Southland mortgage brokers arrested

A trio accused of stealing $1 million are in the news today. From the story at latimes.com:

Three Southern California mortgage brokers have been arrested on suspicion of stealing nearly $1 million from borrowers seeking to adjust their home loans.

Michael McConville, 31, and co-workers Garrett Holdridge, 23, and Alan Ruiz, 28, are scheduled to be arraigned Monday in Los Angeles County Superior Court on charges of bilking more than 70 homeowners, said Scott Gerber, a spokesman for the California attorney general's office.

The three were arrested Thursday after a complaint listing 44 criminal charges was filed by the attorney general's office.

Normally, that office files civil complaints, but the investigation in this case led to a criminal complaint, Gerber said.

"This is essentially grand theft," he said. "We looked at the evidence and that's what it showed, and that warranted criminal charges."

Interestingly, the story also mentions those official-looking property tax reassessment mailings, which I know I have received on several occasions.

--Lauren Beale

Thoughts? Comments?

 

Treasury Secretary Geithner's New York home has no takers

 

It's out of our area, but if you're having trouble selling your home, here's some solace from the misery-loves-company department. From the Associated Press:

 The real estate market’s troubles are hitting close to home for Treasury Secretary Timothy Geithner.

After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn’t sell and recently rented it out instead, according to real estate agents familiar with the deal.

Geithner put his five-bedroom Tudor near leafy Larchmont on the market for $1.635 million in February, after heading to Washington for his job as the nation’s top economic official.

A few weeks after the asking price was dropped to $1.575 million, the home was rented for $7,500 a month on May 21, said the agents, Scott Stiefvater of Stiefvater Real Estate and Debbie Meiliken of Keller Williams Realty New York.

 While that sounds like a lot for rent, it probably falls a bit short of the monthly mortgage payments on the Geithners’ two loans totaling $1.25 million, plus $27,000 a year in property taxes.

To me, it doesn't seem like it's been on the market an inordinately long time but what stunned me as a Californian are those property taxes.

-- Lauren Beale

Thoughts? Comments?

Photo: Records the Geithners paid $1.602 million for the home in 2004. Credit: Stephen Chernin / Associated Press

L.A. County to lower assessments

L.A. County Assessor Rick Auerbach said today that 333,000 homeowners will get their property taxes reduced thanks to a review that has lowered assessed values. The average reduction in value for single-family residences is $126,000, or about $1,400 off the annual property tax bill. Affected homeowners will be notified by mail. Here's The Times' story.

For more information, go to http://assessor.lacounty.gov.

 -- Peter Y. Hong

Property tax revenues to drop in many Southland cities

In the "less is less" category, see "Cities brace for revenue losses as property values continue to drop" at latimes.com:

Assessors in Los Angeles, Riverside and San Bernardino counties are forecasting the first drops in property tax collections in more than a decade, presaging reduced revenues for many cash-strapped local governments.

Until now, property tax revenues had been a relatively stable source of money for cities amid a recession that has dramatically reduced sales tax intake, particularly from car dealers.

Even with the decline in home values, the property tax base in five Southland counties grew last year thanks to continuing sales and the completion of construction begun during the 2003-2006 building boom. But assessors in those counties said they have reduced the value of more than half a million properties and expect to make deeper cuts to their rolls by the summer.

Not surprisingly, San Bernardino will be harder hit -- with an anticipated 5.7% drop -- than L.A. County, which projects a 1% drop. Orange County expects to retain the same property tax base or see growth up to 2%. Ventura County expects the base to remain flat. Has anyone out there gotten their property tax lowered and, if so, by how much?

-- Lauren Beale

Thoughts? Comments?

Photo: John Curulli had his Altadena home, purchased in 2006, reassessed from $470,000 to $425,000 and saved nearly 10% on his property tax bill. Credit: Anne Cusack / Los Angeles Times

Property tax review is free, so why pay for it?

"Offer to reassess home raises red flag" Thursday at latimes.com explains one piece of mail Californians may have recently received:

If you're a homeowner, you may have received an official-looking letter recently informing you that your property needs to be reassessed for tax purposes. The cost of the reassessment is $179, but you'll have to pay an additional $30 if you don't mail in your application within the next few weeks.

"It's a scam," Los Angeles County Assessor Rick Auerbach told me. "They're trying to make you think the letter comes from my office so you'll pay them to do something you could do yourself for free."

The letter is actually from a company called Property Tax Reassessment, which gives a Los Angeles post office box as its address. Auerbach said the company's letters have prompted a raft of complaints from homeowners to his office and to other assessors statewide.

"This outfit is particularly disturbing because they seem to be sending their notices to everyone," said Larry Stone, Santa Clara County's assessor in Northern California. "The letters are terribly deceiving."

Read more about it at the Los Angeles County Tax Assessor's website, where it is noted: "There is no reason to pay for a review that will be done for free."

-- Lauren Beale

Thoughts? Comments?

Photo: A letter from Property Tax Reassessment includes a deadline. Credit: Lauren Beale / Los Angeles Times

The less homes sell for, the less property tax is collected

"Property tax revenue plummets with home values" Sunday in the San Francisco Chronicle takes a look at the future of state property tax coffers:

California could pay the price for the foreclosure crisis for years to come, thanks to Proposition 13, the 1978 voter initiative that caps property taxes.

As banks feverishly dump foreclosed homes at cut-rate prices, and as neighboring homes change hands at similar bargain-basement rates, those amounts are enshrined as the new basis for determining property tax until the homes are sold again. Under Prop. 13, that basis can rise a maximum of just 2 percent a year, even if the home is worth significantly more. The consequence is likely to be a revenue crunch for the public services funded by property tax revenues.

