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November 10, 2010

Homeowner, facing foreclosure, goes on hunger strike

A Baltimore homeowner who fell behind on her mortgage payments after her property taxes unexpectedly spiked protested in an attention-grabbing way this week: She went on a hunger strike.

Lauren Rymer started just after 7 a.m. Monday and spent an empty-stomach day camped out in Annapolis, trying to get an audience with Gov. Martin O'Malley and talking to passersby who wanted to share their stories of economic woe.

By the time she ate something at 5 p.m. Tuesday, she'd had a foreclosure alternative offered to her by the state housing department, talked to someone from O'Malley's office about the tax problem and given interviews to a bevvy of media from WBAL to the Huffington Post to MSNBC about her hope that elected officials will do more to help Americans avoid foreclosure.

"Awareness has been raised on this issue, so I feel like the strike was worth it," she wrote on her Hungry4Home Twitter feed Tuesday afternoon.

Rymer, 32, who works for a nonprofit in Baltimore, bought her two-bedroom home in Upper Fells Point four years ago. She said her monthly payment started off at $1,500, including taxes and insurance, which she could afford. But it jumped to $2,100 this year after her property taxes skyrocketed, she said, and that was beyond her ability to pay.

The state Department of Assessments and Taxation, which investigated at the O'Malley administration's request, says it's the result of a little-known exception to the tax break that caps homeowners' property-tax increases at 4 percent a year in the city.

Homeowners don't get the Homestead tax credit on new improvements worth more than $50,000. State law dictates that they'll get hit with the full assessment for that work, phased in over three years, before the Homestead credit goes into effect for the renovated portion. (UPDATE: When I asked for more details, state assessors clarified that the threshold was $50,000 when Rymer purchased her home but increased to $100,000 in 2009.)

Rymer's home was newly rehabbed when she bought it. Unfortunately, state assessors say, the city did not send a copy of the permits their way when the work was done. Thus the state didn't up the taxable value until two years later, when her neighborhood was being reassessed.

Her loan is interest-only through 2011, so she was expecting a $218-a-month increase next year. But the more than doubling of her taxes between 2008 and this year came as a shock. She thought she was protected from big jumps by the Homestead credit.

The state says it sent a notice in the fall of 2008 to inform her, but she doesn't remember seeing anything like that, and it wasn't until this summer that she realized what happened to her taxes. She's sure the $234,000 assessment is far above the property's true value now, but an appeal wouldn't help her decrease her taxes until next July.

"Obviously if this was something I could have foreseen, I wouldn't have purchased the home," Rymer said.

Her mortgage servicer told her she didn't qualify for a loan modification. So she called the state, which owns her mortgage and suggested she put her home on the market as a short sale. She did -- for $125,000, far below the $259,000 she'd paid.

No luck.

"It's not selling," she said.

On Election Day, she got home from voting for Gov. Martin O'Malley to discover a notice on her door that a foreclosure action had been filed and her home could be auctioned off in 45 days.

Perhaps she really didn't have any options, she thought, but she wanted to put a face to the foreclosure statistics. She ate a piece of chicken when she woke up Monday morning and headed to the state capital with a sign declaring, "Hunger Strike Against Foreclosure Day 1."

The state Department of Housing and Community Development, which runs the Maryland Mortgage Program, brought her in for a meeting toward the end of the afternoon. She said officials suggested that she hand over her deed in lieu of foreclosure, often seen as a better option if the noteholder agrees not to go after the former homeowner for the difference between the home's value and the mortgage balance. (The state told her it wouldn't pursue a deficiency judgment but said the mortgage insurer could, probably for less than $10,000.)

The housing department told me it couldn't discuss her situation but said in a statement that it "will always work with homeowners to explore every viable financial option."

Shaun Adamec, a spokesman for O'Malley, said the department is still looking into her case to see if there are alternatives that would let her stay in the home.

"She's pretty far along in the process, which isn't always the best scenario for helping, ... but there are still options," said Adamec, adding that O'Malley has shepherded through "some of the most innovative and sweeping reforms in the nation" to foreclosure laws.

Rymer said that handing over her deed might be her only way to avoid a foreclosure auction, and she's glad she was given an alternative. Still, it makes no sense to her why it's in anyone's financial interest to foreclose on her in order to sell her home to someone who will make far lower payments than her original $1,500 a month. (That's assuming it changes hands for no more than $125,000, the amount she hasn't been able to get any buyers to bite on.)

Other struggling homeowners, she figures, might have more options than she does. Part of her goal with the hunger strike was to exhort politicians to do more to oversee loan modification efforts, making sure people who should qualify actually get one. 

