Many of you may have read our past posts about what is going on with our property tax situation in New Mexico. In short, folks are getting taxed out of their homes due to doubling and even tripling taxes. Below is a letter I wrote to the Senate Corporations Committee, who will be evaluating bills designed to correct the mess. After the letter, please note the applicable bills and the legislators who are on the committee. If you can make the time, particularly if you’ve been affected or know someone who’s been affected, please contact one or all of the committee to voice your concern.
Given the amount of time being committed and the number of related bills, it’s obvious there is an understanding in the legislature of the enormity of the property tax issue. I’m hopeful that the legislature will see the necessity of passing the bills noted below.
Being in the mortgage business, we’ve seen numerous examples of the negative impact of the current property tax environment. I thought I’d share at least one specific example that I believe speaks volumes. This is literally from a call I took from a client TODAY. It’s not a coincidence that the call came in today, we receive calls like them all the time.
The call was from a client in California who purchased three homes here in Albuquerque in 2006. A client who has had to cover over $1,200 per month to cover the amount of the mortgage payments in excess of the rents being collected; and he’s done so for over a year and a half. He called me today because he received a notice from the lender on ONE (others will follow soon I’m sure) of the homes letting him know that he owed them over $2,500 due to a shortage in his escrow account. If he didn’t pay the lump sum, his payment would increase a total of $375.00. If he did, it would still increase by over $200 per month.
His dilemma centers around the fact that he believes morally he made an obligation to pay for these homes, which is why he’s continued to pay the $1,200 per MONTH beyond what is coming in for rent, even though a part of him thinks there is no reason to continue paying the mortgages. However, the latest development regarding the property taxes has created a situation where he may not have a choice. He’s now thinking that his best option is to let the homes go in to foreclosure. His thinking is why wait for values to come back up AND pay anywhere from an additional $300 to 600 more per month for the three homes combined?
Certainly no one expects you to have sympathy for this person because he bought some investment property here in Albuquerque and isn’t able to collect enough rent to cover the mortgage payments. These are the consequences of the decision he made. The point is that the current property tax environment has impacted him in a way that will likely cause these homes to go in to foreclosure, whereas most likely he would have chosen to continue on in hopes of a turnaround in the housing market. I think you would all agree this is the type of scenario we as a community need to avoid if at all possible.
It’s a good thing rates have gone down allowing folks to refinance. In doing so, many have been able to at least keep their payment the same after factoring in a recent or upcoming increase in their payment due to the property tax increases. In this clients case this is not an option because these are investment properties.
I appreciate your attention to this very important issue and look forward to significant progress being made.
1. SB 181 – this will keep the 3% cap in place regardless of change in ownership, preventing future tax lightening.
2. SB 335 – regarding vacant land, this will change the tax ratio for valuing non-agricultural land from 1/3 to 1/6.
3. SB 457 – this will rollback the valuation of properties that have been hit by tax lightening.
4. SB 458 – regarding new construction, this will value new homes at 80% of sales price.
5. HB 34 & 261 – these would require disclosure of a property tax increase to future homeowners.
6. SB – to be introduced next week, this would reset property taxes to current and correct values with a 4-year phase in for homeowners that experience a tax loss or increase. After the reset, the 3% cap would be reinstalled.
Phil Griego: firstname.lastname@example.org
Lynda Lovejoy: email@example.com
Kent Cravens: firstname.lastname@example.org
Dianna Duran: email@example.com
Tim Keller: firstname.lastname@example.org
George Munoz: email@example.com
John Sapien: firstname.lastname@example.org
Bill Sharer: email@example.com
David Ulibarri: firstname.lastname@example.org
Mark Boitano: BOITANOM@aol.com’