Unearned Bond interest - legalized thievery!!
 

Because we are closing on a house in The Villages next month, I called VCDD to find how to pay off the bond at closing. I was told that even if I paid off the bond I will be charged for over a year's worth of interest - which for a $20,000 bond at 7.5% will be at least $1500!!

When I asked why I would be charged a year's worth of interest, I was told the people who bought the bonds were promised they would make money. So, it would be "unfair" to them if I didn't pay the extra $1500 or more. The Alice in Wonderland story is that the cutoff date is July, so if you buy your house in August you have missed the cutoff date??!!

I knew up front that the infrastructure costs (normally paid for by a developer and included in the price of a house) were palmed off to the buyer here in The Villages. What was NEVER hinted at was that we would be charged a year's worth of interest regardless of what we did.

Leagalized rape is still immoral. Why do we allow this kind of outrageous usury? Florida's legislators are concerned about you in proportion to how much you can donate to their pockets.

SB1196, the 'condo' bill, just passed allowing Speculators to buy 7 or more condos without incurring any liability of a builder nor without having to buy any insurance on the condos. So, if a fire, hurricane, or other problem occurs and your 'neighbor' happens to be a speculator, good luck in your condo.

In looking over TOTV, I see concerns about thieves breaking into your house -- what alarm system, what gun to have etc. According to statistics I've seen for Sumter County, 2 out of 100 houses might be stolen from by theives. When those thieves are caught they will go to jail or prison.

In new sections of The Villages, 100 out of 100 homes will be legally stolen from. Yet the thieves will be lauded and fawned over by our elected officials. It appears our 'fears' are misdirected.

Not sure how this affects people in TV since there are basically no condos in TV. What was your point with that statement?

Maybe someone should rethink their position. Not here yet and complaining!!!

You've got time to back out. If I wasn't sure I'd be happy here - that's what I'd do.

X

Well, someone had to come up with the money and just about everyone wants their money to make interest.
Doesn't seem fair that they would want to collect something for the use of their funds? I think you might feel the same way if it was your money, I know I would. I'd be losing money if I got no interest. I could have put it somewhere else to earn $$$. Logically it seems unjust, but financially, it's business.

Congratulations on your new house. Come and enjoy.

You will be charged the bond payment for the first year but if you are in a new construction home built it 2010 you only pay property tax on the value of the land in the first year. So it my opinion, it is a wash. You gain on lower property tax the first year and you pay a little more on the bond payment.

I don't want to sound rude but if this gets you so upset, you will be a very unhappy Villager.

Welcome to the " hood"

Congratulations and thanks for the "heads up." I'm sure that after you calm down you will love it there.

Sorry you feel that way. You have two options:
1) Quit whining !
2) Don't close until after Jan 1 !

If I had been aware that a $20,000 bond actually meant $22,000, I might not have not have changed my mind. There is no rethinking after a contract is signed unless you want to pay penalties.

I'm glad you have enough money that you don't complain when you are charged 10% more than you were told the item would be.

Xavier, are you telling me there are more things like this that I don't know about?

this site
 

I am a wannabe, but I found this site accidentally, not sure how, the people here are all very nice and very informative

I started my own list of ideas and information I have found here and found it invaluable even in just online searches for a home, I think they will give you great answers, they have given them to me and I am just a lurker as they say

I have not intention of paying off my bond. I would rather have that money available for my use. If I sell my house, I can't sell my house for anymore than comparable properties just because the bond is paid off. Guess bonds are just part of the package in Sumter and Marion counties. Honestly, I wonder just what percentage of owners pay off their bond. Might be interesting to know.

Thanks about the new house. We like it and we like TV that's why we decided to buy here.

If it had been stated up front that there not only was a $20,000 bond but there was also a mandatory years worth of interest to be paid, that would have been one thing. Like the existence of the bond it would have been something known up front. To discover it two weeks before closing is another thing.

1. If you think being upset about paying an additional $2000 is whining, I'm glad you're so cheerful.

2. I was told when the house would close. Closing at any other time was not an option.

Guess I never really thought about it because I have no intention of paying off the bond. Hubby might have known about the interest, he talked with the sales agent about bonds, but I was just more interested in trying to decide what model home I wanted. After living in southern CA, houses here seemed a bargin...though the taxes were considerably more than I used to pay (We had Prop 13 which kept our property taxes fairly low.) New owner of our house wasn't exempt and the taxes had gone up almost $4000 for them.

Again, congratulations on your new home...and remember, so many things are different financially here in Florida, but the people and the beauty of The Villages are priceless.

I don't think TV is keeping the bond and how it works a secret. We were fully aware of it and accepted it as part of the buying process. It was a part of the contract you signed and just like any legal document it is your responsibility to check it out until you are comfortable with the terms. We always get copies of contracts before the closing date and completely review them.

