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The Myth of Property Ownership

Woman Sees Her Home Confiscated Over a Water Bill

Vicki Valentine lost the two-story brick row home after the city sold her debt to investors through a contentious and byzantine legal process called a "tax sale."

June 6, 2010 | Alternet

One raw day in early February, Vicki Valentine stood by helplessly as real estate investors snatched her West Baltimore home over what began with an unpaid city water bill of $362.

Rather than collect the overdue money they are owed, many local governments are selling tax liens.

Buyers range from behemoths such as JPMorgan Chase & Co, and some regional banks and law firms, to small-fry investors lured by late-night television commercials promising quick riches. Investors generally bid in an auction for the right to collect delinquent taxes and other municipal debts on property owners, sometimes by paying only a few hundred dollars. When owners can’t pay, investors can pick up property at bargain prices.

City records show that one in five of these liens on properties is for unpaid taxes or other municipal bills amounting to $1,000 or less. If Baltimore’s 2009 tax sale is any indication, hundreds will stem from delinquent water bills; there were 666 such liens last year.

http://www.alternet.org/story/147118/woman_loses_home_over_a...



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"A Neighborhood’s

"A Neighborhood’s Decline

More than three years after Valentine’s small debt drew her into the tax sale, neither the city nor the investors seem to have won much.

The property is unlikely to be fixed up any time soon. Instead, it adds to a sense of decay that permeates some parts of urban Baltimore. On Valentine’s old block in the Sandtown neighborhood, all but a handful of houses, abandoned long ago, are boarded up.

Such decline has summoned other ills. “Drugs moved in and replaced the good with the bad,” said Valentine, who is living temporarily with her mother. Many of her possessions are in storage.

De Laurentis and Reiff now hold a “writ of possession” for a property that’s in need of substantial repair. Though the home is assessed at $46,000, in such dilapidated condition the investors said they probably would have trouble selling it for more than $16,000.

In addition, investors could be on the hook for a $7,000 water bill of their own. Just how that happened is unclear; there may have been an undetected leak in Valentine’s home. Last month, the city finally turned off the water.

If the investors take the final step to secure a deed to the property, they would have to pay the city roughly $6,300, which the city is then supposed to turn over to Valentine. The law entitles original property owners to receive at least some compensation." - Page 6

What a perfectly f**ked up situation.

..

It's Still A Terrible Time To Buy

Why?

By Patrick Killelea
Last updated 18 May 2010

1. Because house prices will keep falling in most places. Prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a maximum of 15 times the house's annual rent. Yet on the coasts, both those safety rules are still being violated. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines. Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that prices will keep falling for a long time. Anyone who bought a "bargain" this time last year is already sitting on a very painful loss.

2. Because it's still much cheaper to rent than to own the same size and quality house, in the same school district. On the coasts, annual rents are 3% of purchase price while mortgage rates are 6%, so it costs twice as much to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is three times the cost of renting and wipes out any income tax benefit. Buying a house is still a very bad deal in the richer neighborhoods, but it does make sense to buy in some relatively poor neighborhoods where prices have already fallen into line with salaries and rents. Check whether you should rent or buy in your own area with this NY Times calculator.

The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk. The basic buying safety rule is to divide annual rent by the purchase price for the house:

annual rent / purchase price = 3% means do not buy
annual rent / purchase price = 6% means borderline
annual rent / purchase price = 9% means ok to buy

So for example, it's borderline to pay $200,000 for a house that would cost you $1,000 per month to rent. That's $12,000 per year in rent. If you buy it with a 6% mortgage, that's $12,000 per year in interest instead, so it works out about the same. Owners can pay interest with pre-tax money, but that benefit gets wiped out by the eternal debts of repairs and property tax, equalizing things. It is foolish to pay $400,000 for that same house, because renting it would cost only half as much per year, and renters are completely safe from falling house prices.

