waiting2buy_IHB
New member
I noticed that portola springs has mello roos for 40yrs and I was told that this is standard for most new communities in irvine. Anyone know how long the mello roos last for quail hill, oak creek, etc...?
Irvine mello roos
- Thread starter waiting2buy_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
IrvineRealtor_IHB
New member
Mello-Roos is essentially a 40 year bond for builders to help subsidize the costly expense of building infrastructure for the homes that have been built in newer areas. Much of the information is available here in a <a href="http://en.wikipedia.org/wiki/Mello_Roos">wiki entry</a>. Understand that the bond is used to fund building schools, water, electric, sewer, etc, and without it the builders would be passing the costs on to buyers up front.
When considering a purchase, look at more than just Mello-Roos, and be sure to <strong>ask about the total tax rate</strong>.
Part of the tax amount that you will pay is a fixed amount. The Mello-Roos, other bonds, and some other county tidbits are included in the fixed portion of the bill.
Part of the tax amount is variable, and is charged according to a percentage of your assessed value. Your assessed value is usually the purchase price that was originally paid for the home, multiplied by 1.02 (at maximum 2% increase) for each subsequent year of ownership, as per Prop 13 limits in CA. Hopefully the attached picture will show up to give you some clarity. The total tax amount is in the bottom-right corner.
Please PM graphrix if you have any questions regarding the CA property tax code that haven't yet been clarified. :kiss:
If he doesn't respond, he's probably up to no good.
<fieldset class="gc-fieldset">
<legend> Attached files </legend> <a href="http://www.talkirvine.com/converted_files/images/forum_attachments/40_LJkP9jgobYII9INEneli.JPG"><img src="http://www.talkirvine.com/converted_files/images/forum_attachments/40_LJkP9jgobYII9INEneli.JPG" class="gc-images" title="tax info.JPG" style="max-width:300px" /></a> </fieldset>
When considering a purchase, look at more than just Mello-Roos, and be sure to <strong>ask about the total tax rate</strong>.
Part of the tax amount that you will pay is a fixed amount. The Mello-Roos, other bonds, and some other county tidbits are included in the fixed portion of the bill.
Part of the tax amount is variable, and is charged according to a percentage of your assessed value. Your assessed value is usually the purchase price that was originally paid for the home, multiplied by 1.02 (at maximum 2% increase) for each subsequent year of ownership, as per Prop 13 limits in CA. Hopefully the attached picture will show up to give you some clarity. The total tax amount is in the bottom-right corner.
Please PM graphrix if you have any questions regarding the CA property tax code that haven't yet been clarified. :kiss:
If he doesn't respond, he's probably up to no good.
<fieldset class="gc-fieldset">
<legend> Attached files </legend> <a href="http://www.talkirvine.com/converted_files/images/forum_attachments/40_LJkP9jgobYII9INEneli.JPG"><img src="http://www.talkirvine.com/converted_files/images/forum_attachments/40_LJkP9jgobYII9INEneli.JPG" class="gc-images" title="tax info.JPG" style="max-width:300px" /></a> </fieldset>
qwerty_IHB
New member
Mello Roos is not tax deductible, however, many people do deduct it anyways.
Stuff It_IHB
New member
Why has mello roos increased in price so much?
My understanding is the north park/oak creek have a mello roos of about 1.2% of the sale price and these areas were built just b4 the bubble escalated. For areas that were built during the bubble the mello roos is about 1.7% which that means that the mello roos has increased far more than what house prices have increased
My understanding is the north park/oak creek have a mello roos of about 1.2% of the sale price and these areas were built just b4 the bubble escalated. For areas that were built during the bubble the mello roos is about 1.7% which that means that the mello roos has increased far more than what house prices have increased
IrvineRenter_IHB
New member
[quote author="Stuff It" date=1209433473]Why has mello roos increased in price so much?
My understanding is the north park/oak creek have a mello roos of about 1.2% of the sale price and these areas were built just b4 the bubble escalated. For areas that were built during the bubble the mello roos is about 1.7% which that means that the mello roos has increased far more than what house prices have increased</blockquote>
Mello Roos are a kickback to the developer. It is set at whatever rate the developer thinks they can get and still be able to sell the houses (They still do have to justify the total amount.) Nobody cared about high Mello Roos rates during the bubble, so the Irvine Company made them as large as possible.