"This is going to have a long-term impact on the state budget and on local budgets," said Jean Ross, executive director of the nonpartisan California Budget Project in Sacramento. "It means that even after the economy recovers, state and local government budgets will not recover fully."

I'm not quite following the dig at Prop. 13 here, but I'd be curious to know what L.A. Land readers think about the proposition so many years out. Should we still have it? Is it fair? I get the point, however, which is explained further:

Here's an example: A four-bedroom home in Antioch sold for $700,000 in 2005. Annual property taxes were $7,000, or 1 percent of the purchase price. If the home goes into foreclosure and sells for $400,000, a common scenario in a county where values have plummeted, the new tax would be $4,000 -- or $3,000 less.

Consider that almost 250,000 homes in California were repossessed by lenders last year, according to ForeclosureRadar.com, and you get a sense of the mega dollars lost to the cities, counties, K-12 schools, community colleges and special districts that rely on property tax revenue.

Loans on those properties amount to $107.8 billion, ForeclosureRadar said. Assume the loans roughly equaled the previous purchase prices, and make a conservative estimate that the foreclosed properties got resold for 35 percent less than those previous prices. That means $37.7 billion in property values has been wiped out -- which amounts to a $377 million bite out of annual property taxes that will persist until the properties are resold.

In the 31 years since Prop. 13 was enacted, property tax revenue has increased every year -- until now.

Also of note was this prediction a couple years down the road:

A forecast from consulting firm Beacon Economics predicts that property tax revenue in the state will fall 6.1 percent in the next fiscal year, which runs from July 1 to June 30, 2010. The following year will see a 3.6 percent decline, followed by a more modest 0.8 percent drop, it predicts. Only in 2012-13 will property tax revenues rise again and then only by 1 percent, Beacon projects.

Sounds like that's a market bottom call for California housing values. Hat tip to Scott for pointing out the story.

--Lauren Beale

Thoughts? Comments?

Photo: A foreclosed home for auction in Moreno Valley. Credit: Francis Specker / Bloomberg News

Department of bad ideas: L.A. mulls big-house "luxury tax"

I try to greet each day with gratitude, and it is particularly easy to be grateful this morning because I'm reminded how lucky I am: I don't have to cover local politics in Los Angeles.

If I did, I'd have to take seriously the latest cockamamie idea from Councilman Richard Alarcon for a "luxury tax" on residents who own houses that are larger than 5,000 square feet. From City News Service, via the L.A. Times' L.A. Now blog:

Under the proposal, owners of houses that are between 5,000 and 5,999 square feet would be taxed $1,000. Every additional 1,000 square feet would result in another $1,000 in the tax up to 10,000 square feet, which would result in a $6,000 fee. ... In the city of Los Angeles, there are 6,336 single-family residences that exceed 5,000 square feet and 534 houses larger than 10,000 square feet. Taxing those residences would generate $15 million a year. The tax would most affect homeowners in Bel Air, Beverly Crest, Brentwood, Pacific Palisades, Encino, Tarzana, Hollywood, Sherman Oaks, Studio City, Toluca Lake and the Wilshire area. A report by the Chief Legislative Analyst found the “luxury tax” would violate the state constitution if it is based on increments of 1,000 square feet.

Two cents: This is a ridiculous idea. Property should be taxed based on its value, not its size, or its carbon footprint, or how big a shadow it casts.

If you want to read a more serious analysis of the Alarcon proposal, the L.A. Times' Robert Greene has it, here.

-- Peter Viles

Photo credit: Los Angeles Times

Property tax reassessment deadlines

Although many California counties have a Monday deadline for submitting requests to reassess home values for property tax purposes, as recently reported at Inman News, Southern California is all over the map on this.

First the bad news: If you own a home in Riverside County you've missed the deadline, which was Sept. 1.

In Orange County,  the last day to file an appeal for assessments dated Jan. 1-July 1, according to the assessor's office, is indeed Monday.

Residents of Los Angeles County have more time, with a Dec. 31 deadline to request a "decline-in-value" review. The same deadline applies in San Bernardino and Ventura counties.

But it's kind of like holiday shopping. Why wait until the last minute?

-- Lauren Beale

Your thoughts? Comments?

Illustration: Richard Downs / For The Times

Property tax cuts coming to 128,000 L.A. homeowners

News item from today's L.A. Times: "The number of homeowners in Los Angeles County who will receive a lower property tax bill grew to 128,000 this week because of the deteriorating real estate market.... Those receiving a reduced assessment in Los Angeles County will receive a written notice before June 30. On average, their tax bills will be $750 lower than last year."

Don't like the county's decision on your reassessment? You can appeal, but be patient: The current backlog to have your appeal heard now stands at one year, The Times reports.

Backstory: In early May, the assessor's office reported it would lower property tax bills for 89,000 L.A. homeowners by an average of $684.  The assessor's office is in the process of reviewing assessed values of 318,000 L.A. County houses that changed hands between July 2004 and June 2007.

Property tax cuts coming for 89,000 L.A. homeowners

I have good news for 89,000 L.A. homeowners today: You're getting a property tax reduction.

Now I have bad news: The value of your house has declined by, on average, $68,000.

Update from the L.A. County Assessor's office: The office is roughly halfway through a review of 316,000 single-family homes and condos for potential decline in value. The review covers homes purchased between July 1, 2004 and June 30, 2007. Numbers:
--186,000 homes have been reviewed.
--Assessed values have been reduced on 89,000 homes.
--Average reduction in assessed value is $68,400.
--Average reduction in property taxes is $684 per house.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: L.A. Times