Search for Half of the Country's Foreclosures in One Place

The U.S. Department of Housing and Urban Development has unveiled a web-based map search tool displaying the location of all foreclosed properties held by Fannie Mae, Freddie Mac and FHA. These account for nearly half of all foreclosed (REO) properties in the U.S.

The idea is to move the shadow inventory and help stabilize local real estate markets.  Until the majority of these distressed properties are gone, housing prices will not rise. This tool will make it easier for investors and owner occupieds to find these homes and with one click be shown how to make an offer on it.

The image is a snapshot of Rhode Island's search results.

Central Falls City Services Being Shut Down

Since 1980, only about 46 cities or towns in the entire U.S. have filed for bankruptcy protection. Central Falls could be number 47.

Central falls has roughly 19,000 residents and 15% unemployment.  The state took over Central Falls last year following the uproar of every teacher being fired from the High School.

Negotiaitions are being held with labor unions and retirees. Cuts are being made throughout the budget, including:

• At the community center, the subsidized lunch for seniors is no longer being served.
• The pool has been drained.
• Health screenings have been cancelled.
• The locks to the building were changed last week.
• The public library has been closed.

Overall, Central Falls faces $80 million dollars in unfunded pension and benefits obligations and an estimated $25 million in deficits over the next five years.

City Council Railroads Property Tax Rate Hike, Disses Mayor and More!

The property tax situation in the city of Providence has certainly got a lot of press lately. In some respects it hasn't gotten enough. And a nutshell, a tax revaluation was conducted in Providence and as expected values dropped based on current market value.  After the city gets done with all of its assessments are the finance committee then gets together with the mayor between his recommendations and their input a budget is born.

Under no circumstances this is not done overnight. Under normal circumstances this is kind of a team effort. Under normal circumstances the mayor and the city Council lookout for the best interests of the residents in their city. But, this is Providence were talking about, so this whole situation is everything but normal. You see, it's kind of important for all these folks to get along. This opportunity doesn't come around every month. When property values are assessed and the mill rate is applied (the dollar per thousand rate), the city then sends out the tax bills and collects the revenue and attempts to run the city with the funds acquired.

Now I'm not going to suggest that budget planning and execution and running a city government including all of its ancillary costs is by any stretch in easy task. However, when this CD looked to recover about $12 million to pay labor contracts it targeted a very small demographic which can have a very large ripple affect.

The city Council voted 8 to 7 to pass a tax levy increase on less than 5 unit, non-owner occupied dwellings i.e. the investment properties.  To begin with, the mill rate jumped from $24.21 per $1,000 of assessed value to $30.38, and increases the commercial-property tax rate from $28.60 per $1,000 to $33.70.

The next bullet in the gun was to strip a 33% tax exemption for these non-occupant owners.

What this little nugget means is that these landlords, whom the finance committee regards as "fat cats running businesses" will have to pony up more money.  But what the city Council fails to see (actually, they can see they just turned their heads the other way) is that we live in a trickle-down economic Society.  The increased costs to run these housing conglomerates will have to be passed down to the tenants because most of these landlords cannot afford this levy. The problem with this is that the tenants can afford it either.

Two really bad things are going to start happening. Firstly, landlords will have to forgo necessary maintenance and upgrades to their houses in order to pay for the higher tax. Consequently, property values in these neighborhoods will go down even further because of the condition of their neighbor's houses. Or worse, these houses may go into default, and we all know what short sales and foreclosures do for neighborhood house values. I think that's actually three bad things, I've lost count.

So the mayor was left with two options: veto the budget or let it pass. Generously, the city Council gave the mayor all of 48 hours to render a decision. And why is this so critical? Because the council takes a recess for the month of August. And if the mayor doesn't pass a budget before this time, then tax bills can't go out; the city can't collect any money; the city of Providence goes into receivership; everyone takes their rental investments to other places, and we skip ahead to foreclosures.

So there you have it. Politics as usual in the city of Providence. It's not just these "rich fat-cat" landlords having to shell out a few more bucks that are probably falling out of their pockets anyway. It's the "let's put our personal differences ahead of the constituents, regardless of the economic collateral damage" way of doing business in our capital city.

