Do NOT pay advance fees: Property Tax, Loan Modification Scams Flourish

Notices from companies promising to help homeowners reduce their property taxes or win a loan modification are flooding mailboxes. Some of the offers are legitimate, but many are scams and consumers should be on high alert especially if they are asked to pay an advance fee.

In the case of applying for a property tax reduction, there is a simple reason why property owners should not pay any fee — the L.A. County Assessor, which has the last word on property tax reductions, does the review process for free.

The application is a simple form that anyone can complete and there typically is no need to attend a review hearing, although even that is a simple process.

When it comes to loan modification, if a property is in foreclosure it is illegal for anyone to charge an advance fee.

And, even if the property is not in foreclosure, it is illegal to charge an advance fee unless the company's loan modification proposal has been approved by the California Department of Real Estate. A list of approved loan modification companies is posted on the DRE website.

Regarding reducing assessements, the assessor is in the process of reviewing more than 500,000 to see if they qualify for a reduction in 2009 assessment. “We don’t charge a fee for this,” said Assessor Rick Auerbach, “and anyone whose homes are reviewed will receive a letter in June notifying them of the results.”

One firm, he noted, is charging $179 to file a decline-in-value application, as well as a so-called “late fee” of $30. This company is already the subject of investigation in several counties, he added.

“At best,” Auerbach said, “these are legal but sophisticated scams taking advantage of homeowners who don’t understand that my office will do a reassessment on its own. Or anyone can file a simple application form available on our website at www.assessor.lacounty.gov. This can be completed in a few minutes.”

At worst, they are illegal, especially if the company misrepresents itself as a government agency.

The 2008 decline-in-value review completed by the assessor resulted in lower assessments on nearly 130,000 homes and condos with an average property tax savings of $750.

At least 1,600 of the reviews initiated by the assessor involved unnecessary forms submitted by private companies at great expense to the homeowner.

For 2009 the Assessor's staff will look at all homes sold in 2003 or later and may even go back to 2002 in some areas of the county based on a review of market conditions.

While anyone has the right to file a decline-in-value application requesting a review of their property’s value, Auerbach urged those who bought their home or condo in 2002 or later to wait until June when the results of the review will be mailed.

If a letter is not received or the owner is not satisfied with the results of the review, a decline-in-value application can be submitted. Anyone who wants to file a complaint may contact the County Consumer Affairs director by calling 800-973-3370. A complaint form is also available online at www.dca.lacounty.gov/contact.htm.

The Southland Regional Association of Realtors is a local trade serving the San Fernando and Santa Clarita valleys. SRAR is one of the largest local associations in the nation.