You can get very specific information about paying off the bond from TV, they will even give you a complete breakdown of the interest charged over the term of the bond payments.

BTW, I'm surprised the bond interest rate is at 7.5%. We've purchased 3 homes here and the highest (and most recent) was just over 6%.

Think of it this way, if the bond was built into the price of the house you would be paying taxes on that increased price. (Both at the time of purchase and forever in property taxes.)

Soon2b

Are you surprized you are not getting much sympathy from members of this board? Well I can understand your position but you may really want to think about paying off the bond so quickly....especially in light of you having a MAJOR problem with the developer and you have not even closed on the property. WHy I say this is that in this economy, it is unlikely that you will recover the $20K bond payment just in case you need or want to sell in a couple of months/years. I say "take your time"... the developer may be doing you a favor if you find things are just not to your liking here in TV. I would be surprised, but there are a number of surprises and people do sell within 3-5 years of buying OR sooner. They sell to move back home or to another location within the Villlages and if thats your case again you would never recoup the $20K.

My advice is relax...I dont think anyone is trying to take your money or "legally rape" you. Your certainly old enough to "adjust' to the circumstances ...many of us faced issues unknown to us when we bought in TV and moved here...but after a couple days, weeks or how ever long it take you to adjust.......you just may enjoy it regardless.

Is that interest rate set for the bond? Surely that wasn't your loan interest rate. Just wanted to understand. We didn't have a bond. But if what you are saying is correct, I'd be upset too.

With that being said, your warning should be appreciated by new home buyers looking at a bond. Welcome to TV and I hope your neighbors and your time here will outway the bond interest. Not to make light, I do get you being upset. Anyway, welcome, welcome, welcome.

You bring up a valid concern. Some Villagers do move to a different house, larger, smaller, closer to town, away from the town center, etc. and they could move to another house, villa, that still has a bond. Does one pay off yet another bond? That's lots of $$$ out of pocket. Thanks for the reminder.

BogeyBoy, perhaps in your contract the specific amount for VCDD was spelled out. In mine there is simply the statement that the VCDD may impose and levy taxes or assessments or both. I asked what the bond was and was shown a number a few cents shy of $20,000. That number was not in any contract we signed.

The contract further states that the seller will pay all assessments and taxes prior to closing.

It is not the existence of a bond that is the issue. It is having to pay a years worth of interest even if paid off at the day of closing.

If the bond had been rolled into the price of the house, the interest rate on that $20000 would have been 4.75%.

I wasn't thinking of interest, I was thinking of property taxes, increased insurance costs, etc. on a home with an additional $20,000 value.

Pooh or any other person, Would like your opinion on "what would you consider the differences to be between the bond an individual new lot/home pays and the bonds floated by the CDD to the general investment community".

Kindly note I'm not a current resident. My husband and I stayed for 5 days in June 2010 and were impressed with the community. I've been spending time studying the community from the financial aspects and I'm somewhat concerned of what could happen to an individual owner if the IRS rules not in favor of the CDD. Also to me it sounds like the CDD was established as a way to float tax exempt bonds from 1998 to 2005. Although I'm not saying the CDD is not appropriate, I'm just wondering if the community at large will change negatively in the future. For example, certain ammendities may no longer be offered or the HOA will increase more than the CPI.
Any feedback/comments are welcome.

Here are my 2 cents. Soon2b has a beef with not being told up front that he would have to pay a years worth of interest on the bond. Now he is stuck with paying about $1500 he was not aware of. I think that is a valid complaint. The villagers are pointing out that the bright side, which is he can wait that year to pay the bond, maybe pass it on to the next buyer if he moves, invest or collect some interest on that 20k he was going to pay on the bond, and enjoy the fact that if there was no bond he would be paying property taxes, increased insurance costs etc on a home valued at 20k more...(btw... I dont think property taxes are based on the price you paid so this argument is somewhat tenuous).
Lesson learned: Get as much information as you can before you make your offer, have it in writing, and then ENJOY TV!

Suggest you do a search on IRS, bonds , etc. You will get enough information to keep you busy for the rest of the week. And BTW there is no answer to the IRS ruling.

consider this...
 

I would like for you to consider a few things before you make these kind of emotional accusations in the future.

Your claim of "legalized thievery" is unwarranted. Nobody pointed a gun at your head and made you buy a home. Further, you had every opportunity to call the VCDD and ask about how the bond works before you made the commitment to purchase. In addition to that, there is a weekly CDD orientation given on this topic that is open for everyone to attend.

That said, I understand that you are frustrated by what you thought was a surprise cost. It was only a surprise because you assumed you understood this complicated topic, but you did not.