My understanding is the north park/oak creek have a mello roos of about 1.2% of the sale price and these areas were built just b4 the bubble escalated. For areas that were built during the bubble the mello roos is about 1.7% which that means that the mello roos has increased far more than what house prices have increased</blockquote>
Mello Roos are a kickback to the developer. It is set at whatever rate the developer thinks they can get and still be able to sell the houses (They still do have to justify the total amount.) Nobody cared about high Mello Roos rates during the bubble, so the Irvine Company made them as large as possible.
freedomCM_IHB
New member
Are they set by TIC, or the sub-developers?
Do you think that they will be reduced/eliminated to spur sales?
Do you think that they will be reduced/eliminated to spur sales?
IrvineRenter_IHB
New member
[quote author="freedomCM" date=1209444745]Are they set by TIC, or the sub-developers?
Do you think that they will be reduced/eliminated to spur sales?</blockquote>
There are no other subdevelopers on the Ranch. Mello Roos rates will be set by TIC.
Typically, the Mello Roos rate is plays in to the negotiation between the land developer and the home builder. If the developer puts a high Mello Roos on a property, the builder will discount this at the time of sale, particularly since the builder will have to make those payments until they build and sell a house. The builders know that savvy customers will pay them less for houses where the Mello Roos are high, so they have to discount the properties to achieve their desired sales rates. Developers may get a bit more from floating the bonds with high Mello Roos rates, but they lose it when they have to discount the property to a builder. In recessions, Mello Roos rates tend to decline to keep costs down. However, since TIC has control over everything on the Ranch, they could keep the payments high if they wanted to. Mello Roos is property debt, and TIC may want to keep their debt service payments to a minimum until sales improve, so they may lower the Mello Roos rates as a result.
Do you think that they will be reduced/eliminated to spur sales?</blockquote>
There are no other subdevelopers on the Ranch. Mello Roos rates will be set by TIC.
Typically, the Mello Roos rate is plays in to the negotiation between the land developer and the home builder. If the developer puts a high Mello Roos on a property, the builder will discount this at the time of sale, particularly since the builder will have to make those payments until they build and sell a house. The builders know that savvy customers will pay them less for houses where the Mello Roos are high, so they have to discount the properties to achieve their desired sales rates. Developers may get a bit more from floating the bonds with high Mello Roos rates, but they lose it when they have to discount the property to a builder. In recessions, Mello Roos rates tend to decline to keep costs down. However, since TIC has control over everything on the Ranch, they could keep the payments high if they wanted to. Mello Roos is property debt, and TIC may want to keep their debt service payments to a minimum until sales improve, so they may lower the Mello Roos rates as a result.
waiting2buy_IHB
New member
thanks for all the info guys. but does anyone know how many years of mello roos are left for oak ridge and quail hill? I decided not to purchase a home in portola springs because I didn't want to pay $140K in mello roos. But if it's 40 yrs of payments for quail hill too, then I might as well just buy a home in PS since it's new and cheaper than QH.
Bubblegum_IHB
New member
waiting2buy, I wouldn't even consider the expiration of the mello roos when looking at a house. I'd plan for what can be paid for comfortably today. Inflation in 30 years will hopefully make the 5-8K mello roo fees a non-issue, but the difference between 37 years and 40 years would be too far in the future for me to care for.. Some of the homes in VoC Tustin had annually CPI-based adjusted mello roos in the 8-10K range (with max 2% annual increases!), which would have made the annual tax bill in the low to mid 20's... no thank you. At some point you do want to consider HOA fees + mello roos because its another non-deductible monthly outlay on housing expenses.
freedomCM_IHB
New member
Does anyone know what will happen to the HOA and MR fees in the case of a significant proportion of foreclosures in progress and eventual REOs?
Will the rate go up and the number of people paying them go down?
Do the banks pay them while the property sits before sale?
Any historical data available from the 90s?
Will the rate go up and the number of people paying them go down?
Do the banks pay them while the property sits before sale?
Any historical data available from the 90s?
IrvineRealtor_IHB
New member
fCM -
Usually the HOA takes it in the shorts when a BK goes through and just writes it off from their reserve fund, which they're required to have. That means the rest of the homeowners eat that cost.
The Governor gets his cheese first, though, in any transaction, and the property taxes have to be brought to current for any deal to go through, REO, short sale, or otherwise. That is part of the negotiations that happen in the purchase contract (who pays for it is determined by just a small checkbox on page 2 of California's Residential Purchase Agreement). Typically it is the seller's obligation.
I think one of the investors here (awgee, maybe?) would have better info on what happens during the auctions and what the tax mechanics are of that process.