"I don't have a lot of options, and I accept that," she said. "But there are a lot of people who could have options and banks are moving straight to foreclosure." 

Tuesday night, she added that she hopes the coverage she got will give other homeowners incentive to speak up, too. "I don't think there's enough activism, people exercising their First Amendment rights -- people think they can't effect change," she said.

UPDATE Wednesday night: Rymer talked to her mortgage servicer again today, and here are the details, for those of you trying to make the math work out.

Her original payment was about $1,640 -- she'd incorrectly remembered it being lower when I talked to her more than 24 hours into her hunger strike. That figure rose to $1,750 in 2008, fell (oddly) to $1,720 in 2009 and then jumped to $2,157 (a bit more than she'd remembered) this March.

As you might recall, her property taxes started rising significantly in 2009, not 2010. Because her mortgage servicer didn't adjust her payments until this year, she had an escrow shortage of nearly $3,100, she said she was told -- further increasing her total.

Comments

There were many other things she could have done. Did she try to appeal for reassessment of her home value? The best buyer (and sequentially homeowner) is an aware one. She did not have to wait until they sent her a notice to check her assessed value. If she wanted to, she could have also taken in a boarder or roommate to bridge some time to come up with a solution herself. All of these resources are available online!

She sounds like someone that frankly cannot afford to own her own home. There are people all over that got in over their heads and are now whining that somehow they are a victim.

Cinema, she didn't realize what had happened to her taxes until this year, and at that point an appeal wouldn't have adjusted her taxes until next July. (That's in the post.) When she bought her property, the assessment was under $100,000, so there would have been no reason for her to appeal. (A roommate is a good idea, though.)

bobski, this is a pretty unusual situation -- very few buyers understand Maryland's assessment system well enough that they would have suspected, purchasing this home, that their taxes could skyrocket several years later. Do you really think Rymer is whining? When the state suggested she short-sell the house, she tried that.

I am sure her realtor did all possible to explain that this could happen.

Tongue firmly in cheek, Ronnie? I did ask, and she said no one working with her during the buying process gave her any warning that this could happen. It's possible that none of them had any idea.

Ronnie - Unlikely. I know of two couples who found out their taxes were going to be double what the estimated rate was at closing. Realtors are in the business of selling homes and collecting commissions, not going through every worst-case scenario.

Jamie, I've been reading various articles about this since yesterday, and i might be missing something, but i still don't see how her monthly bill went up $600 a month because of property taxes. If her original assessment was $90K (i thought it was +$180K from the tax assessment site), she'd be looking at $170.25 a month (@ 2.27%), and it only goes up to $442.65 a month at ~$234k a month, a difference of $272.40. Can you give any insight into this? Thanks

Oops, forgot the state property tax, which is still makes the difference a total of $285.84. Thanks again

That's a definite point of confusion, Phil. I calculated the impact of the property-tax increase at $200 a month extra now vs. two years ago. But Rymer says her payment went up to $1,700 last year, which she managed, and $2,100 this year, which she couldn't.

When she called her servicer, she says she was told that she was being charged for higher taxes plus back taxes. This would apparently be for taxes she would have paid had her assessment been increased earlier. The state doesn't see any record of back taxes being collected, but since it's up to the city to handle collections, there's no way to be certain without hearing from the city. (I've got a call in.)

She can't even sell the house for half what she paid yet the assessed value is even more than she paid. If you needed any more proof that the politicians and the banksters are in cahoots this is it. You should have voted the bastards out when you had the chance, Maryland.

She should be sure to request mediation!!

Thanks Jamie. It starting to sound like she really didn't do an expected level of due diligence and upkeep on this matter (from the parts of the story in the media anyway). Though I do have to wonder if the back taxes scenario is correct, what the legality is regarding the government collecting retroactive back taxes for their flawed assessment.

Baltimore City has high property taxes, you only get the homestead tax credit if you apply for it. If she didn't apply, she didn't get it!!!! Baltimore is raising property taxes in some areas to clean out some of the trash, but it does have some draw backs, like this lady who is a good person just on bad times.
@J Mediation is not always the best thing when the issue is the taxes not the FCL, the FCL firm won't have any say on the taxes owed just the mortgage. Her mortgage went up because of the taxes she should have continued to pay the mortgage to avoid the fcl, and went to the city for the tax issue. They do emergency hearings for tax issues. The mediation adds attorney fees & costs to the end of the mortgage if it doesn't work in the debtor's favor. If one chooses mediation make sure the READ THE FINE PRINT!!

