Here are some eye-popping statistics from authors who would like you to purchase their do-it-yourself books:
– Up to 60 percent of all taxable property in this country is overassessed, yet only 2 percent of all homeowners bother to challenge their tax assessments.
– At least $562 million is still due borrowers who have refinanced their old adjustable-rate mortgages.
Writers sometimes overstate their causes to boost sales. But in the cases of Joseph Almeida, author of the “Homeowner’s Property Tax Reduction Guide,” and David Ginsburg, who has written “The ARMCHECK Do-It-Yourself Manual,” the numbers ring true.
Almeida, a Bridgeport, Conn., real estate broker who helps his commercial clients reduce their property tax burden, takes his numbers from several sources, including the National Taxpayers Union.
And Ginsburg, the head of a mortgage consulting firm, says his estimate is on the conservative side. People who have paid off their ARMs might have as much as $1 billion coming to them because of errors their lenders made in adjusting their loans, he maintains.
Almeida says homeowners should follow the lead of large-scale real estate investors. These big hitters frequently protest the property taxes assessed on their apartment developments, office buildings and shopping centers. But with the downturn in commercial real estate, they’ve been screaming for tax reductions in record numbers.
In case you’ve had your head in the sand, the recession hasn’t missed the residential sector either. In fact, houses in most markets have lost at least some value over the last few years, yet property taxes in most places are rising.
Almeida says the chances are good your assessment is based on values that are too high for current conditions. “Many jurisdictions base their valuations on sales statistics that may be up to two years old,” he says, “so how could they be consistent with today’s prices?”
But even if the assessment is up to date, the broker says it could be based on an inaccurate description of your property. “The assessor is supposed to visually inspect every house, both inside and out, but that’s virtually impossible because not everyone is home when the tax man comes by, and some people won’t let him in when they are home,” he explains.
Worse yet, Almeida says that there is “little or no supervision” in the field. Whether or not the taxing authority uses its own people or hires an outside contractor to gather information, he says that when no one is looking over their shoulders, “they don’t always do the job they are paid to do.”
Another enlightening statistic: Four out of five homeowners who do appeal are successful in gaining at least some reduction in their tax bills.
An appeal need not be confrontational, Almeida advises. “It’s not like going before a judge and jury. Most appeals boards are made up of volunteer homeowners just like you. And you’ll only need two to five minutes to explain your case.”
Oh yes, there’s one other thing. You’ll need evidence.
“Most people throw their arms in the air and say they can’t afford to pay such a high tax, but that’s an argument that holds no water. You need proof to get a reduction,” Almeida says.
And that’s where his book comes in. Actually, it’s more than a book. It’s a tax reduction kit, which includes Almeida’s 160-page book, an audio question-and-answer cassette and all the forms you’ll need to make a compelling case.
The package is available for $39.95 plus $5 shipping and handling and comes with a written double guarantee: You get your money back if you’re not satisfied and return the kit within 30 days, or if your taxes are too high but you fail to get them reduced. To order, call 800-283-4887 or write Mortgage Monitor, 495 Connecticut Ave., Norwalk, Conn. 06854.
Meanwhile, Ginsburg, who operates his own mortgage consulting firm, says you would also do well to go over your old ARM. “There may be gold in those old loan papers,” he says. “There are errors waiting to be discovered and refunds waiting to be made.”
Ginsburg came up with his $562 million balance-due figure by determining the total number of ARMs that have been refinanced since 1989. Then, using a 33 percent error rate, he determined that 1.4 million loans have been miscalculated.
Next, he multiplied by an average error of $800 to come up with $1.125 billion in total errors. Then, because lenders make just as many mistakes for borrowers as they do against them, he divided the total in half.
But the result is probably on the low side. For one thing, Ginsburg did not count the thousands and thousands of ARMs which were paid off when the house was sold. For another, he used a one-third error rate when other experts say mistakes occur in one out of every two adjustable loans.
The $800 he used as an average error may be on the short side, too. While overcharges run anywhere from a few dollars to thousands, they typically fall in the $500 to $1,500 range. But the larger the loan amount, the larger the error.
Take the case of one Denver businessman who received a refund of $38,000-$30,000 plus $8,000 in interest-on his $125,000 mortgage because the lender mistakenly based five years worth of adjustments on the highly volatile six-month T-bill index instead of the sluggish, slow-moving semi-annual cost of funds index.
So don’t throw away those old loan documents without first making sure all the adjustments were correct. Refunds can be obtained on most miscalculated ARMs-even if they were paid off years ago-because the statute of limitations in most states doesn’t start until an error is discovered.
Loantech charges $95 to audit loans, which is about average. If you wish to go it alone, the company has published a 74-page do-it-yourself workbook that contains everything you’ll need-worksheets, tables and a history of 4,000 index values.
The book is available for $17.95 plus $3.50 shipping and handling from Loantech, P.O. Box 3635, Gaithersburg, Md. 20885, or call 800-888-6781. For credit card orders, call Bookmasters at 800-247-6553.
