Alert: Georgia in top 10 for mortgage fraud

The FBI recently released its 2009 Mortgage Fraud Report. Georgia was one of the states with the highest amount of mortgage fraud according to law enforcement and industry data. The FBI considered factors such as the number of loan investigations by state, the number of reported misrepresentations during the loan process, the number of foreclosure filings, and the prevalence of debt elimination schemes.

Other states named included Illinois, California, Florida, Texas, New York, Maryland, Colorado, Ohio, and Pennsylvania.

In related news at last week’s World Elder Abuse Awareness Day Scam Jam 2010 in Decatur, state Attorney General Thurbert Baker warned the audience of mortgage debt elimination scams. Baker said that some elderly owners become so financially desperate that they hand over the deed to their house to con artists claiming that they can help. Owners end up with their equity stolen in the process.

Atty. Gen. Thurbert Baker warns of fraud at Scam Jam

Potential scams should be reported to authorities such as the DeKalb district attorney, the DeKalb solicitor’s office, the Attorney General, or the Governor’s Office of Consumer Affairs.

Benfield on “property tax waivers”

LWV’s Voter Guide includes local candidates’ property tax positions

In questionnaires distributed to candidates for office, the League of Women Voters of Georgia asked, “What specific changes, if any, to property tax policy would you like to see?”

State Representative Stephanie Stuckey Benfield (D-House District 85), whose district covers parts of Decatur, gave one of the more provocative answers to the question of any local candidate for office, floating the idea of empowerment zones for depressed areas where property taxes could be waived. Here is her full response:

My district includes several neighborhoods that have been hard hit by the foreclosure crisis, so I'd work to enact changes in our tax policy to help those who are most in need. Some legislative ideas include: state rebates or tax credits for homeowners with modest incomes, property tax waivers in empowerment zones to attract new investors to hard hit communities, and encouraging more homeowners / renters to appeal their property tax assessments.

In response to the same question, Jason Carter (Democratic incumbent for Senate District 42) said he would like to see a bottom-up review of taxes in Georgia.

State Senator Steve Henson of North DeKalb says he would reinstate the HTRG property tax exemption. Henson is one of several politicians recently making a campaign issue out of the defunct exemption.

Decatur-area candidates Mary Margaret Oliver (Democratic incumbent in HD 83), Stacey Abrams (Democratic incumbent in HD 84), Tom Stubbs (Democratic challenger for SD 42), and Kenneth Quarterman (Republican candidate for HD 85) did not respond to the LWV survey questions.

Georgia's median property tax rate

With a median property tax rate of a bit under 1 percent of home value, Georgia falls smack-dab in the middle of residential property taxes nationwide according to this Tax Policy Blog map published yesterday:

Avoid assessment scams

The World Elder Abuse Awareness Day Scam Jam 2010 takes place today at the Decatur Active Living Center (231 Sycamore Street). The DeKalb County TRIAD event will provide information about scams and fraud to seniors.

Although property tax scams are somewhat rare, property owners should still be aware of recent developments in other states.

In March, Oregon property owners were flooded with solicitations to send in $189 fee to get your property taxes lowered. The letters were made to look like official government documents but were fake. The attorney general of Oregon issued a fraud alert to state residents. Fraudulent letters were also sent to cities in California in late 2009.

Although we have not heard of fraud like this recently in Georgia, we are likely to see an increase in the number of owners trying to appeal their taxes in 2011 because of assessment reform enacted by the state legislature. The new law will allow any property owner in Georgia to appeal their assessed value every year.

The new Georgia law may also result in an increase in the number of companies and consultants saying that they’ll help you file your appeal and reduce your assessment. While some of them may be true, be careful. Just remember:

• You can file your own appeal for free
• No government office in Georgia charges you a “service fee” to lower your assessment.
• When in doubt, call. The City of Decatur tax office can be reached at 404-370-4100, and the DeKalb County tax commissioner’s number is 404-371-2000.

The city tax office will have a booth at the Scam Jam with information about homestead exemptions for the elderly.

Campaigning for a property tax exemption

In what’s turning out to be a political hot topic leading up to the statewide elections this fall, another prominent politician has endorsed the restoration of the Homeowner Tax Relief Grant (HTRG). The HTRG was an exemption that Georgia homeowners received in addition to the basic homestead exemption. In Decatur the HTRG had reduced annual property taxes by about $250.  The HTRG was basically eliminated by the Georgia General Assembly in 2009 until the economy rebounds.