3. Because it's a terrible time to buy when interest rates are low, like now. Realtors just lie without shame about this fundamental fact. House prices fall as interest rates rise, because a fixed monthly payment covers a smaller mortgage at a higher interest rate. Since interest rates have nowhere to go but up, prices have nowhere to go but down. The way to win the game is to have cash on hand to buy outright at a low price when others cannot borrow very much because of high interest rates. Then you get a low price, and you get capital appreciation caused by future interest rate declines. To buy at a time of low interest rates and high prices like now is a mistake for both reasons.

It is far better to pay a low price with a high interest rate than a high price with a low interest rate, even if the mortgage payment is the same either way.
* Your property taxes will be lower with a low purchase price.
* A low price gives you the ability to pay it all off instead of being a debt-slave for the rest of your life.
* As interest rates fall from high to low, house prices increase.
* Paying a high price now may trap you "under water", meaning you'll have a mortgage larger than the value of the house. Then you will not be able to refinance because there you'll have no equity, and will not be able to sell without a loss. Even if you get a long-term fixed rate mortgage, when rates inevitably go up the value of your property will go down. Paying a low price minimizes your damage.

4. Because buyers already borrowed too much money and cannot pay it back. They spent it on houses that are now worth less than the loan. This means most banks are actually bankrupt. But since the banks have friends in Washington, they get special treatment that you do not. The Federal Reserve prints up bales of new money to buy worthless mortgages from the most irresponsible banks, slowing down the buyer-friendly deflation in prices and socializing bank losses.

Big bank cash flow will never run out as long as the Federal Reserve exists. The Fed exists simply to protect big banks from the free market. Banks get to keep any profits they make, but bank losses just get passed on to you as inflation, when the Fed prints up money and buys their bad mortgages.

As if that were not enough corruption, Congress authorized vast amounts of TARP bailout cash taken from taxpayers, to be loaned directly to the worst-run banks, those that already gambled on mortgages and lost. The Fed and Congress are letting the banks "extend and pretend" that their mortgage loans will get paid back.

It is necessary that YOU be forced deeply into debt, and therefore forced into slavery, for the banks to make a profit. If you pay a low price for a house and manage to avoid debt, the banks lose control over you. Unacceptable to them. It's all a filthy battle for control over your labor.

5. Because buyers used too much leverage. Leverage means using debt to amplify gain. Most people forget that debt amplifies losses as well. If a buyer puts 10% down and the house goes down 10%, he has lost 100% of his money on paper. If he has to sell due to job loss or a mortgage rate adjustment, he lost 100% in the real world.

The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage. Interest generally accounts for more than half of the cost of a house. The saver/renter not only pays no interest, he also gets interest on his savings. Leveraged housing appreciation, usually presented as the "secret" to wealth, cannot be counted on, and can just as easily work against the buyer. In fact, that leverage is the danger that got current buyers into trouble.

Higher-end houses especially are now set up for a huge fall in prices, since there is no more fake paper equity from the sale of a previously overvalued property. Without that equity, most people don't have the money needed for a down payment on an expensive house. It takes a very long time indeed to save up for a 20% downpayment when you're still making mortgage payments on an underwater house.

It's worse than that. House prices do not even have to fall to cause big losses. The cost of selling a house is 6% because of the realtor lobby's corruption of US legislators. On a $300,000 house, that's $18,000 lost even if prices just stay flat. So a 4% decline in housing prices bankrupts all those with 10% equity or less.

6. Because the housing bubble was not driven by supply and demand. There is huge supply because of overbuilding, and there is less demand now that the baby boomers are retiring and selling. Prices in the bubble, even now, are entirely a function of how much the banks are willing to lend. Most people will borrow as much as they possibly can, amounts that are completely disconnected from their salaries or from the rental value of the property. Banks have been willing to accomodate crazy borrowers because banker control of the US government means that banks do not yet have to acknowledge their losses, or can push losses onto taxpayers through government housing agencies like the FHA.