Usually the HOA takes it in the shorts when a BK goes through and just writes it off from their reserve fund, which they're required to have. That means the rest of the homeowners eat that cost.
The Governor gets his cheese first, though, in any transaction, and the property taxes have to be brought to current for any deal to go through, REO, short sale, or otherwise. That is part of the negotiations that happen in the purchase contract (who pays for it is determined by just a small checkbox on page 2 of California's Residential Purchase Agreement). Typically it is the seller's obligation.
I think one of the investors here (awgee, maybe?) would have better info on what happens during the auctions and what the tax mechanics are of that process.
awgee_IHB
New member
I am fairly sure the IRS will get theirs first, even before the Governor. After the gov, municipalities. I am completely ignorant on how the HOA dukes it out with the lenders and mechanic's liens. Why, you ask would the IRS be involved with foreclosure funds? Many times, the IRS is not involved, but in those cases where the home debtor has not paid his/her federal income tax, the IRS will lien first their liquid assets and second, real property.
IrvineRealtor_IHB
New member
I'm on our HOA board and have some experience with that end of the process. We have the option of charging legal fees (trying to collect from someone that usually has no money) or writing off the few months of missed payments. We have to weigh which option is going to be more fruitful, and usually the board just writes it down rather than throwing good money after bad.
But interesting reminder about the IRS. Totally slipped my mind now that 4/15 has passed.
But interesting reminder about the IRS. Totally slipped my mind now that 4/15 has passed.
25inIrvine_IHB
New member
Has the length for mello roos payments always been 40 years? does it vary?
I ask because my dad purchased a place in Mission Viejo in the mid 90's and believes his expires in the 2010's (maybe 2015) somewhere. He believes its a 20 year term. I also heard this was the case for those mid and late 90's developments in Northwood around Meadowwood Park. Are those 40 year bonds too? Is there any public access websites where it is possible to confirm this sort of thing?
Now that makes me wonder about those toll roads. When the bonds are paid off the tolls are supposed to be gone. Anyone know how far away that is? I am guessing decades and decades away.
I ask because my dad purchased a place in Mission Viejo in the mid 90's and believes his expires in the 2010's (maybe 2015) somewhere. He believes its a 20 year term. I also heard this was the case for those mid and late 90's developments in Northwood around Meadowwood Park. Are those 40 year bonds too? Is there any public access websites where it is possible to confirm this sort of thing?
Now that makes me wonder about those toll roads. When the bonds are paid off the tolls are supposed to be gone. Anyone know how far away that is? I am guessing decades and decades away.
PadreBrian_IHB
New member
[quote author="24inIrvine" date=1209527918]Has the length for mello roos payments always been 40 years? does it vary?
I ask because my dad purchased a place in Mission Viejo in the mid 90's and believes his expires in the 2010's (maybe 2015) somewhere. He believes its a 20 year term. I also heard this was the case for those mid and late 90's developments in Northwood around Meadowwood Park. Are those 40 year bonds too? Is there any public access websites where it is possible to confirm this sort of thing?
Now that makes me wonder about those toll roads. When the bonds are paid off the tolls are supposed to be gone. Anyone know how far away that is? I am guessing decades and decades away.</blockquote>
Yep! They vary! They can be 10, 20, 30, and 40 years. The developer is the one in charge of arranging for the bonds and pricing it. His goal is to make sure he doesn't pay a single dime for streets, water, sewer, elec, gas, schools, parks, basically anything to do with infrastructure. His job is to take the cut from the houses and the land. Newer developments are usually 30 years at a high rate. Someone's got to pay for all those nice things.
I ask because my dad purchased a place in Mission Viejo in the mid 90's and believes his expires in the 2010's (maybe 2015) somewhere. He believes its a 20 year term. I also heard this was the case for those mid and late 90's developments in Northwood around Meadowwood Park. Are those 40 year bonds too? Is there any public access websites where it is possible to confirm this sort of thing?
Now that makes me wonder about those toll roads. When the bonds are paid off the tolls are supposed to be gone. Anyone know how far away that is? I am guessing decades and decades away.</blockquote>
Yep! They vary! They can be 10, 20, 30, and 40 years. The developer is the one in charge of arranging for the bonds and pricing it. His goal is to make sure he doesn't pay a single dime for streets, water, sewer, elec, gas, schools, parks, basically anything to do with infrastructure. His job is to take the cut from the houses and the land. Newer developments are usually 30 years at a high rate. Someone's got to pay for all those nice things.