Wayne Hill, who served as chairman of the Gwinnett County board of commissioners for years and was integral in developing the Republican Party in Gwinnett, is seeking nomination to run for state representative in the Sugar Hill area (District 98). Hill told the League of Women Voters, “I would like to reinstate the State credit on property taxes for all citizens of Georgia.”

Former governor and Democratic candidate for governor Roy Barnes has made similar statements. In radio ads, Barnes has said defunding the HTRG was “not right and it's not fair and when I'm Governor, it won't stand.”

If more and more candidates from both sides of the aisle continue running on this platform, it’s possible that we could see legislation during the 2011 session to amend the HB 143, the 2009 act that limited the circumstances under which the tax credit could be funded.

News roundup for homeowners

• Countrywide has been accused by federal authorities of collecting excessive fees from mortgage borrowers.  On June 7, the AP reported that Bank of America, which bought out Countrywide, has reached a $108 million settlement to compensate the borrowers. 
• According to the AJC on Monday, “DeKalb County wants taxpayers to foot the bill to redevelop the sprawling GM plant in Doraville, a $36-million proposition.”
• The Hill says that Congress is considering the elimination of the tax deduction for mortgage interest (h/t TaxProf Blog).
• Zillow warns of “flopping”—an emerging form of short sale fraud.

School millage rates: some up, some down, says GSU

At an Urban Institute conference in late May on the effects of the housing crisis on state and local governments, James Alm and David Sjoquist from Georgia State University gave a presentation entitled “Rethinking Local Government Reliance on the Property Tax.”

Alm & Sjoquist look at national property tax trends for the first half of their slides, but then focus on Georgia as a case study. One of their observations (on slide #22 of their presentation) is this table showing that declining property values have not caused an increase in the number of Georgia school districts increasing their millage rates:

However, it looks to me like an increasing number of school districts are no longer lowering their millage rates.

Their full PowerPoint presentation is available here.

Update on IRS evacuation

TaxProf Blog gives the latest news links about the IRS mailroom grenade in Atlanta.

Evacuation near Atlanta IRS offices

WSB 750 is reporting on air that the Peachtree Summit building is being evacuated because of a possible grenade onsite.

It may be totally unrelated, but the news caught my attention because the IRS has offices in that building, and we remember what happened in Texas earlier this year when a man flew an airplane into IRS offices in Texas.

Fox 5 has a photo of the evacuation on its website.

Tax-exempt musicians?

In a case that could possibly affect property owners in Georgia whose tax-exempt status is murky, Athens-Clarke County is taking Nuci’s Space to court.  (See this article from the Athens Banner-Herald.)  Nuci’s operates a nonprofit venture for musicians but also stages for-profit concerts. They pay no property taxes, but Athens-Clarke argues that they should.

Meanwhile,the University of Georgia is being audited by the IRS for income from UGA’s non-educational ventures like its golf course. Athens-Clarke officials say the Nuci’s Space lawsuit would have no bearing on UGA because Georgia law is ironclad with respect to the non-taxability of schools. The outcome of the Nuci’s case should have no effect on educational, government, or religious institutions.

By the way, the largest tax exempt property owners in Decatur are DeKalb County, Agnes Scott, the City of Decatur, Columbia Seminary, the Decatur Housing Authority, DeKalb Medical, the First Baptist Church, Decatur First United Methodist Church, MARTA, and Decatur Presbyterian Church. Two final notes: 1) Decatur’s tax-exempt owners do pay stormwater bills and 2) they’re also some of the largest employers in town.

Assessment fairness under scrutiny

The sunk housing market, studies by the Atlanta Neighborhood Development Partnership, a news expose about property assessments, publicity surrounding the assessment reforms of SB 346, and a class-action lawsuit in Fulton County have all highlighted the discrepancies between falling property values and rising or stagnant tax assessments in Georgia.

Nevertheless, some owners did not file property tax returns during DeKalb County’s January to March return season. (Or for that matter, throughout the state during the January to April return window of most counties.) What that means for owners who did not file a return is that no automatic review of the property’s value was initiated. Owners who did not file for a new value and who did not receive a notice of assessment change will retain their value from last year even though the market value may have declined.

