Dec 12, 2013
Poor Losing Homes Over Small Tax Liens to Private ‘Investors’
Posted on Sep 8, 2013
Imagine living in your home for decades, mortgage paid off, in your retirement years, and suddenly strangers are billing you absurd amounts in interest and legal fees over a minor and forgotten about tax bill.
And then they kick you to the street and sell your home for a couple hundred thousand dollars.
According to The Washington Post, that’s a routine occurrence in Washington, D.C., under a hard-to-believe devil’s bargain between D.C. tax officials and a class of private predators whose amorality reaches mind-boggling proportions. And while the Post focuses on the D.C. transgressions, the practice is repeated in municipalities around the country as local governments struggle to collect delinquent tax bills. From the Post:
More than half of the people losing their homes lived in Washington’s poorest neighborhoods in the predominately black Southeast quadrant. One house, foreclosed on because of a $287 lien, was sold a short time later for $129,000.
The system is pretty simple. Unpaid property taxes become liens, which eventually means the city can foreclose on the property to force payment of the tax. Rather than doing that, the city sells the rights to the liens to private investors who can charge the property owners interest and fees—exorbitant, in some cases, and seemingly aimed at precluding the owner from digging out of the financial hole. After six months, if the original lien and added fees aren’t paid, the investor can seize the property.
With such “profit” hanging in the air, the flock of vultures has been thick. In 2007, the Post reports, six companies dominated a lien auction by the city, buying up the foreclosure rights to 2,000 delinquent properties for $5 million. The value of the properties: more than $666 million.
—Posted by Scott Martelle.
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