Mortgage Mess Questions

Why is it that someone with similar credit scores to mine would be able to get a loan to refinance their home to avoid foreclosure but because my mortgage was paid off and I am now in a better position financially I cannot get a mortgage due to some late payments. The payments were late because I made sure I could pay my mortgage so as to avoid foreclosure.
SAVAGE SAYS: I don't have allthe details of your situation -- and your friends -- but if you're not satisfied with the service you receive at one mortgage lender, try another! There must be a reason for the turndown. Have you checked your credit report?

I understand most of the blame for the current state of the real estate market is the result of banks approving buyers that had no business purchasing a home or did not fully understand the terms of the type of loan they were getting into. However, why does no one talk about the appraisers? They are the ones who inflated housing prices so buyer's could take out home equity loans or not need as much for a down payment. I believe this was the root of the problem. Had these properties been assessed properly maybe we wouldn't have as many foreclosures or most of these buyer's wouldn't have been approved for their loans?

SAVAGE SAYS: Good point. Inflated appraisals do bear a small part of the blame.

GO GIRL! Finally someone who has the guts to put the blame where it belongs. Kudos! to you, Terry. Starting with Greenspan and going down the line you hit the nail on the head. I'll admit there were some who tried to live beyond their means and bought homes that they could not afford. But, who encouraged them to do it? Greenspan and the rest are not surprised they are embarrassed about their stupidity and now want to blame each other or worst the stricken homeowners who now stand to lose everything. What a bunch of losers!
Thank you, I'm proud of you. Please, keep up the GOOD WORK!

Let me commend you regarding your Monday, May 5, article re: the mortgage mess.

Your "last question" was addressed to property tax assessors and is especially important to me. I would like to share something with you. During the summer/fall of 2007 I attended a public meeting at the Romeoville Recreation Center in Romeoville, IL. The meeting was to address property taxes in Will County, IL.

During this meeting residents raised the question as to why our property taxes were going up while our property values were declining. The Will County Supervisor of Assessments, Rhonda R. Novak responded by saying that property values in Will County were not going down....in fact she said they were up 7 to 10% !!!!

We asked how they arrived at these figures and Ms. Novak said her office and another county agency did the surveys for the assessed valuation! This sounds like the fox guarding the hen house!

I and others present do not believe that somehow real estate in Will County, Illinois is doing that much better than the rest of Illinois or the country for that matter. Yet, Rhonda Novak tells us that our property is worth 7 to 10% more than the previous year.

I am writing this to let you know what at least one property tax assessor is doing about property taxes in the midst of the huge price drops we've seen? Please keep Rhonda Novak in mind....she is not going to be the first to heed your advice!!

Thanks for listening --

SAVAGE SAYS: Assessors need to feel the pressure from the public to be realistic about current home values. They'll certainly be getting pressure from the other side -- the local government, which is likely seeing a drop in sales tax revenues, and will be hurt by a drop in property tax revenues.

As a previous post in this category notes, it's not the assessors who create the tax bill. They just create the BASIS for the tax bill. So in addition to putting pressure on the assessors, watch your local and state taxing authorities who are not going to stand by and watch their revenues decline as the tax base declines!

Terry,

No, I don't think readers are 'bored' by these stories. Most are very sad, even tragic, but they are 'human interest' stories. Placing the blame is important, but it's too late for that. What is need now are suggestions for making the broken system work, and includes harsh penalties for those who abuse the system.

It's a sad state of affairs that America seldom fixes a problem - it's not politically expedient - until it has caused great harm. But that's where we are now and what's needed are reasonable plans for making the mortgage system work well in the future. That shouldn't be too difficult because it worked well in the past, before the greedy few destroyed the game for everyone.

NOTE: My apology follows this letter!

Dear Terry,

I am a long time reader of your column and a great fan. I have clipped and mailed your columns to many friends over the years. Imagine my shock, when I read the last paragraph of your May 5th column concerning property taxes.

Please do not perpetuate the myth that property assessors raise peoples taxes. I have spent the last 35 years of my life explaining to thousands of property owners, that their taxes are driven by the spending habits of the local taxing bodies(i.e schools, parks, libraries, fire districts, counties, townships, etc). Property assessors are responsible for appraising and assessing property based on an ad valorem property tax system. We do not set the market, we only measure what is happening in the real estate market place. If property values are rising due to buyers paying more for properties, then assessments will rise proportionately.It is not the goal of any property assessor to "raise property taxes". We are saddened every year when we hear of the pain these ever rising taxes are causing. We try to assist as many property owners as possible by explaining exemptions and assisting those who qualify with the application process.It was assessors, back in 1991, who pressed the Illinois legislature to enact the property tax limits. We, more than any elected officials, understand the excessive burden placed on property owners by the local taxing bodies.

I am attaching a document we recently distributed in our jurisdiction to help explain why property taxes will not go down even if property assessors lower assessments due to a declining real estate market. The sad fact is that local taxing bodies are the only ones who can cut back property taxes. And they can do this by lowering their spending but then services will have to be reduced.

We are not asking for an apology for your misleading remarks, but perhaps you can write a column explaining how assessments are not the cause of high or increasing property taxes. Local governments collect all the property taxes and they are the only ones who can increase or decrease the property tax burden. Such a column would help spread the "Savage Truth" about the property tax system.

I invite you to visit my web site at www.bloomingdaletownshipassessor.com where you will find a wealth of information about the property tax system. This can be a great resource for your column about the property tax system.

Keep up your usually excellent work and advice to the reading public but please don't believe that property assessors take any delight in raising property taxes.

Hank Gianvecchio
Assessor
Bloomingdale Township
Du Page County

SAVAGE SAYS: First let me apologize. You are correct. Assessors only give property values based on recent sales. It is the legal local taxing bodies that set tax rates and the total amount collected.

I SHOULD have said: when will the assessors lower the property values on which property taxes are based.

But you're correct,and I'm betting that even if assessors get around to lowering property values based on declining home prices, the tax bills won't go down! That's because the local taxing bodies won't stand for a cutback in revenues, and will raise the RATES!

Again, apologies to the assessors around the country. But I hope you quickly move to reassess to lower values, so I can make a big deal out of the fact that tax bills don't go down, even though assessed values may drop!!

Terry, thank you for the information. I couldn't agree with you more. If you or one of your assistants could take a moment and answer a question. In addition to the culprits you mentioned, does the U.S. Congress have any responsibility for the mortgage mess? I've seen and heard some reports that indicate the Congress pressured banks to make loans to minoiities even though their qualifications were marginal. I respect your opinion and would like to learn your viewpoint. Thank you.

SAVAGE SAYS: Aha -- good point! It was called the Community Reinvestment Act, and in the early 1990's it required banks and S&Ls to make mortgages in low income neighborhoods. In some cases, that required banks to lower their lending standards. But that was seen as an offset for the benefits of getting home ownership -- and the price that comes with it -- into neighborhoods that would then anchor future growth and development.

But nothing that the Community Reinvestment Act did reached the scale of unqualified lending that we saw develop out of pure greed a decade later.

PS It's all me -- no assistants!