Pigtown, it's not an issue of failing to apply for the Homestead credit. She has the credit. But state law dictates that improvements of more than $50,000 aren't eligible for the credit until the full assessment on the improvement's value has been phased in, so she's not getting a credit on that portion.

Her taxes are part of her payment due to escrow, unfortunately, so she couldn't simply send in a payment minus taxes -- at least to the best of my knowledge. (Anyone want to weigh in on that?)

Also, the hit that Ms. Rymer took wouldn't have been as hard had she known about the city's new construction tax credit. But as many people, including me, can attest, the city did a poor job in making homebuyers aware of this credit.

I don't think this tax issue is all that uncommon - particularly for those of us who bought rehabbed houses in the City at the top of the market. It happened to us and thousands of other people.

In any event, it's a sad story. No one should feel good about someone losing a home. But unfortunate as it is, the rules are the rules. And they exist for good reason. The role of government should be to enforce contracts. Many "activists", however, believe in some sort of "right" to rely on the government to help grown adults renege on the agreements they lawfully entered in to. That might make activists feel like good and compassionate people, but if you stop to think about it that's a really poisonous idea.

I know I will recieve a lot of HATER comments for what I am about to say, so let me appologize in advance to those going thru foreclosure now.

I was one of the early foreclosures even before the Bank Bailouts and honestly did not get one word of sympathy. I can feel and understand the sence of impending lose people feel now, but I cannot feel sympathetic about the many articles about people facing it.

I have gone thru ut and had my home stolen, my credit ruined, and my life destroyed already. I will probably never ever have a house again.

If you want to sometimes write about the aftermath of the foreclosure maybe I would feel some emotional lose or hurt for a person. This group is the forgotten ones because their lives like mine have been destroyed and ruined, but we have to live on and deal with the loss.

Yes, I understand the trama they are about to face, but I have lived that trama real time and it is far worse than a hunger strike or feeling sad about not having my dream home. It is about survival in a world that only accepts and does for people with good credit.

Sometimes maybe the media should focus on the real crimes of financial injustice and maybe those in power can see what they are doing to people and think about stopping or slowing down that process. NUFF SAID!!!!

This DID just happen to us. We went to re-finance our home and got a call from the financing agent. He said he couldn't understand why the city had our taxes on record above 6400 since we were only paying on 4300 now. The city phased us in as well and didnt notify our lender, so were are currently 4 mos behind on the higher tax rate difference, as well as now not being able to make any money on the re-fi. We will just be breaking even. And no - we were not told A SINGLE thing about the possibility of this happening to us. And to anyone who wants to suggest we weren't educated buyers, I am unsure as to how we could have uncovered this scenario on our own. We currently pay 1853/mo. A re-fi at the old tax rate would have put us at 1720/mo. Now - we need to re-fi at the lower interest rate just to stay in the 1880/mo range. Disgusting that we were never told of any remote possibilty. And even more difficult to swallow is that it took a re-fi to discover any of this.

the part that really bothers me about this, and there are a lot, is that this woman put her house on the market for $125,000 and NOBODY bit. her house is valued at over $230,000 yet nobody bit on it. that is very very very troubling indeed. i agree with rich about a contract being a contract but it isn't that simple in the state of maryland. most people who buy homes in maryland don't realize that mortgage holders can sue homeowners for the remainder of the balance of the loan after foreclosure. given the historic real estate crash, nobody's house today is going to sell for what they paid for 3, 4, 5 years ago. most folks are severely upside down in their loans. what happens in this scenario is the bank not only gets the property back, they also get to sue the homeowner for the remainder of the loan. i think this is something that the governor and his people should change. maybe it will force lenders to be more diligent when giving out loans to folks. i don't think homeowners should be penalized twice; lose their home and lose whatever savings they may have (assuming it's none since they are in foreclosure in the first place).

I agree it sounds like this women is being cheated. After all, it appears her crime was buying a rehabbed home in Baltimore City. Since we all have a stake in the redevelopment of Baltimore City, I'd say that Ms Rymer was doing something that was fundamentally good for us all and to that end, we should help her if this is a genuine tax forclosure. But that said, she was willing to pay a $1700/mth mortgage, I can't imagine walking away from the house over an extra $400. You can deliver pizzas on weekends, or valet park to cover that. For me, I would like to think a survival instinct would kick in. My pride would compel me to do everything possible to keep this house.

OK mike I'll bite with a hater comment: Unless it was due to some unforseen catastrophe, it is most likely you bit off more than you could chew, and you put yourself into a losing situation which you are now paying for. I agree that there are severe crimes of financial injustice as the bailouts have enriched the Wall Street crowd.

