States Struggle with Foreclosure Issues No One Expected

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The Internet is loaded with stories now about local and state governments grappling with how to handle row upon row of abandoned houses. They’re passing on property tax increases to those still in their houses and having to figure out how to police abandoned houses to stop the spread of crime to these neighborhoods.

Meanwhile, in Florida, thousands of prospective homeowners can’t buy their houses because of confusion about a Florida tax. The issue is that in Florida there is a transfer tax that is charged when a property is bought. The transfer tax is based on the home’s value.

Simple enough, but how do you handle a short sale? Some escrow officers have taken the position that the value is based on the loan amount and others think it should be the short sale amount (which will be less than the loan amount). But no one wants to make the mistake and charge the amount and risk $200 – $300 per house for thousands of houses or, on the other hand, overcharge and face irate homeowners and possible litigation.

Meanwhile the houses are still empty. The buyers are ready, money in hand, and they can’t close on the property.

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