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The November 20 installment in the Federal Reserve Bank of Atlanta's Foreclosure Response podcast series features Susan Adams of the Atlanta Neighborhood Development Partnership discussing how foreclosures and tax assessment practices can have a negative and inequitable impact on households in the surrounding area. After you have listened to the podcast, join us on the Forum on Wednesday, December 16 from 12 - 2:00 p.m. EST (9 - 11:00 a.m. PST), to get answers to your questions about the podcast.


  • Interact with the speaker: On Wednesday, December 16 from 12 - 2:00 p.m. EST Susan Adams will be online to answer your questions. All questions should be posted to this thread by pressing the Add Reply button. You are welcome to post at any time leading up to or during the online Q&A session. Questions will be answered on a first-come, first-served basis until time runs out, so post early to be sure yours is addressed.

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About the Foreclosure Response podcast series
The Foreclosure Response podcast series is made available by the Federal Reserve Bank of Atlanta. Through interviews with experts on various facets of foreclosure - from neighborhood impacts to loan modifications to new strategies - listeners will be engaged in understanding the problems and advancing solutions. Each week, beginning September 24, 2009, and continuing for more than ten weeks, a new interview will be released. HousingPolicy.org is partnering with the Federal Reserve Bank of Atlanta to offer online Q&A with the speakers.

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Replies to This Discussion

Can you provide a little background -- why haven't tax assessors included foreclosed and bank-owned sales in the valuation process?
In years of steady appreciation, foreclosed and bank-owned sales were considered "outlying" sales and -- therefore--- not representative of the market. But, as a result of the housing crisis, foreclosures are the only market in many struggling neighborhoods. in the current climate, assessors cannot make accurate assessments without considering foreclosures and bank-owned sales in their valuation formulas.
In Monday's online Q&A with John O'Callaghan, he suggested that investors are starting to play a larger role and buying up more REO properties. How do you anticipate that this increased investor activity will impact property values and, accordingly, tax assessments, if at all?
In the short-term, increased investor activity could provide a modest boost to market values. But ultimately, more investor-owned properties (and absentee landlords) will not contribute to the long-term stabilization of neighborhood property values and the tax digest.
In the podcast you mention that your report received significant media attention and support from County Commmissioners and other elected officials, and that a resolution was passed urging tax assessors to use innovative practices for property valuation in high-foreclosure neighborhoods. To your knowledge, have any changes been made? For advocates - what are next steps?
The media attention (including seven front page articles in the AJC over eight months) helped to secure passage of a new state law (authored by Georgia state senator Chip Pearson) requiring tax assessors to include foreclosed and bank-owned sales in the valuation process. We do know that tax assessors reduced values on more than 350,000 residential parcels in Atlanta's five core counties. We have also estimated that values were reduced in SW Atlanta's Pittsburgh neighborhood (one of the hardest hit by foreclosure in the metro area) by an average of 27 percent, but despite this adjustment, neighborhood residents are still paying $1,300 more in taxes than they should. In short, while some progress was made, there is still a significant property tax disparity in low-income, high-foreclosure neighborhoods. Advocates need to continue to press this issue. We encourage housing leaders in other metro areas to examine and quantify the property tax disparities in their high-foreclosure communities.
What would you say in response to those who argue that the sale's price of a foreclosure-related property isn't comparable to the price you could expect at a truly voluntary sale & that including them would lead to a lower assessed value than is actually warranted?
Our research only looked at arms-length transactions (multiple listing service (MLS) sales between a willing seller and a willing buyer); we did not include distressed auction sales on the courthouse steps in our analysis. Using FMLS data mitigates the extreme effect that auctioned sales could have on home sale values. It's also important to note that in many of the neighborhoods we analyzed, foreclosure-related sales are the only market.
Susan, thanks for your time today. Can you share any initial results of the third phase of your research?
The third phase of our research with RCLCO compares 2008 assessed values to 2009 assessed values to determine if (and by how much) property values were lowered in metro Atlanta's 15 highest-foreclosure zip codes. We found that values were lowered in these neighborhoods by an average of 11 percent across the five county area. While assessors did make progress in correcting property tax inequities, property taxes were still not lowered to the levels where they should be to accurately reflect current market values in high-foreclosure neighborhoods.
Do you have any recommendations for filling the gap in local coffers that may be left if property tax revenues are adjusted to reflect foreclosures and REO properties?
It's the tax assessors job to set fair values across the tax digest. When a level playing field is set and homes are assessed for what they are actually worth, local government officials will need to determine the millage rate adjustment required to meet critical local needs.

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