The proper thing to do was to teach those who overspent (you) and those who gave you the means to do so (your lender, Wall Street, etc) a painful lesson by letting you fail. Those of us who have lived within our means should have been left out of the mess, and perhaps even had a chance to benefit from our fiscally responsible posture.

Bottom line - I feel you likely received what you deserved, but the realtor-up-through-Goldman Sacks group has gotten away with the largest white collar crime ever committed.

The bottom line for me is, you shouldn't by a house that you can just barely afford, EVER, If she can't afford the new payments then she cut it too close to begin with. Things happen. Relationships end, taxes go up, jobs change, things break, etc etc etc. If all your money is going into mandatory mortgage payments, then you can't really afford your home, and shouldn't have bought that home in the first place.

Not to mention, when I bought for my house at double the assessed value, it was a pretty sure bet that homes would eventually be re-assessed closer to their actual value. It is a completely foreseeable event.

Brian - you are absolutely correct that lenders can try to collect the balance of the loan not satisfied through the foreclosure sale. It's called a deficiency judgment. It's by no means a peculiarity of Maryland law; it's allowed in vicrtually every state.

I don't understand what's unfair about that. If you borrow $300,000 and your house is worth only $200,000 at the time of the foreclosure sale, you've effectively failed to pay back $100,000 of the money you borrowed. Why shouldn't a bank be allowed to try to collect that amount from you? You borrowed it.

I had already prepared my handful of mud to fling at the homeowner until I read her article. IMO the TAXES are a huge problem and the homeowner did NOTHING wrong.

When you have made NO improvements to your house and then your property taxes DOUBLE or almost QUADRUPLE as they did it my case, the homeowner is definitely not at fault if they have trouble paying.

She got a mortgage she could afford, and probably calculated all the costs she had available. Had she even OVER-estimated she could not have anticipated such a big increase.

Those of you who don't own property in Baltimore have no idea.

When the assessments go up a Little, the taxes go up a LOT... unless your taxes are subsidized.

As far as the mortgage payment goes, when property taxes increase, the mortgage payment will increase as a result of escrow analysis in EXCESS of the estimated taxes. So, the assessment goes UP, the taxes-owed go up a LOT, and the mortgage payment goes up a WHOLE LOT.

By law the mortgage companies can keep two months of payments in escrow, and still charge the homeowner extra to pay the taxes.

For one property, I pay my escrow myself because I am over 20% loan-to-value (LTV), but it's pretty stressful coming up with the money every year because there is no way I could have anticipated such a BIG increase.

That's one of the reasons I opposed the "bailouts" because keeping prices ARTIFICIALLY high will just hurt existing homeowners since we pay higher taxes. Why should I care if my house is worth 10X as much on paper? Especially in a state like MD where people are moving TO.

I think a lot of us are planning to keep the property we have, so high taxes are NOT helpful. I feel especially sorry for older folks on a fixed income who bought their houses long ago. Once their tax credits expire, unless the property "values" go back down where they belong, those guys are in a lot of trouble in a year or two.

I wish I could help that poor girl. Her best bet is to find a boyfriend with a high-paying job LOL, get out of the non-profit sector and get a higher paying job herself, or find a roommate.

Since she's already behind, she needs to make sure she gets current with her mortgage in arrears, even if that means borrowing a few grand from someplace. She may be able to go to court and stop the foreclosure if she can come up with the arrears. Good grief!

I hope she has friends or relatives if it's difficult for her to get credit from an outside source. Maybe a credit union can help. If she gets a roommate to sign a lease, she may be able to use that as income to get money to pay the arrears. It's not great, but it's better than losing her deposit on the house.

My heart goes out to her.

BTW we do something in the Caribbean called throwing a Box. In her case if she's 10K in arrears and can't get credit from a bank, she can get 10 other people she knows to do a box for 10 months. Everyone gives 1000K a month and each month one person gets 10K. Maybe her nonprofit cohorts can agree to help in that way. It's kind of like an interest-free loan.

In the US, participants may be able to sign a contract and have participants use "secured" goods as a promise to pay. The thing about the box is that you have to pay no matter what because others are depending on the money.

BTW Jamie, no, you can't just pay the portion of the mortgage w/o the escrow. Isn't that crazy? If you do that, your payment is late.

In my case, back when my taxes were 2K, my bank had in excess of that amount already in Escrow and still charged me an extra $300 per month.

Besides the interest-free loan I was giving the bank every year as part of "escrow," I decided to pay it myself because if I don't pay my taxes at least the city/state won't take my home or ruin my credit. Well, not immediately. But a bank sure can.