7. Because there is a massive and growing backlog of latent foreclosures. Millions of owners have simply stopped paying their mortgages, and the banks are doing nothing about it, letting the owner live in the house for free. If a bank forecloses and takes possession of a house, that means the bank is responsible for property taxes and maintenance. Banks don't like those costs. If a bank then sells the foreclosure at current prices, the bank has to admit a loss on the loan. Banks like that cost even less. So there is a tsunami of foreclosures on the way that the banks are ignoring, for now. To prevent a justified foreclosure is also to prevent a deserving family from buying that house at a low price. One day, those foreclosures will wash over the landscape, decimating prices, and benefitting millions of families which will be able to buy a house without a suicidal level of debt, and maybe without any debt at all! Why is it that news articles about foreclosure never mention the happy young families that can finally buy at a low price?

8. Because first-time buyers have all been ruthlessly exploited and the supply of new victims is very low. From The Herald: "We were all corrupted by the housing boom, to some extent. People talked endlessly about how their houses were earning more than they did, never asking where all this free money was coming from. Well the truth is that it was being stolen from the next generation. Houses price increases don't produce wealth, they merely transfer it from the young to the old - from the coming generation of families who have to burden themselves with colossal debts if they want to own, to the baby boomers who are about to retire and live on the cash they make when they downsize."

House price inflation has been very unfair to new families, especially those with children. It is foolish for them to buy at current high prices, yet government leaders never talk about how lower house prices are good for American families, instead preferring to sacrifice the young and poor to benefit the old and rich, and to make sure bankers have plenty of debt to earn interest on. Every "affordability" program drives prices higher by pushing buyers deeper into debt. Increased debt is not affordability, it's just pushing the reckoning into the future. To really help Americans, Fannie Mae and Freddie Mac and the FHA should be completely eliminated, along with the mortgage-interest deduction. Canada has no mortgage-interest deduction at all, and has a more affordable and stable housing market because of that.

The government pretends to be interested in affordable housing, but now that housing is becoming truly affordable via falling prices, they want to stop it? Their actions speak louder than their words.

9. Because boomers are retiring. There are 70 million Americans born between 1945-1960. One-third have zero retirement savings. The oldest are 64. The only money they have is equity in a house, so they must sell. This will add yet another flood of houses to the market, driving prices down even more.

10. Because there is a huge glut of empty new houses. Builders are being forced to drop prices even faster than owners, because builders must sell to keep their business going. They need the money now. Builders have huge excess inventory that they cannot sell at current prices, and more houses are completed each day, making the housing slump worse.

bump

.

'Cause there's a monster on the loose

Oh

Dorothy Gale where art thou!

Everyone here should know this!!!

As soon as you record your property with the State, it becomes their subject property. Call your county recorder and ask if property is REQUIRED to be recorded!! It is NOT!

Private property becomes "Real Property" in the recording process, why? Because now the state is performing an activity FOR YOU! They are keeping watch over 'your' land, by making it 'their land', and making you the 'tenant'.

A tax on private land or property is a direct tax in violation of the Federal Constitution, therefore, the States have created a VOLUNTARY, yearly (or quarterly) "taxable activity". TO un-record your property, you must:
1) Have no mortgage
2) "sell" the property to someone, (real or fake name, even yourself)
3) record ONLY the release of deed with the County. DO NOT RECORD THE TRANSFER!!!

now that the property is unrecorded, any tax they levy on your "private land" will be a direct tax. Im working with the State of Michigan, Florida, and California now to find out how to remove the private land from the tax roll. Ill report back when I figure it out.

Read here for more info!!!!!!
http://www.1215.org/lawnotes/work-in-progress/landpatent/lan...

Another question

Julius,

That link is not working for me.

So are you saying that the gov't CAN or CAN'T levy a tax on your unrecorded property?

