According to the Journal, the Task Force's mission "was to evaluate the potential local impact of the subprime lending crisis and to come up with ways to protect consumers against abusive lending practices. (ABQ Journal - Subscription)." First of all, beware any time the government starts trying to "protect" the public, especially when it has to do with your money. Generally the result is your money being sent somewhere you don't want your money to go.
Strictly speaking the subprime mortgage "crisis" is not a crisis at all. It's the logical result of over-eager lenders making money available to people who shouldn't be getting it in the first place. The result is a tightening of the money available by the very people who were practically begging you to take out a loan just a year ago. The reality is that not everyone should own a home; there are those whose financial position is better suited to renting at least for now.
Back to the governor's Task Force... Since the subprime "crisis" was created by over-zealous lenders and brokers, you'd think that the recommendation of the task force would be some sort of restrictions on lending (not that we'd like that much either). Nooooo... The task force's recommendation is to make all private home sale prices public. Why? Because the task force blames the "crisis" on "unscrupulous appraiser[s]."
"One of the problems in the mortgage meltdown were loans based on inflated values," said task force co-chair Michael Loftin, who is executive director of Homewise, a nonprofit home ownership organization in Santa Fe. "So if you make more transparent what the values (home sales prices) are, it makes it harder to cook an appraisal."
First of all, the market has a perfectly functional mechanism for taking care of unscrupulous appraisers who either over-value or under-value property - lenders stop using them. Lending institutions rely on accurate appraisals to determine risk. When appraisals are inflated, lenders run the risk of having to foreclose on a property that cannot be sold at a price that allows them to recover their investment.
Second, the Journal story implies that appraisers have no access to sales price data and are somehow working in a vacuum seemingly coming up with prices based on some kind of gut feeling or something. Nothing could be further from the truth.
It's safe to say that most houses in Albuquerque are sold by Realtors using their private Multiple Listing Service. Every house sold through the MLS is recorded along with its sales price. Appraisers use this data (and have for years) to determine comparable prices or comps for a specific property. Since most homes are sold through the MLS the comps are usually very accurate.
So what is all of this really about? Since 2004 New Mexico has required that all sales prices be reported to the county assessors. That data was not to be used for assessing value. Of course if they have the data they will find a way to use it. Before 2004, property owners could choose to provide the sales price but weren't required to do so.
Second, the Journal story implies that appraisers have no access to sales price data and are somehow working in a vacuum seemingly coming up with prices based on some kind of gut feeling or something. Nothing could be further from the truth.
It's safe to say that most houses in Albuquerque are sold by Realtors using their private Multiple Listing Service. Every house sold through the MLS is recorded along with its sales price. Appraisers use this data (and have for years) to determine comparable prices or comps for a specific property. Since most homes are sold through the MLS the comps are usually very accurate.
So what is all of this really about? Since 2004 New Mexico has required that all sales prices be reported to the county assessors. That data was not to be used for assessing value. Of course if they have the data they will find a way to use it. Before 2004, property owners could choose to provide the sales price but weren't required to do so.
Of course this whole thing isn't about protecting anyone from predatory lending; it's about separating you from your money. Requiring every sale price to be reported will allow the assessors to easily increase your property value and therefore increase your property taxes.(Sidebar)(End Sidebar)
The Bernalillo County Assessor's office used to send out a very official letter to new homeowners that asked them to report the sales price. The letter was constructed in such a way as to make you believe that casual observers would believe that they had to report their sales price. In other words, before 2004 the county assessors would trick you into reporting your own sales price.
Before you start thinking "it's only fair that the assessed value track the market," remember that there's a very real possibility that people who have lived in a home for an extended period of time will be taxed right out of their home. In addition, our assessment system was taken into account when our property taxes were set so changing the assessment method will simply result in increased revenue not originally planned for. In other words, a tax increase where the hardest hit will be those on fixed incomes. (How's that for progressive taxation?!) Plus, you know that the sales data will be used to support an increase in assessed value and won't reflect market corrections when they occur.
With the state facing a substantial reduction in new revenue, we'd bet that Governor Richardson sees fit to put this on his upcoming legislative agenda. Make no mistake, this is about money not consumer protection and should New Mexico become a disclosure state we'll be filling state coffers on the backs of people who can least afford it.