My favorite part of this story is ate some chicken at 8am Monday, went on strike, ate again on Tuesday evening. What a trooper for the cause. For those of you defending her plight, pls note she took out an interest only loan. This is a strong indication of someone who was stretching to the limit to get in to a home, who was only concerned at the closing table with, "what’s my montly?" So even if you want to allow the specious argument of being swallowed by the complicated tax code, it speaks to a much larger issue. If it wasn’t the taxes that caused her foreclosure, there certainly would have been another triggering event ( her car blew up, mother got sick, etc). Folks, this story isn’t unique. Just a different flavor of taking on too much risk by both the lender and the borrower. Neither of which deserve your tears. Why aren’t there sensationalized news articles when people buy cars that they can’t afford? Why no tears for them when they get repossessed?

I went to an expensive restaurant, ordered a fancy meal and several hundred dollars worth of wine and when the check arrived claimed that I was mislead about the price because of the sales tax, I refused to pay.

I threatened to make a scene and destroy the meals of the other diners while telling them my hard luck story and how I couldn't afford the meal on a waiter's salary.

Shame on that restaurant for serving me, for advertising good food, and that stupid server who suggested expensive wines after I indicated that I wanted to splurge. They are really taking advantage of people like me who live on a server's salary.

Banks are making mistakes because they are overwhelmed by the "tsunami" of cases they have, that it's not an excuse to threat you as a number and put everybody in the same boat. Look what happened to me, and please, I ever played the victims game. I just wanted justice and the final deal they gave me was even better for them. Why not offer it months ago in March?
http://www.dailymotion.com/video/xf4fqg_wells-fargo-forecloses-on-austin-fa_news
http://agentgenius.com/real-estate-news-events/all-hell-breaking-loose-man-starves-to-protest-foreclosures-halted/
http://agentgenius.com/real-estate-news-events/hunger-strike-in-austin-over-foreclosure-comes-to-an-end/
http://agentgenius.com/real-estate-news-events/hunger-strike-in-austin-over-foreclosure-comes-to-an-end/

MR Restaurant, your hypothetical story isn't relevant. Perhaps, if when you walked in, they were only going to tax you on the food, and when you were done, the restaurant decided to tax you on the entire meal, plus the table you were sitting on, oh, and they forgot to tax the guy that was sitting there before you, so we threw some extra tax in, then it would be similar. You might then say, well, I had only planned on 6% tax, but now with 15% tax, I can't afford it. Read the entire story before you make a bad analogy and make yourself look like a jerk.

Jamie, thanks for the update. Just so I'm on the same page as you are, her service provider messed up the math regarding her property taxes (which i think as a responsible homeowner she should have caught), and now they're just trying to get back the money that they paid for her property taxes (but not all at once)? If that's the case, then her actual payment would somewhere around $1900 a month (if the math we talked about yesterday holds up), which means (and this is the part i'm find hilarious) that next year once her core mortgage payments adjusts, she's going to be looking at a payment of somewhere around, drum roll please, $2157.

If the math (and her facts) above is somewhat correct, I'm finding the whole situation somewhat unfortunate. I only say it's unfortunate because if someone was going to pull a "radical" stunt like this, it'd be nice if their argument had weight behind it, and couldn't be so easily dismissed (if one is going to over pay for a house, do one's homework on property taxes). But with most people only caring about the superficial aspect of the story, maybe that doesn't really matter?

Phil, the problem as I see it is that most -- probably 95 percent -- of Maryland residents, had they bought the house she bought, would have been similarly shocked to find the property taxes more than doubling two years down the road. (The Homestead tax credit, which caps increases, is pretty well known, and so Marylanders have some reason to expect that annual increases won't rise above a set amount.) Some folks can absorb an increase like that and some can't, but either way it would be a big increase they wouldn't have counted on.

I'm not making an argument about whether state law should have the exception to the Homestead credit that it does, nor am I passing any judgment on whether a homeowner in Rymer's situation should go on a hunger strike. But I do think homeowners are being set up for disaster unless they're informed of this little-known aspect of property-tax law. I'm planning a blog post just on this subject.

Baltimore City's property taxes are virtually double that of Baltimore County. That would mean approximately another $200/month on a $200,000 home.

Beyond 300 murders per year, failing schools and higher insurance premiums, I have no idea what you get for paying that premium.

Thanks, but I'll stay in the County and pocket the $200. I wish Ms. Rymer the best as she faces this modern American tragedy.

