WatchA reader pointed out that a foreclosure near her is paying significantly higher property tax than she is, for a similar house. The bank is paying the property tax, as they should. Property taxes are public record.
This higher property tax means means the state has no motive to get that foreclosure sold and occupied again. The new price would be lower that the last sale price, and so the property taxes would be lower, and the state would lose revenue.
So the state has a direct financial interest in keeping at least some foreclosures empty. Perhaps this influences state policies.
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Wow. So who can explain why CA is "broke" when property taxes have doubled and tripled over the last decade? That is the magic question.
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Fremont, CA
banks are great owners, the dont generate car traffic and they have deep pockets
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KILLERJANE says
It is the magical spending. Typical socialism,unions,and list goes on and on...
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Saint George, UT
elliemae's website
i would think that the state wouldn't give a shit either way on the house sale issue. why would they?
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Scottsdale, AZ
robertoaribas's website
Patrick says
owners have a motive to sell homes, in this case the bank.
Once the foreclosure has happened, there is no state policy that prevents a bank from selling the home directly. State policies may delay foreclosures, however, in that case, the defaulting owner would still owe every penny of the tax.
At some point, you really need to quit grabbing at every straw to try to make a conspiracy case.
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Los Angeles, CA
robertoaribas says
*Do* the banks have a motive to sell? *Does* the gubbermint benefit from higher tax valuations from unsold foreclosures? We should start there, out of respect for the original post, before we go off into our usual "I'm right, you're wrong" ranting.
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Well, I know in Nevada investor tax rates are .08 and owner occupied .03. So then if investors are dominating the market, like in Vegas where prices have tanked 60%, the tax revenue is somewhat getting balanced out by the investor.
I think the equation in LV goes like this:
56,000 taxable assessor amount
x .35
=19600
19600 x .03(owner occupied) = $588 taxes
19600 x .08(investor) = $1568 taxes
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bubblesitter says
Not good enough answer to my question. IF TAXES HAVE DOUBLED AND TRIPLED OVER THE LAST DECADE, THEN WHY IS CA BROKE? Where da money? Those program cost haven't doubled and tripled.
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Hermosa Beach, CA
KILLERJANE says
Sadly, I suspect the answer is more or less "up people's noses." Perhaps not literally. In LA, there have been plenty of stories about how government employees who had company cars, cousins (hired as consultants) had company cars, police officers living in expensive homes, 100s of 1000s in missing fuel from city depots or charged to company cards, etc...
There was too much money, too few checks and balances and too many corrupt people. Might as well have been the Sopranos.. everybody taking their little cut until they spent it all. A ponzi scheme of corruption and it collapsed.
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Over a year ago the elementary school my kid goes to sent home a request to parents. Since they had to make budget cuts, we needed to choose between a librarian and a school nurse. It is all a joke.
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Yet prisons have made few cuts. Well paid staff too. Three strikes and yer out and all that.
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I have known govt. employees using govt. cars to do personal chores while on work. KJ, what other places can't you think of where the surplus can be blown away?
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Banks can always reassess it to pay lower taxes.
But yeah there is plenty of you scratch my back and I'll scratch yours in this industry.
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bubblesitter says
Recent scandal we had was millions of dollars spent on gasoline by government that they can't account for.
Apparently someone allowed government workers to refuel without proper tracking it... so many just took it as a free perk for being a government employee.
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ptiemann says
I don't work for a bank. But I imagine they aren't dumb with money.
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Scottsdale, AZ
robertoaribas's website
There goes your California budget... Legalize and tax all drugs and treat addiction as a health problem. Then, legalize and tax prostitution...
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Pacifica, CA
"Banks can always reassess it to pay lower taxes."
No they can't, only county assessment officials can do that.
"This higher property tax means means the state has no motive to get that foreclosure sold and occupied again. The new price would be lower that the last sale price, and so the property taxes would be lower, and the state would lose revenue."
Local communites take the biggest hit with lowered property values. The bubble popping and all these inflated valuations coming down means the whole unsustainable payroll/pension scheme for public workers has been revealed. Cities spent to the limit w/all the money coming in from property taxes, and now we're all going to pay the price of that irresponsible political behavior.
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Property values have come down about a third from 2006? Well that isstill a hell of a lot more money than receive a decade ago.
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Mountain View, CA
LarryPatrickMaloney's website
You're only NOW figuring this out?
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San Francisco, CA
Philistine says
Apparently not. In the zip code where we are looking to buy, there appear to be 200 REOs.
Guess how many are listed for sale?
One.
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sean7825's website
robertoaribas says
The banks have no motive, they are servicer's and collect fees for holding, not selling homes. Also, past due taxes run with the property, so the defaulting owner doesn't pay the tax, the subsequent owner does (again not the bank - but the underlying investor).
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Pacifica, CA
A fascinating observation. Likewise when squatters are in houses awaiting foreclosure the bank pays the property taxes.
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Shawnee Mission, KS
Banks have too many foreclosed properties to monitor property taxes in each local. What can be ignored, is ignored by counties and the money garnered is thrown into the communal pot.
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Walnut Creek, CA
The state has no incentive to promote the solution to foreclosures because the state gets higher property tax revenue from the foreclosed property. Is that the argument?
In California I believe local government taxes and receives payment for property tax. What does the state have to do with higher property tax revenue when the state is not involved in the taxing or income stream? So, the state is to blame, not the banks, for the mess in the foreclosure process and unsold inventory? Did the state instituted 'liar loans' and easy credit? The state if responsible for a tanked national economy? Is this the logic I am reading??? Why bother to read this stuff?