Real Estate Insight Airs Every Sunday Morning at 10:00 on Talk Radio 920 WHJJ

Phones Rang off the Hook on Real Estate Insight Over Tax Hike!

Click the link below to hear one impassioned, fed up constituent.

Providence's Finance Committee Votes in Favor of Tax Hike

Even Higher Rate Increase for Small Landlords

On July 14^th, the Providence City Council's Finance Committee voted to increase the property tax rates for residential and commercial property and eliminate the homestead exemption for owners of 1 – 5 non-owner occupied properties, (July 16^th  and July 20^th articles in the Providence Journal).  The full City Council will vote on July 26^th.

Details of the Proposed Increases:

25.5% increase in residential property tax rate: The residential property tax rate would increase from $24.21 per $1,000 of assessed value to $30.38.

Additional 33% rate hike for small landlords:  The Council will vote to repeal a homestead exemption for non-owner occupied rental properties of 1 – 5 units.  If approved, this will result in an additional 33% increase in the property tax rate for owners of these properties. This will mean a grand total of a 58.5% tax increase for some landlords.

17.8% increase in commercial property tax rate:   The commercial property tax rate would  raise the commercial rate from $28.60 per $1,000 of value to $33.70

When will these increases take effect?   Immediately? Retroactively? Property owners will receive revised tax bills in August, (July 16^th Providence Journal). 

Choosing a Smaller House Doesn't Always Mean You are an Empty Nester.

I was interviewed last week by Cheryl Phillips, Real Estate Contributor to GoLocalProv.com on the growing trend in buyers looking for smaller homes, regardless of how many people are living there.

"…Downsizing isn't just for empty nesters anymore. More people, including first time homebuyers, are moving into smaller homes and learning how to live with less. 

Just how much home space do you need? Can you live with fewer possessions? And what do you do with the stuff that takes up too much space?

These questions are important in a time when making a home buying decision is based on needs rather than wants…"

Click here for the rest of the article

RI Foreclosures are Up 55% From a Year Ago and Up 19% From March

One in every 525 households received a foreclosure notice in April, according to RealtyTrac.

The Irvine, Calif.-based real-estate tracking firm said 861 properties in Rhode Island, or one in every 525 homes, received a foreclosure notice last month. The state’s foreclosure rate ranked 19th-highest among the 50 states.

Nationally, RealtyTrac said one in every 387 homes received a notice in April, a drop of 2.4 percent from a year ago and down 9 percent from March 2010.

When you get down to individual state foreclosure statistics, what you really talking about is that state's economy.  We've seen the median price of a home in Rhode Island stabilize and even creep up a bit. We've seen the tax stimulus encourage people to get back into the real estate market. But now that that is over, it's going to be our local Rhode Island economy that provides the true heartbeat for our real estate market.  

While not known for their efforts to help existing homeowners, Rhode Island Housing is a winner of a 2009 Justice Award in the category of Consumer Protection. The awards are given in recognition of an extraordinary commitment to justice exhibited by members of the community.

“We are honored to have the work of our HelpCenter recognized by Attorney General Lynch,” says Richard Godfrey, Executive Director of Rhode Island Housing. “At the onset of this unprecedented housing crisis, other counseling agencies were simply overwhelmed. With our receipt of federal funding, Rhode Island Housing has seen over 5,000 Rhode Islanders walk through the doors of our HelpCenter. Some were victims of predatory lending, others of scams that followed offers to ‘save their homes.’ For others, it was the loss of jobs and the economic crisis that brought on their struggles. Many factors have come together to put Rhode Island homeowners in crisis.”

Adds Godfrey, “Our HelpCenter provides a safe place for advice and education when it comes to protecting both homeowners and tenants from foreclosure, or coping with the loss of a home. Here in Rhode Island, which is currently ranked 11th in the nation for foreclosure activity, distressed homeowners are at particularly high risk of predators.”

“By reaching people at the first sign of trouble, we can offer them more options,” says Godfrey. “To date, our efforts have not only kept many homeowners seeking assistance in their homes, we have prevented many more from falling prey to those offering false promises and steep fees for foreclosure assistance. Our efforts continue to help homeowners in trouble arm themselves with the tools and information they need to protect themselves against fraud, avoid housing trouble, or find a safe solution to their situation that best meets their needs.”