Jamie, I can understand your viewpoint, but I would hope that common sense would dictate that when one pays more than twice the assessed value for a house (assuming the ~$100k assessment figure), one would do their homework and be a little more hands on, as thinking that taxes will stay that low probably fall under "Too good to be true". However in all fairness, I'm probably more than a little biased for a due diligence mentality, since my work relies on it.

While looking up info on the Homestead Act, I did note that it wasn't easy to find the exemptions, but I came across something else that would probably have been useful to her -:
The Homeowner's Tax Credit
http://www.dat.state.md.us/sdatweb/htc.html
For those like me that have never heard of it, if a household makes $60,000 or below, the property tax is limited on a sliding scale, at $60,000 it would have been maxed out at $4380. (too late for her, since the filing deadline was 20101101)

On a related note, what would you foresee the government actually doing for her? My coworkers and I can't really see the state doing anything but stretching out the repayment for the $3100, as it would seem anything else would pretty much open the floodgates of complaints (reassessing her taxes, lowering her interest rate without a refi charge, etc., etc.).

Phil, there are lots of cases of people buying homes assessed for a lot less than their purchase price (at least during the housing bubble days) and not feeling much impact from the later reassessment, because there was no rehabbing involved and thus the Homestead cap protected them. So even someone who understands most parts of the state assessment rules (and I doubt that applies to most folks) could be caught flatfooted by this $50,000-improvement exception.

I'm not arguing that the state should do something specific in her case, because that's really not my place. All I'm saying is that this problem will happen again if buyers aren't given a heads up at some point in the process. The extent of my power is to say, "Hey, please be aware this can happen."

Jamie, short of calling the DAT, I haven't been able to find info regarding the exception. I wanted to ask one more thing before I went that far. Isn't it correct that the previous assessment of a home, especially if it has had the Homestead Credit in effect, shouldn't be used as a gauge of future tax payments for new owners since the assessment will essentially be reset at somepoint to reflect their new ownership? I've seen articles and other message boards about this happening and new buyers not being told of the possibility by their brokers or lenders.

Oh and I didn't think you were arguing anyway or another for state action, I just figured since you would have the experience for a better guess, as opposed to my interest in this because it didn't sound like the numbers added up, and how it might affect my current home buuying process.

Phil, one key is to differentiate between the assessed value and the previous homeowner's tax bill.

The previous homeowner's tax bill has no bearing on the next owner's bill (except during the run-up to the new owner's first July 1 in the property -- before that point, he essentially inherits the previous owner's credit).

But the assessed value is the assessed value. Take a look at what the phased-in value is scheduled to be on July 1, 2011 (if you're buying before then), and you can calculate your tax burden for that year. (Some properties are in the process of being reassessed now, so we won't know their 7/11 assessment until January.) Once you've hit your second July 1 in the property, you're eligible for the Homestead credit and shouldn't see increases topping 4 percent a year (if you're in the city or Baltimore County -- it ranges by jurisdiction).

HOWEVER: If you have reason to believe the property has been significantly improved, the state assessment office suggests you call them to see if they've accounted for that in the assessment. Otherwise, the Homestead exception could come back to bite you.

Assessment wonks: Have I missed anything?

Jamie, thanks for your patience, the dialogue has been quite informative.

I guess the only thing left that I find weird, is that she missed the letter stating that her assessment was going up, but wouldn't the new application for her Homestead Credit have been in the same package?

Thanks again.

I don't know the answer to that, Phil. Because she was sent the letter out of cycle (in October, rather than late December), it might not have had the full paperwork that homeowners get when they're reassessed. So I suppose it's possible she got the normal reassessment letter in late December, which might not have included a clear "you're not getting a Homestead credit on this new amount" warning. Or maybe it did. I just don't know.

She helped create her own problem. By buying a speculatively priced home, she not only spent more than she could afford, but helped continue the gentrification that kicks hundreds of less fortunate out the homes they've owned/rented for far longer than Ms.Rymer. She spent, the housing market, collapsed, and now she's losing her $259,000 home. Maybe she'll have to rent.Too bad. Why not have a hunger strike for the people in Pigtown, Barclay, or one of the hundreds of public housing units that the city maniacally tears down without consideration for the residents. I guess they don't matter, right?

Was there any follow up to this, I looked around and can't tell what happened with her situation, Thanks.

Phil, the governor's office said last week that housing officials are still talking through options with the homeowner.

There are 3 issues here: what she did/shouldof known, what the listing and her agent should have advised, and content of reporter's article.

As was finally introduced by Phil R, she should have known that 1) assessments are auto updated upon a sale, 2) initial tax will be at least 1% anywhere in this state and probably double in balt city, 3) the current (previous!) tax bill has no relevance to the future. Apparently she felt she could cheat the gov't and pay less than her fair share; shame on her.

