Facebook | Sal DiCiccio: Property taxes are about to go up in Phoenix

News Release

Office of Councilman Sal DiCiccio, District 6
602-262-7491
Council.district.6@phoenix

.gov

Property taxes in Phoenix are about to go up. The City Council on May 25 will consider allowing the rate taxpayers pay to rise over the next 20 years.

This comes on top of the city, in the past for months:

* Imposing a new food tax (up $50 million per year)
* Increasing water rates ($30 million per year; a 40% increase over 5 years)
* Increasing sewer rates ($3 million this year)
* Increasing fees on small business

And now the City of Phoenix wants to raise property tax rates, even though property values have gone down.

All of these fees and taxes were imposed to afford an average cost of $100,000 per city employee – that’s for all 14,000 employees. This could all be fixed if Phoenix simply would restructure operations. My office has asked Phoenix to address the high cost of labor at City Hall. Instead, the city has chosen the easy route of raising taxes and fees on the public, all of which I have opposed.

At 2 p.m. on Tuesday, Phoenix will consider raising the property tax rate under the guise of a “floating rate.” That means taxes will “float” up.

Phoenix imposes property taxes as a percentage to a property's assessed valuations. When property values were climbing, Phoenix kept it rate constant, which mean it took more dollars from every property every year as their values increased. Now that values have dropped, Phoenix wants to tax homeowners at an even higher rate and take a higher percentage of the equity homeowners still might have in the homes.

This is being done because city budgeters failed to account sufficiently for declining property values and the city now lacks the revenue to repay bonds. Phoenix must solve this problem internally by making structural changes and not look to shift the responsibility onto taxpayers.

Instead of hitting taxpayers yet one more time, I believe the city needs to address its own bloated labor cost bubble and initiate structural changes such as managed competition to bring its expenses down. Homeowners and taxpayers are hurting in this economy, and the city of Phoenix is just making the burden heavier by piling on more and more taxes and fees. That's not the way to lead Phoenix out of this recession.

Respectfully,

Sal DiCiccio
Phoenix councilman: Ahwatukee, Arcadia, Biltmore and North Phoenix
200 W. Washington St. 11th Floor
Phoenix, AZ 85003
602-262-7491
council.district.6@phoenix.gov

"Right To Rent" Bill Being Considered

The US House of Representatives is considering a bill, called the “Right to Rent Act” (H.R. 5028), that would allow this homeowner-to-tenant conversion.

JMO:
Although there are other provisions in place to keep owner-occupants from being displaced, this bill on it's face could have severe impact on real estate values, as it would dramatically impact the "investor/speculator" market. Under this bill, an owner-occupant at their sole discretion could choose to convert their ownership to a lessee tenancy for up to 5 yrs. Although it would be a month-to-month tenancy the subsequent purchaser (investor) would be required to uphold the terms of the lease for the full 5 yr period unless the tenant (former owner) breached the agreement in some way. This will make it much harder to "flip" properties because a successful "flip" should end up with an owner-occupant in the property. Under this scenario, it could only be flipped to investors for the 5 yr term. This one is worth following....I'll keep everyone posted

Mortgages: Walking Away - 60 Minutes - CBS News

Here's a recent 60 Minutes episode that discusses strategic walk-aways.

Mortgages: Walking Away - 60 Minutes - CBS News


JMO:
I found it very interesting that Morgan Stanley has walked away from 5 large commercial buildings and a major developer walked away from a 5 Billion Dollar project while both these companies continue to receive funding for other projects. It's also unlikely that their other credit lines aren't being reduced or closed. Yet individual homeowners are being vilified for making similar decisions with far greater negative consequences.

Second Credit Report To Be Required At COE

Fannie Mae To Require Second Credit Report Before Closing

From National Mortgage News:

Beginning June 1, lenders originating mortgages being sold to Fannie Mae will have to pull a second credit report just before the loan closes. The new quality control requirement is designed to prevent a type of mortgage fraud called "shotgunning," but the guidelines could send lenders on wild goose chases. Will Dillard, a vice president of operations at SettlementOne Credit Corp., a San Diego reseller of credit data, told American Banker that pulling a second credit report would help stop such frauds but that lenders might also waste time checking out false alarms. "If they see another inquiry, Fannie would like to see lenders query those creditors," Dillard said. "If you're at the funding table ready to fund and you see a new inquiry popping up, the question is, do you send your underwriter out...to track down Honda Motor if the borrower is also trying to buy a new car?"

My question is--what if the debt ratios or score changes before settlement? Will the loan be re-underwritten? Can they actually change the GFE at that point because a new score allows for a "change in circumstances"?

JMO:

Of course the obvious concerns exist, such as if there is a drop in score or inquiries could be borrower be declined or the loan re-underwritten. But the other question exists as well, if the borrower's score has improved to a point where they may be entitled to a lower interest rate or more favorable terms would the file be subject to review as well. I see a lot of problems developing while they try to work out the logistics of this situation.