One of the most devastating aspects of the economic crisis that began gripping the country in 2007 was the effect it had on the housing market.
While Kentucky did not experience the widespread declines felt mainly by states along the coasts, we were far from unscathed. According to the state’s Administrative Office of the Courts, there have been more than 80,000 foreclosures over the last five years, and tens of thousands more households are just getting by or are “underwater,” meaning their mortgage is more than their home is now worth.
Those facing foreclosure are not the only ones affected, either. Experts say these homes can bring down surrounding property values by one or two percent, and the loss of taxes from these homes cuts into government and school budgets. At the same time, abandoned homes are more susceptible to vandalism and thefts of such things as copper wiring.
Earlier this summer, the Kentucky House of Representatives authorized a special task force to take a closer look at this issue and to see what the legislature can do to help. Its membership consists of 14 legislators who understand the issue well and who serve on the House committees that will handle any proposed legislation that would help alleviate this situation.
For many affected homeowners, some relief is already underway. Last month, for example, the Attorney General’s office announced that notices have gone out to more than 5,000 qualified families who lost their homes between January 2008 and December 2011. They will receive a combined $10.7 million as part of a $25 billion settlement Kentucky and most other states reached early this year with many of the country’s largest banks, which had been accused of improper foreclosure procedures.
Qualified homeowners – those who had foreclosed loans or a short sale with Ally/GMAC, Bank of America, Citi Bank, JP Morgan Chase or Wells Fargo – should receive a notice by the middle of this month. If you think you qualify and have not gotten a notice, please call 1-866-430-8358 between 6 a.m. and 6 p.m. More information about the settlement can be found at the Attorney General’s website: http://ag.ky.gov/mortgagesettlement/. The deadline to make a claim is Jan. 18, 2013.
In addition to the $10.7 million going directly to these homeowners, the settlement also provides an additional $48 million for consumer-protection programs and other housing assistance across the state.
Although not tied to housing, another program designed to help Kentuckians who may be having trouble financially was announced by Governor Beshear last week. In this case, it would establish a tax amnesty period to give those who owe back taxes to the state a chance to pay without penalties and with half of the interest. Notices have been mailed to 168,000 taxpayers who have back taxes owed between Dec. 2001 and the end of Sept. 2011; those under criminal investigation, understandably, do not qualify.
The amnesty program is only open this month and next, and those who don’t take advantage of it will face much steeper penalties.
This is the third amnesty program the state has offered. The last one, in 2002, netted the state about $40 million from 23,000 taxpayers, but the goal this year is $60 million.
If you think you qualify and would like to know more, please visit the website www.amnesty.ky.gov or call the Dept. of Revenue at 855-KYTAXES (855-598-2937). There are several ways to pay, either in person, by mail, or online.