Even the people who did file or who received a notice of assessment change for other reasons have begun questioning their assessor’s determinations. State Rep. Mike Jacobs has questioned the validity of change of assessment notices here in DeKalb. Jacobs and other critics have argued that the county ignored property returns and that they’ve proposed increased values despite a statewide freeze. Any defense of the county is likely to include the arguments that it is within the assessor’s authority to disagree with the returned value, and that property improvements are not subject to the freeze.

But leaving the legal wrangling aside for the moment, the most important and time-sensitive thing that property owners can do if they disagree with their new assessment is to appeal within 30 days of receiving their notice. If you did not receive a notice, you cannot appeal your value for 2010.

Although the City of Decatur tax office is not involved with assessments and we cannot change assessments, I strongly encourage any property owner in Decatur who believes their assessment to be out of line, but who has missed the deadline to appeal this year, to put a reminder to yourself on your calendar for 2011.  The good news for Georgia property taxpayers is that because of SB 346 (which was signed by Gov. Perdue today), everybody will receive an assessment notice in 2011 meaning everybody will have the chance to appeal (even though this could have been done through the return process anyway).  You don’t want to pay on the basis of a flawed assessment, and we have zero desire to bill you on that basis either.

Buying properties at tax sales

A few items have popped up on the web recently about buying tax lien property in Georgia. The message board of auctions.org shows this unfair but entertaining exchange on May 15:

Q: I live in Ga. Does anyone know the process for acquiring tax lien property? The vacant lot next to me is going up for auction the first week in May because the owner has not paid his property taxes. Is it true that if I win the property through the bidding process, that the owner has at least a year in order to try and get the property returned to him?

A 1: loslunas87031 says:

have you ever been to a tax auction ? Its a zoo of idiots who watch too many late night tv infomercials, run the bids past market value and then realize they do not automatically own the property and the owner has up to several years to pay the tax and recover it.

A2: acermill says:

Yes, it is quite true. Georgia offers a one year redemption period for the delinquent taxpayer after the tax lien sale/auction. The delinquent payer need only pay the tax delinquent, plus a 20% penalty, and the ownership reverts to the original owner.

That conversation highlights the risks of buying properties at tax sale, but on May 22, http://www.financemoz.com/tax-liens-vs-tax-deeds-which-is-the-best-investment.html described the potential benefits:

If you are interested in either owning the property or getting a very good return on your investment and you live in or near a redeemable deed state, than you should consider investing in redeemable deeds. Redeemable deeds are kind of in-between tax liens and tax deeds. You purchase the tax deed at the sale, but there is a redemption period in which the previous owner can come back and redeem the deed from you. They have to pay a pretty hefty penalty in most redeemable deed states in order to do so, and the penalty is on the total amount that you bid at the sale. In Texas the penalty is 25% and in Georgia it’s 20%. Not a bad rate of return!

It should be kept in mind that whether it’s a good or bad investment, ultimately tax sales are unfortunate events. They signify that for whatever reason, somebody is in jeopardy of losing their own property, investment, or even their own home because they couldn’t pay the taxes.

Tax payments due today

Property taxes are due today to the City of Decatur for the first installment of 2010. We honor postmarks. You can mail your payment to:

City of Decatur Lockbox
P.O. Box 945650
Atlanta, GA 30394-5650

Please enclose the payment stub of your tax bill with your mail, and write your real estate ID and tax year (2010) on your check. If you prefer, you can deliver your payment in person to 509 N. McDonough Street on the first floor of City Hall. If you bring in your whole tax bill, we’ll stamp the top portion as paid for your records. We don’t have a “drop box,” so please plan for parking accordingly.

First installment bills are based on 2009 DeKalb County property assessments. Your payment is due today even if your property value is under appeal with DeKalb County. If the county lowers your assessment in the 2010 digest we will receive from them this summer, your total year’s taxes will be recalculated during the second installment of 2010, and your first installment payment will serve as a credit against the tax total for the year.

Although payments are now due, there is a grace period up until June 15. A late penalty of 10 percent and a montly interest charge of 1 percent will be charged on unpaid amounts after that time.