The problem of banks not taking financial responsibility for the properties they foreclose on continues to grow. In this blog post from NPR's Marketplace (Scott Jagow is the author) he discusses the problem.

Is it happening here? I suspect in Prince William and Rappahannock counties the answer is no. Houses are selling so quickly it seems unlikely the bank wouldn't just go ahead and put it on the market.

There are a few properties I've seen in Culpeper and Fauquier county that I've wondered about. They are mostly rural properties on small lots with small houses in very bad condition. The bank supposedly foreclosed many months ago and there's been no sign of it being sold. So, the answer is....maybe.

Given the state of local county budgets, if this is happening seems like it'd be in the county's interest in getting this money. Legally, however, if the bank never transfers the deed, they don't legally own the property.

So, who does? If the owner paid the delinquent taxes could they move back in? If the bank has written off the loss and walked away what's to stop that from happening?

Did you know that only 2% of homeowners ever challenge their property tax assessments? But the ones who do have a 75% success rate!

What if the dying inner cities of a generation ago will now be replaced by dying suburbs as gas prices soar? We're already seeing evidence of revitalized city centers and emptying suburbs full of McMansions. Temprorary blip or permanent restructuring?

A court in California ruled that the clause in a new home purchase contract mandating that disputes after settlement go through binding arbitration rather than court was "unconscionable" and therefore unenforcable. The court said it was unconscionable because of "oppression" and "surprise". According to the court "oppression arises when the parties have unequal bargaining power, leading to no real negotiation and lack of meaningful choice. Surprise may arise when challenged terms are hidden in a 'prolix wordy or long-winded printed form' drafted by a party in a superior bargaining position." I find the rationale in this as interesting as the decision itself. What does this say about builder's contracts in general?

The Virginia legislature is taking up the matter of a homestead exemption this year. This was originally proposed by Governor Kaine in his election campaign. With higher property taxes across much of the state there is great interest in any relief that might be available to homeowners.

A homestead exemption was originally the exemption provided to protect a primary dwelling from creditors, and especially provide protection for a surviving spouse and children. By the way, Virginia's existing protection is a joke. Currently $5,000 of the home's value is protected.

But the homestead exemption has been expanded in some states as a way to provide property tax relief. Basically, some portion of the value of the home is exempted from property taxes.

The proposal for Virginia is that the maximum amount exempt from taxes is 20% of the value of the home or farm. This would be applicable only to primary residences. Localities would be allowed to set the terms and conditions. This would allow them to potentially target specific populations, say the elderly, and also to take into account local budget needs when they decide how to use this.

The bill would seem to stand a decent chance of passing. Since the local jurisdictions can determine how it is implemented it's impossible to predict what the impact would be on local homeowners or on local government budgets. But this is one to watch.

And, I definitely don't blog on Sundays!

There are just too many interesting things showing up right now that I want to bring to everyone's attention.

This article is as much opinion as it is fact. Keep that in mind as you read it. But what are blogs for, if not for opinion!

And, I'm reluctant to call any attention to Lyndon LaRouche, ever! But the article is interesting and timely and its points are worth discussing.

http://www.larouchepub.com/other/2007/3440loudoun-grnd-zero.html

There hasn't been as much discussion as there should be on the tax consequences to local governments from the real estate market tumult. It's as good a time as any to start that conversation. Where will the lost revenues come from? How will the infrastructure get built to support all these new residents?

In Commonwealth Magazine, the publication of the Virginia Association of REALTORS, there is an article this month that discusses the effect of impact fees on home affordability.

It quotes a study from the NAHB of saying that each $1,000 increase in the costs of home ownership reduces the number of prospective buyers by 217,000.

The implication of the article is that fees such as higher construction permit fees, tap fees, proffers required frombuilders and such things as the new taxes contemplated by some northern VA counties to pay for infrastructure are a bad thing.

Here's the problem with that implication. All of these fees, taxes, etc. are, in their own way, a way to offset the increased infrastructure required as new homes are built and new residents are added to an area. Increased population requires additional roads, schools, hospitals, sewers, etc.

Since all of these things have costs associated with them, the money has to come from somewhere. If you're not going to get that money from the builders making money off selling those homes, or from the new homeowners who, after all, will be the people utilizing those new services, who should pay?

The only people left, it would seem, are the existing homeowners. They would see an increase in their own taxes to help fund new infrastructure for the benefit of other people. It's hard to see anyone jumping on that bandwagon!

No one likes fees or taxes, regardless of their political persuasion, regardless of whether they use the services that those fees fund. But you can not simply continue to add population without infrastructure. And you can't expect existing home owners to absorb the entire burden. You're asking for an anti-growth backlash!

"Even modest impact fees can have a dramatic effect on housing affordability," says Jerry Howard, the CEO of NAHB.

I'm still waiting for his suggestion on who, then, should pay for the infrastructure!

I think we've all seen what happens when no one pays and construction continues and the services aren't there for the newcomers. Is everyone enjoying their commute from this area into northern VA and DC?

So, what do you think? How do we pay for infrastructure?