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:

Foreclosures have upended families in some of the city’s most distressed neighborhoods. Houses were taken from a housekeeper, a department store clerk, a seamstress and even the estates of dead people. The hardest hit: elderly homeowners, who were often sick or dying when tax lien purchasers seized their houses.

One 65-year-old flower shop owner lost his Northwest Washington home of 40 years after a company from Florida paid his back taxes — $1,025 — and then took the house through foreclosure while he was in hospice, dying of cancer. A 95-year-old church choir leader lost her family home to a Maryland investor over a tax debt of $44.79 while she was struggling with Alzheimer’s in a nursing home.

Other cities and states took steps to curb abuses, such as capping the fees, safeguarding houses owned by the elderly or scrapping tax sales altogether and instead collecting the money themselves.

“Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”

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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