Here is what you said:
"I knew up front that the infrastructure costs (normally paid for by a developer and included in the price of a house) were palmed off to the buyer"

This is an incorrect statement. There is a very good reason the costs are separated (not palmed off) and two choices are presented to the buyer (payoff or annual payments). The 'average' homeowner in the Villages will move at least 3 times while they live here. Separating it allows the homeowner to make those small payments on the infrastructure cost and walk away from the balance when they sell in a few years and go to their next home. People do not buy homes in the Villages to live in them for 30 or 40 years. Think about it. It’s a retirement community.

The infrastructure cost being separate is a huge benefit to people in their retirement years.

Second, the county will assess your home based on the TOTAL purchase price. Your taxes will be a percentage of that TOTAL price. Taking out the infrastructure cost will lower that taxation amount. By adding it to the price of the home, other developers are causing you to be DOUBLE taxed. You are paying taxes on your home and you are being taxed on the cost of the infrastructure (i.e. you are being taxed on a tax).

In the future, I would invite you to think before you make these kind of inflammatory accusations. Buying a home is an emotional decision. I understand that... but do you really think that a company like the Villages with it's level of success and extremely high level of customer satisfaction would behave the way you have described? Calm down and look at it again.

You are about to move to the best damn retirement community in the country right now. I hope you will be able to truly enjoy it once you better understand this issue.

Good Luck and God Bless.

Nope - just saying that if you have misgivings, you have the option to cut your loses and bail out. It may even be worth the penalties if you can't get over it. There nothing worse than living or working someplace that isn't as you hoped it would be.

Xavier

Bonds can only be paid off in July. The only thing you can do is ask the seller to pay off the bond before the sale and let them absorb the interest charge.

I don't blame you for being upset because you were surprised. But, it is what it is. Ask yourself this question: Would you still buy a home in TV if the price was increased by that same amount -- and you knew about it in advance? If the answer is yes, then put this behind you so you can find peace. Don't think about it anymore. Then you can begin to enjoy your home in what is arguably the best retirement community in the world.

Another solution: Don't pay the bond until next year on the "pay off" date. Invest your $20,000 well and it won't be $1,500 cost because of your wise investing.

I forgot to congratulate you on one of the smartest moves you've ever made.

Xavier

Wow....are you Gary Morse?

I was thinking along those lines too.

Congratulations and Best Wishes.

The $1500 unpleasant surprise, I am sorry about for you, but I wouldn't blame the Morses. They are in business to make money. I wouldn't pay off the bond either. We bought a new house and two years later we are thinking to sell it and buy another.

Some of the posts on here make me wonder if someone is an outside realtor and even one made me think of someone close to the Morses. We sure are a stubborn, opiniated bunch, but that is to be expected I guess after several decades of living.

I hope that this won't completely spoil your dream of living here in this beautiful place.

Maybe the Morses are greedy and maybe they are as altruistic as St. Teresa, I can't guess their motives. I appreciate their brilliant and organized ideas and don't begrudge them the money they make.

If I were as wealthy as they are, I might choose to have someone else manage the whole thing, but they continue to work here and are part of the everyday running of things.

If you are reading this Morse family. Thank you from the G's.

Is this a favorable or unfavorable comment?

2B,
You need to do your homework on the other bonds, the bonds that the real estate rep Village or MLS claims to know nothing about. The one called the interest free bonds or the IRS bonds.

To give you an idea what this is about.

http://andrewblechman.blogspot.com/2...n-ritchie.html

If I were Gary Morse reading it then I would say unfavorable:)

Neither...I was having fun with a guy with only his second post.

No one is twisting your arm to force you to move here. If you want to live The Village lifestyle you have to accept it the way it is; warts and all. I do not like the way they sell cars without a set price but unless I want a Saturn instead of a Honda I have to accept things as they are. Your statement is rather harsh and unlike rape, purchasing a home in TV is voluntary so your metaphor was inappropriate.

Your not Gary Morse and it was not unfavorable.

I personally think Mr. Morse is doing a great job here.

Me too.

Buying the car (rather than the farm)
 

Vinny, I like your car dealer analogy. Pick out your favorite car with all the extras you want and the dealer will tell you what his price is. Let's say he won't haggle, but you agree to the set price. He wants 20% up front. The contract says you lose your 20% and there are other penalties if you change your mind later.

He told you before you signed that he has a dealer's prep cost of $1000. When you first bought cars long ago preparing the car was included in the price, but now is added on. You were aware of it before you signed. Yes, it's a way he makes more money but, so what, that's the way it is now. He tells you it will take four weeks to get the car and prep it.

Finally, you go to pick up your new car, pay him the money including his dealer's prep charge. Then he says to you "not so fast. That $1000 was my dealer's prep charge four weeks ago when you signed the contract. Since then I've had to pay my employees and rent on the building and other things, so now you owe me $500 more."

True, nobody twisted your arm to buy that car. Shouldn't you just accept that's the way things are?

P.S. I'm done with this thread and will be following Xavier's advice to take the lemons I've been given and let them ferment for a year. With a little vodka, I'll have something with which to make a nice toast to TV.