The PREVIOUS tax BILL is subject to many factors including how long the seller has owned the property during an inflationary period, and when last assessed - both available online. The Multi List System a/k/a Realtors should be hanged for showing the last tax bill since it is of little relevance, and is more likely to be misleading than informative.

Now the third: shame on Ms. Hopkins for taking space to defacto criticize the system and sympathize with an irresponsible individual. Hopefully you will take some time in a future article to inform your readers who hadn't heard it before: if it looks too good to be true, then it undoubtedly is - be it the purchase price, annual taxes, brooklyn bridge price, etc. If the taxes are low relative to the price and other properties seen, then undoubtedly the anomaly will soon be adjusted. Duh!

Further,why not mention something so simple as: if you walk into a newly renovated room/house but the house wasn't recently reassessed , then put 2 and 2 together. Similarly, how about advising buyers (of new or renovated bldgs) to check on filed and concluded building permit(s). Not only could that pressage a drastic assessment change, but also improvements that were not were inspected and may not have been according to code. So pls, forget the sensationalism and undeserved sympathy, and instead inform the readers what they should keep in mind when shopping, and what change in law they should encourage their reps to make. So, there was a story there, but it was not about another irresponsible person unwilling to accept responsibility for their actions, but about what she , and others, should know - and be responsible for rather than blaming others.

Hi, Geo -- you don't have to refer to me in the third person, you know. I'm right here. :-)

I think you might be misunderstanding the situation. It's true that a new buyer can't rely on what the previous owner's property tax bill had been because the Homestead credit can create a big gap between the "taxable" value and the assessed value. But usually, a buyer can look at the full assessed value of a home and know what their tax bill will be PLUS be assured that it can't rise more than a set percentage (4 percent in the city) in any year.

Assessments are not auto-updated upon sale in Maryland. Maryland assessors evaluate properties once every three years. So there are many people who bought a home that was assessed for a lot less than the amount they paid but -- because there was no rehab involved, or the rehab was never noticed by the state -- were locked in at that amount, seeing increases of 4 percent a year thereafter. (If not for the every-three-years schedule, then agents would probably be much more vigilant about this and warn every buyer, "Be aware that you're going to be paying taxes on the value of the sales price." As it is, they don't. Because that's simply not how the system has worked.)

A hunger strike (however short) is unusual, which is why I interviewed Rymer. (Readers may or may not feel sympathetic, but that's not the reason for articles -- it's whether the situation is noteworthy in some way.) But once I understood what had happened with her taxes, I thought it would be a useful warning to would-be buyers to take this into account.

I'm surprised you're taking me to task for not "advising" buyers -- that's part of the point of this post, don't you think?

As I mentioned to some earlier readers, I'm planning a post specifically about this rehab quirk of the assessment rules, in case folks missed it here. I know some people see "foreclosure" and their eyes glaze over.

There are 3 issues here: what she did/shouldof known, what the listing and her agent should have advised, and content of reporter's article.

As was finally introduced by Phil R, she should have known that 1) assessments are auto updated upon a sale, 2) initial tax should be at least 1% of assessnebt anywhere in this state and probably double in balt city, 3) the current (previous!) tax bill has no relevance to the future. Apparently she felt she could cheat the gov't and pay less than her fair share; shame on her.

The PREVIOUS tax BILL is subject to many factors including how long the seller has owned the property during an inflationary period, whether owner-occupied, and when last assessed, all available online. The Multi List System a/k/a Realtors should be hanged for showing the last tax bill since it is of little relevance, and is more likely to be misleading than informative.

Now the third: shame on Ms. Hopkins for taking space to defacto criticize the system and sympathize with an irresponsible individual. Hopefully she will take some time in a future article to inform readers who hadn't heard this before: if it looks too good to be true, then it undoubtedly is - be it the purchase price, annual taxes, brooklyn bridge price, etc. If the taxes are low relative to the price and other properties seen, then undoubtedly the anomaly will soon be adjusted. Duh!

Further,why not mention something so simple as: if you walk into a newly renovated room/house but the house wasn't recently reassessed , then put 2 and 2 together. Similarly, how about advising buyers (of new or renovated bldgs) to check on filed and concluded building permit(s). Not only could that pressage a drastic assessment change, but also improvements that were not inspected may not have been according to code and not yet included in assessed value. So pls, forget the sensationalism and undeserved sympathy, and instead inform the readers what they should keep in mind when shopping, and what change in law they should encourage their reps to make. So, there was a story there, but it was not about another irresponsible person unwilling to accept responsibility for their actions, but about what she , and others, should know - and be responsible for rather than blaming others. Then, what about the incompetent state staff that enabled her to buy it, buying the mortgage, then leaving us taxpayers to eat a loss of over 50%. Where else does one get to lose 50% of the house's money but still keep one's job - only a sloppy government!

