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Friday, May. 16, 2008

Patterson homeowners fear Mello-Roos taxes will hasten foreclosures

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PATTERSON -- Several residents facing foreclosure said at a workshop this week that the city's special taxes, combined with ballooning mortgage payments, were squeezing them out of their homes.

About 1,200 properties in Patterson, or one out of every five homes, has received a foreclosure-related filing, one of the highest foreclosure rates in Stanislaus County, according to the nonprofit organization No Homeowner Left Behind, which co-sponsored the Wednesday night foreclosure workshop with the city.

Patterson also charges some of the highest special taxes in the county. Residents in five of the newest Patterson subdivisions pay about $2,000 a year in Mello-Roos taxes, a common way for cities to fund public infrastructure such as parks or sidewalks.

One resident, who said he owns two homes in Patterson, blamed the high taxes for his financial hardship, saying that the city is threatening foreclosure if he falls behind on the tax payments.

"We could afford to make the (mortgage) payments, but the Mello-Roos is killing us," he said.

Patterson Mayor Becky Campo responded that the city needed those taxes to pay for infrastructure to support the housing boom. The city had to accommodate an influx of people moving to Patterson from the Bay Area, she said, and the special taxes have been "earmarked and spent."

Last year, the City Council hired a law firm to help recover unpaid Mello-Roos taxes because of an unusually high rate of delinquencies, nearly 15 percent. Property owners were told the city could start foreclosure proceedings within 90 days on properties with delinquencies of more than $700.

Campo said the city was forced to take that step because of a clause in the bond it took out to pay for the public services upfront, but it didn't foreclose on anyone. The city worked out solutions with the property owners struggling to pay their taxes, she said.

"It is not in the city's interest to have empty houses with overgrown yards," Campo said.

Marion Dix and her husband bought a home in 2005 in Patterson's Heartland Ranch subdivision. She said they weren't informed about the taxes when they made the purchase.

"We weren't savvy enough, or our real estate agent didn't tell us, that we needed to put those taxes with the mortgage," she said.

They haven't fallen behind on their mortgage payments, she said, but the soaring cost of gas has made it difficult for the two Bay Area commuters to make their tax payments.

She said they've been "stressing out" about losing their home in foreclosure over unpaid taxes, but she picked up advice at the workshop to take steps to prevent that.

Volunteers with No Homeowner Left Behind explained the foreclosure process to the group of about 20 homeowners at the workshop and offered general counseling.

They recommended that people facing foreclosure attend a workshop June 8 at Harvest Hall at the Stanislaus County Agricultural Center, 3800 Cornucopia Way, Modesto. Loss mitigation experts from several lenders will do "work-outs" with homeowners to try to modify loans and prevent foreclosure.

For more information or to connect with a volunteer of No Homeowner Left Behind, Stanislaus County residents can call 211.

Bee staff writer Christina Salerno can be reached at csalerno@modbee.com or 238-4574.