« Courts - "Implementing federal sex offender registration law may prove impossible" | Main | Ind. Decisions - Upcoming oral arguments this week and next »

Sunday, March 15, 2009

Ind. Law - Two stories today on Indiana home foreclosures

Interestingly, both stories point to an Indiana problem lost in all the talk of subprime lending -- ballooning property taxes, not the mortgage loan, as the causative factor in many foreclosures.

Jerry Davich reports in the Gary Post-Tribune, under the headline "Home foreclosure crisis reaches region."His second example is that of Nick Simmons:

Simmons, of Gary, has also filed for bankruptcy and is going through the foreclosure process after his home's ballooning property taxes caused his monthly mortgage to jump from $394 to nearly $1,100. He and his wife are losing their home of 21 years and they're planning on moving into a beat-up mobile home on a separate property next to his home.

"Taxes are the problem, not my loan, and people need to know this, said Simmons, who's 64 and not in great health. "Worse yet, the property that my trailer sits on is appraised at only $10,000 and my taxes for it are $4,300 a year."

When Simmons, a county maintenance man whose take-home pay is about $1,600 a month, asked his bank representative for guidance, he was told to get a better job, he said.

"The government has you coming and going with these new taxes, and the bank has you, too," he griped. "You can bet that after the bank gets my house --which I owe only $15,000 on -- it will turn around and sell it for at least $40,000 to $50,000. That's a tidy profit, isn't it?"

Jeff Parrott writes today in a story in the South Bend Tribune headed "Clerical error threatens couple's home: Homestead exemption can be critical" where it looks like, but for the efforts of the newspaper, and ultimately two county officials, Becky and Bob Reidenbach would have lost their house. The story begins:
Bob and Becky Reidenbach were already behind on their bills and considering filing for bankruptcy protection.

Bob is disabled and Becky works part time in the bakery at a Martin's Super Markets store, although her hours have been greatly reduced because of the recession, she said. Over the years, they've gradually accumulated credit card debt that now has them overwhelmed.

In the bankruptcy, they hoped to keep their home, a modest bungalow in the 1900 block of Randolph Street on South Bend's far east side. Their monthly payment was about $642.

But in January the couple received an alarming letter from their mortgage company. Their monthly payment was increasing to $1,011 to shore up a deficit in their escrow account.

The records indicated their tax bill to be about $2,000, so their mortgage company paid that amount, but the Reidenbachs knew that their tax bill should have only been about $400, the couple said.

Becky called the St. Joseph County auditor's office and quickly learned what happened. The records showed she had not filed for a homestead exemption from her property taxes.

The homestead exemption is a substantial property tax discount that people can claim on their primary home. Failure to file for it can lead a homeowner to foreclosure.

The problem was, she knew she had filed for the exemption, in May 2006, a month after buying the home, and she had the documentation to prove it.

Becky said a clerk at the auditor's office did some checking and easily verified that Becky was correct, and that the office had mistakenly failed to record the exemption for 2007-pay-2008 taxes.

Becky asked the auditor's clerk to write the mortgage company a letter stating the error had been made, but she said the clerk, after checking with a supervisor, said office policy prohibited such letters to mortgage companies.

The auditor's clerk told her she would receive a refund for the overpaid taxes, but not until at least June, after the treasurer's office had finished the 2007-pay-2008 tax settlement.

Becky left the office furious and scared.

"Due to their mistake, we are going to be homeless!" she told The Tribune. "Through no fault of our own. We do not have the money to make a $1,000 house payment."

Posted by Marcia Oddi on March 15, 2009 12:34 PM
Posted to Indiana Government | Indiana Law