OK, Geo, I'm confused. This is exactly the same as your last comment, plus an addition at the end blaming "incompetent state staff."

For the majority of your comment, see my previous reply.

Re: the state -- Rymer's understanding of the situation is that the state was not the original owner of the loan. (I didn't mention that in the piece because it didn't seem strictly relevant, but perhaps you'd like to know that.)

Sorry for the duplication, but although I received a confirm of it being sent, when I looked a day later it read "message not sent" due to failed captcha. So I redid the captcha and took the opportunity to add those extra sentences, then sent it.

Tnx for taking time to consider and reply. It is my understanding that buyers get no limit on reassessment; it only applies to those who remain owners. And surely the subject sale will be relevant to the next assessment. So if there is a disparity between the current assessment and the purchase price, it will soon evaporate, whether it is due to renovation or whatever.

Although your article provides notice to readers of an issue, it didn't seem to provide practical advice such as was mentioned in my last para. Such guidance would be helpful to some - perhaps many.

My last para provides useful perspective on the renovation issue. Substantial renovations such as was the case here results in reassessment when the county is aware of it via the building permit. So disparity between price and assessment is again the clue of work that may not be according to code, and regardless, uninspected and unimproved. Incidentally, the city/county has a right to require such improvements to be removed and restarted to allow inspections.

I am sure the state is not in the business of buying mortgages, be they performing or in default. (Remember, we have a budget deficit, hence no money.) Undoubtedly the state was involved from the beginning with some liberal program promoting homeownership for all including those who can't afford it (which was the root cause of subprime lending and the financial crisis). They would have provided some direct funding or guaranty that subsequently resulted in their increased involvement and us taxpayers having the stupid investment coming home to roost in our pockets.

Ah, I see -- that makes sense. Strange that your comment went through if the captcha didn't take. (I know the captcha's a bit of a pain -- sometimes it demands symbols that I have no idea how to make! -- but it's saving me from literally hundreds of spam messages.)

Here's a quick rundown of the state's Maryland Mortgage Program: "In this program, the Administration provides mortgage loans directly to eligible low- and moderate-income persons, or purchases loans made for them by participating lending institutions. ... The Maryland Mortgage Program is funded by the sale of tax-exempt revenue bonds." (http://www.msa.md.gov/msa/mdmanual/17dhcd/html/17agen.html)

It is my understanding that buyers get no limit on reassessment; it only applies to those who remain owners. And surely the subject sale will be relevant to the next assessment. So if there is a disparity between the current assessment and the purchase price, it will soon evaporate, whether it is due to renovation or whatever.

Maryland's assessment system doesn't work in quite that way, thanks to the complicated once-every-three-years reassessment schedule, the phase-in of that assessment and the Homestead credit. Here's an example:

A home is assessed at $100,000 in 2002. In 2005, the state assesses it for $200,000, phased in over three years -- $133,333 that year, $166,666 the next year and $200,000 the final year.

Let's say someone new buys it in June 2006, just before the new tax year begins July 1. As that tax year begins, they'll be paying on the second year of the phased-in assessed value -- $166,666. Once they hit their second July 1 in the property, though, they qualify for the Homestead tax credit and will pay 4 percent more (on the equivalent of $173,333 rather than on $200,000).

Let's also say that this buyer paid $260,000 for the home. The state comes along in 2008 and values it at $250,000, perhaps deciding that prices have dropped a bit since 2006. That's still a lot higher than what the owner is paying taxes on. But that person is locked in at the lower value and will never see an increase of more than 4 percent a year. Assuming no major improvements, of course!

So this is pretty complex. I run into a lot of people who don't really understand these rules, let alone being aware of the improvement-exception to the Homestead credit.

As for permits: The state assessors didn't say that there weren't permits taken out on the rehabbed home Rymer bought, only that the city didn't forward the permits to them for assessment purposes, which happens sometimes. Whether there were or weren't permits, I don't know.

Although your article provides notice to readers of an issue, it didn't seem to provide practical advice such as was mentioned in my last para. Such guidance would be helpful to some - perhaps many.

The key is to be aware so you can ask before you buy. But I'll get into that when I do a separate post about the issue. I'm waiting on the state assessors to answer a few more questions that I figured readers would have.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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