "transfer" their assessed value to a new house under certain conditions.

The second is fairness. Someone buys a house in an existing subdivision and is paying substantially more in property tax than their neighbor who has lived there for a number of years. But as Frank pointed out, at least they know the situation going in.

One of the ideas behind Prop 13 was that houses would turn over on some frequency so the taxes would be reset to market value. But subsequent laws allowing heirs to "inherit" the existing taxable base, plus some ability to "transfer" the base to another house have affected that basic idea.

I haven't examined how Prop 13 affects commercial property, but I would expect you could set up a corporation to hold the property and then allow a "buyer" to purchase the corporation rather than the property. This would allow the corporation to maintain the existing assessed value. Maybe someone who knows California commercial property could say if that works. There's been talk of modifying Prop 13 so that it only applies to residential property but I haven't seen any real action on that.

Anyway, Prop 13 has done what it was intended to do, and that is to prevent rapid increases in property taxes which could drive people out of their homes. It's nice to see your property value increase, but it's not nice to have to sell your home because you can't afford to pay the increased taxes.

Mike

Butch Edwards
07-23-2009, 7:21 PM
I've been looking at homes in NC in the 500K to 700K price range.

One was listed at $537K and just sold for $490K. Three years ago it was appraised for $675K. That's a $185,000.00 drop in real value.

Can't blame the banks for being cautious.
.


..AFAIC, the home was over-priced by at LEAST $185K to begin with..and probably more that that!!! that was the trouble, over-inflated home prices... now it's trying to get back to reality prices. some will lose, and thats' just the way the ball bounces....banks have to assume thier share of the responsibility as well as the buyer/seller.they saw $$$ signs as big as the Empire State Building. Greed made this problem, and many,including some of my own family, will suffer because of it... and the bottom hasn't hit yet in that area, by reading what's happening in the commercial real estate market...:cool:

Jeffrey Makiel
07-24-2009, 8:09 AM
Greed has always been. It's the recent lack of controls and accountability which has changed.

Prop 13 never made sense to me. The existing family pays 1K in taxes, the new family pays 5K in taxes. Does the new family's vote also count 5 times more when a new proposal requiring more tax revenue comes along?

-Jeff :)

Dennis Thornton
07-27-2009, 11:21 AM
I don't think Bank of America has a clue. We used to use them for our checking. Since we both work we have to make our deposits in the autoteller. With both of us receiving weekly paychecks, rental income checks, consulting, etc there's always a half dozen checks to deposit.

We drive up to the bank and my wife goes up to make the autoteller deposit. BofA has a "new" system where it scans each check. About 75% of the checks require multiple scans to get accepted, some don't get accepted at all. She comes back livid (red hot pissed). If quickly find out why I saw several aggravated people walking away from the ATMs while my wife was trying to make a deposit.

I take time off from work a couple days later. There's a "helper" outside assisting people with problems they're having with the new system. I go in and make the deposit with the teller. I tell her about the problem we have. Instead of trying to help, her response was "Most people like the new system". I state that that is not the results I'm seeing. Her response was more of the same "there's no problem".

I hope they're saving a lot of money on their new system. After I made the deopsit I went over to Bank of the West and opened a new account. We moved everything over to it over the next couple weeks and then closed the BofA account.

I don't think that BofA mistreats their customers on purpose. It seems that as a business gets bigger they forget that they're there to service the customer. You pay your bills on time, follow the rules, but since your numbers come under an arbitrary "line" you get cut off. That's the price we pay when we choose the massive company over the local one. A small local bank would look at your account and say - "You're running in the danger area, but we've done business with you for years and we know we can trust you".

Don Bullock
07-28-2009, 12:04 AM
I recently sold my commercial woodworking shop because it would no longer support the taxes, and the building and properties were paid off. I am not alone.
...
This home equity problem is not your real problem, it is just one small symptom of a nation that is ill. We need to make some hard decisions, but those decisions are not being made. We need to just say no......

First of all Larry, I'm sorry to hear about your business and no, you are not alone.

Trying not to get political and violate the TOS, your entire statement is well written and very true. Far too many in this country feel that they are entitled to things that they have not "earned." They expect the rest of us to pay our bills and theirs.

You mentioned the special needs programs. The average tax payer would be amazed and shocked at what this costs. I was a teacher for 38 years and still can't believe how much was spent on individual students with "special needs" as compared to the "average" students. The school where I taught just underwent a major remodel funded by bond money. Almost everything that was done was to accommodate special needs students. Very little of the work, if any, will "improve the educational opportunities or learning environment" of the general school population.

Over the years people have wondered what happened to ancient civilizations that caused them to crumble. Well the Greek Empire folded mostly because of excessive taxes and people who didn't want to work.

Jim Becker
07-28-2009, 9:28 PM
Don, as a parent of a child who is leveraging "special needs" assistance via an IEP to keep up with her classmates despite a serious language-based learning disability and sequencing problems, I have to say that I'm thankful that the assistance is available to us. She also qualifies individually for Medicare, meaning there is additional access to resources for emotional needs that have been unavailable to us in the private market. These things are helping to insure that she'll be able to live her adult life independently. So you can imagine that I have no qualms about supporting special needs programs and accommodations in the schools for kids who need them to have the chance to learn and grow with their peers, despite the challenges that life has thrown them and their families. I also believe that the mainstreaming that is possible with these supports makes for a better general student population's education because it's much closer to what real life will be "out there".

Neal Clayton
07-29-2009, 12:14 AM
could be worse. alot of folks out there refinanced their house to pay of credit cards (bad idea to start with) and wound up with ARMs that adjusted up, and then their credit wasn't good enough to refinance to a fixed rate after the adjustment. so they have no way out.

the above happened to my realtor's secretary last quarter.