I've heard arguments (and I'm quite you're right and it's legal, etc.) like these where the income tax is voluntary, and it becomes mandatory only when you file your taxes, or something like that.

But when people have not voluntarily submitted, they still are arrested and put in jail for tax evasion. Thus the criminal full well knows it's engaging in criminal activity, but they do it anyways, because they have the guns and they don't want a precedent started.

I suppose local Sheriffs' could stand in the way of arrests, but I don't know of any with the balls to do this, other than Sheriff Mack, and I'm not sure he ever got in the way of such an arrest.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a rEVOLution before tomorrow morning." - Henry Ford

So what?

I ask this not flippantly.

You said, "A tax on private land or property is a direct tax in violation of the Federal Constitution..."

But since when (and here is my sincere question) does it matter that something violates the Constitution??

That happens as a matter of routine business in Wash DC, and nobody has any power to stop the trampling of the Constitution.

For example, we should not be at war, but we are, spending billions of dollars a year. No formal declaration of war, and thus the war is a direct violation of the Constitution.

Another example: Hundreds of federal departments are in direct violation of the Constitution, like the Dept of Energy, the EPA, the Dept of Education, OSHA, etc. etc., but they exist and continue to suck money from the treasury.

Another example, and this is an easy one. Obama was born in Kenya. Everybody knows it. The media routinely reported it when he was in Congress, and yet he's the president now, despite a foreign-born person being forbidden from becoming president by the Constitution.

So I wonder, Julius Bragg, why this great info you are sharing with us (and I appreciate you sharing it) can really be an exception to the rule of carte blanche raping of our beloved Constiution by our traitorous Congress.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a rEVOLution before tomorrow morning." - Henry Ford

Just to clarify, you said

Just to clarify, you said

    But since when (and here is my sincere question) does it matter that something violates the Constitution??

    That happens as a matter of routine business in Wash DC, and nobody has any power to stop the trampling of the Constitution.

Actually, I dont know of any unconstitutional laws, or actions. There are SEVERAL that appear to be unconstitutional, but when they are dissected, you see that they apply to specific people who are subject to their jurisdiction....dont forget:

    Article IV, Section 3
    New States may be admitted by the Congress into this Union; but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.

    The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.

    This means that Congress, constitutionally can make rules and regulations for all Federal Personnel!! Well, when you see the definition of "Federal Personnel" it starts to make sense:
    USC Title 5, 552

      (13) the term “Federal personnel” means officers and employees of the Government of the United States, members of the uniformed services (including members of the Reserve Components), individuals entitled to receive immediate or deferred retirement benefits under any retirement program of the Government of the United States (including survivor benefits).

    Here you see that anyone with a social security number is "federal personnel", and Congress is allowed to make all regulation for federal personnel, or anyone living in the District of Columbia...see how Congress defines "State"
    http://books.google.com/books?id=9UQFAAAAYAAJ&lpg=PA166&ots=...
    see page 166 State means the District of Columbia...todays codes mean the same thing, but now they are trickier, they simply put "State includes the District of Columbia", in hopes that Americans will assume that includes means also, and often Americans do!!
    http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_000077...
    (10) State
    The term “State” shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.

    As far as wars, they are not declared, because America isnt at war, "the UNITED STATES" is, the UNITED STATES, is a Corporation:
    http://www.law.cornell.edu/uscode/28/usc_sec_28_00003002----...
    (15) “United States” means—
    (A) a Federal corporation;

    I think this is why they wear the flag backwards on their sleeves is to differentiate between America and the UNITED STATES...the military of course has a different excuse, but my idea makes more sense!!

    Its all a scam, but not an unconstitutional scam, this is why it is SO IMPORTANT to know all of these laws and actions, that most Americans consider "kookery" or "conspiracy theories"

    Thanks julius, I'm in Michigan, waiting for more info.

    .

    Free includes debt-free!

    nice

    Louis Rogers of the State tax commission just told me that I was not required to record my property...he did not know how to remove it from the tax roll, but admitted that he would not sign his name to a document admitting that a tax on my private land was being assessed.

