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Tuesday, October 28, 2008

County Assessors Have a Nightmare Number of Bad Valuations to Correct

Monday, October 27th
By Dave Frazier of the Boise Guardian

As the financial meltdown continues it is becoming obvious that dishonest real estate people from developers to bankers contributed to a financial mess that is just beginning to become known.

People who couldn't’t afford to purchase a home were granted loans in excess of the value of the property they wished to acquire. Here is how it worked:

–At the low end of the food chain, appraisers were told come up with a value that would cover the mortgage rate…there is a case in U.S. District Court of Idaho making that allegation at present.

–Mortgages often included various “concessions” as part of the purchase price. Say a house was worth $100,000 and needed $20,000 worth of repairs or upgrades, the mortgage was for $100,000, but the real purchase price was only $80,000.

–Buyers dishonestly claimed income levels high enough to get loans.

–Brokers often rolled second loans for down payments into the purchase price as well.

–Realtors dishonestly reported the $100,000 purchase price to the county and these “sales” became the value, even though the TRUE value was only $80,000. Sometimes the price was even higher if the 2nd loan was included.

–The mortgage brokers and bankers were dishonestly “covered” with inflated appraisals and sold the loans to the likes of Freddie Mac and Fannie Mae. The bubble was getting bigger, but still intact.

When reality reared its ugly head, the bubble burst and we now have a financial crises. Some dishonestly blamed dishonest stock brokers and bankers in Paris.

Ada County Assessor Bob McQuade told the GUARDIAN a whole new method of determining MARKET VALUE–the legal assessment standard in Idaho–needs to be determined. He said it may take legislation to get the changes made, but he admitted the current system is dependent upon factors which may or may not be honest.

Meanwhile we all await the new property valuations that come out in May based on market value as of December

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