[quote=bearishgurl]ER, I think it is wonderful that MR is garnering this much public attention through the local media. In the past, especially during the millenium boom, which occurred during and just after the biggest building boom in SD County history, young buyers signed up for new homes in developers’ offices en masse (mostly using a 1st and 2nd TD and putting little to nothing down) and the majority had no idea how much MR was going to cost. Not only did their mortgages (predictably) reset a few years down the line, many of them were completely surprised months after move-in at the monthly outlay they found themselves having to come up with to satisfy MR twice yearly in combination with HOA dues (over and above their regular property taxes and insurance payments). In post 2000 construction, it is not at all uncommon for the combination of MR and HOA to top $700 per month, even for PUDs and condos. As these millenium-boom buyers’ loans reset, they stopped paying their mortgages but many stopped paying their taxes, MR and HOA a few months before that in attempt to satisfy their new, higher mortgage payment. Within 8 months of the reset (or often much sooner), their mortgages went into default.
As we all know, $700 can buy a few months worth of diapers and formula, pay for a couple of elementary-age kids’ afterschool care, or buy enough gas for a couple of parents in a family to commute their separate ways every weekday or plow into their retirement funds.
If just ONE thing goes wrong in Joe6p’s family (complicated pregnancy requiring unpaid maternity leave, involuntary cutback of work hours, loss of ONE of the parent’s jobs, uninsured medical expenses, for example), their property taxes (incl MR), homeowner’s insurance premiums and HOA dues are the first to go delinquent even the absence of an exploding mortgage reset. I’ve seen this phenomenon time and time again on new construction tracts purchased btween 2004 and 2006, where impounds were not common because a PM 2nd TD holder put up the 20% downpayment for the buyers.
This is Joe6P and his family we are talking about here. The “wealthy” aren’t attracted to stucco boxes situated 6-8 feet from one another out in lizardland, and, in any case, can send their kids to private schools of their choosing.
The news commentator in the link you provided has it right. The title to her investigative series is “Mello-Roos, the Tax You Choose.” I’ve been saying here all along that MR is the “tax you choose” given all other housing choices we have in this huge county. The law allows the bond repayment managers of the CFD’s to stretch out the repayment period if it is just repaying the same amount of principal but possibly initially had variable interest rates or I/O terms and they now seek to begin paying on the principal or pay more on the principal, whether or not they refied the loans or are able to refi them.
ER, the reason the bulk of the affected homeowners don’t care if the bonds will be paid off in 20, 30, 35 or 40+ years is because they have no intention of owning the property anywhere near that long, so will just pass along whatever duration of the payments left to their buyer. The buyers and new owners who have intentions of owning the longest are those who have two or more children close in age who are just starting public school or about to. If their kids are currently 0, 2, 4 and 5, then the longest they would have to stay to get all their kids through the public school system would be about 18 years. A LOT of families buy into these tracts when their kids are already enrolled in school and thus, would only need to own for 10 years or less to get their kids through school. After the kids are done with school, there is no reason whatsoever to continue to pay exorbitant MR, such as in that Del Sur tract which was the original subject of the news investigation.
The VAST majority of buyers signing up for MR, especially MR over $100 per month, are those with children who will attend the newer schools that the MR was used to build. All other subsets of buyers have no “need” to throw all that money (in MR) every month down the drain. I find it sad that so many homebuyers today feel they have to pay hundreds of dollars per month over and above their property tax bills just for the privilege of their children attending a PUBLIC school. It’s akin to extortion in my book … but then you have all these “willing participants” who “choose” to pay it in light of all the available alternatives :=0[/quote]
BG,
I totally agree that I’m happy that KPBS is covering this topic. A topic that most people in San Diego probably know NOTHING about and don’t care to know anything about.
I actually understand the need for Mello Roos taxes and actually I agree with them. HOWEVER, only if they are paid off by the original pay off dates.
People are free to choose if they want to live in a MR or not so people DO have options. I know you HATE these areas BG but I actually am one of those homeowners that is THRILLED with my decision to buy in a MR area and I find it well worth it.
The excellent schools were one factor in buying where we did but it wasn’t the only reason. We LOVE LOVE LOVE the area. I think it’s kind of funny you always call this Lizardland and always make it seem like it’s so far away and so distant. LOL.
I’m looking forward to reading more stories about Mello Roos taxes. I’m especially looking forward to hearing under which circumstances the CFD’s can be extended past their ORIGINAL pay off dates.
I do agree with you that probably many owners don’t really think past a few years or plan to sell their houses when they are empty nesters but you can’t paint everyone in that same picture because we know several people that own here in our area and they never have plans to move out of the area. Mello Roos or no Mello Roos.
You just have to remember BG that there are a lot of people that wouldn’t accept to live in certain parts of San Diego even if you gave them a free house. They would much rather live where they do paying a mortgage vs. taking a perfectly fine house in an area like Chula Vista. In fact, I’m one of those people. Even if you gave me the option of a FREE perfectly fine house in Chula Vista and promise to pay all property taxes…. I’d opt not to take it and pay a mortgage instead along with any applicable taxes. Nothing wrong with that…it’s just the way it is.