    Im waiting for a call back from "Tim Snell", the attorney for the taxing commission. Ill keep you posted

    Ironic

    that their were 666 liens last year. odd number? Maybe not!

    Of course...

    If Baltimore’s 2009 tax sale is any indication, hundreds will stem from delinquent water bills; there were 666 such liens last year.

    Of course, it had to be THAT number!

    Just rent

    This is why I won't buy a house. People told me years ago that I was "throwing my money away" by renting and not getting a house.

    Really? I'm not in debt and I have a decent savings account. Who's stupid now?

    If I could REALLY own property without the chance of losing it to a bank or government, I would seriously consider it.

    I'm with you

    I used to be all about saving up money to buy a house. Now, my motto is no debt and to build my savings account for a rainy day. I'm saving money, can move at a whim, and I don't have to pay for anything breaking at my place.
    I like it.

    rent or own

    Just pay your excessive water bill or property taxes.Your indirectly paying them anyway thru rent. Buying a house was the best investment I ever made. Do it now while the market is still low. It is a great hedge against the coming inflation.

    the old hedge against

    the old hedge against inflation myth is back I see.

    Liabilities vs Assets

    Your house won't be an "investment" until it starts putting money in your pocket. Even if you paid for the house, and you owed property taxes, it is a liability.

    Your house can only become an investment (asset) when it begins to put money in your pocket.

    Not trying to start anything, just thought I'd lay out some financial definitions.

    With Freedom Comes Responsibility

    Penny Saved = Penny Earned,

    when you pay rent it goes out of your pocket. When you own the place you doNot pay rent, a kind of saving.
    Therefore, IF one has the savings its better to buy, i.e. without loans + % of interest added to it. Interest is bad, makes the deal very expensive, so instead of that renting is better.

    To help in cases mentioned above, try to amend laws so that old ladies get a discount on property taxes and water bills. That would ease the burden of payments to weak members of society. Sounds fair to me.
    Not promoting socialism, only human concern in a situation which demands kind attention.

    Or, old folks could put a partition in the house and rent out a portion and earn rent, this will take care of the taxes and water bills.

    horrible advice.

    horrible advice.

    Horrible, which part ?

    I posted 3 paras,
    1) to own house. 2) low tax for old ladies. 3) renting out a portion.
    I am not sure which one-s you think is horrible.
    I/we could learn from your reason-s, or I could clarify.

    bumping in . . .

    indignation.

    How could *we* help?

    What could anyone do?

    it's hard to be awake; it's easier to dream--

    Michael Nystrom's picture

    Alternet leans left

    With more articles like this, the left, hopefully, will start to get it.

    He's the man.

    So, that's why "HOUSES FOR

    So, that's why "HOUSES FOR $300" is still playing on all the cable channels early in the morning. I thought it was a leftover ponzi property bubble scheme from 2006. But its far more evil than that. Those smiling, cheerful folks are trying to sell tips on how to rip the poor and elderly out of their homes and throw them into the streets for unpaid utilities... Unspeakably evil!

    "Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

    Or be benevolent and sell the

    Or be benevolent and sell the person back their house at whatever was left on the house with the mortage plus add the utility.

    OR we could address the real problem. Its the govt screwing these people by making them tax liens.

    You could sell it back to the

    You could sell it back to the previous owners. However, to do so, one would either need a private investor to fund the deal (mortgage) or the owner would need to carry back a mortgage. No bank will lend on a situation like this.

    Michael Nystrom's picture

    They call them "investors"

    Investors in other people's misery.

    Investors, meanwhile, can rake in hefty profits. That’s because they can tack on fees and steep interest rates, which can amount to 18 percent annually in Baltimore.

    In Valentine’s case, legal fees and other charges climbed past $3,600–nearly 10 times her original bill.

    He's the man.