14 ms·

Left with Nothing

460 points by aviziva 13y ago

switch007 13y ago
"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." Why does that section of the 14th amendment not apply?
- xsmasher 13y ago
  What makes you think the public tax sale took place without due process of law? Straight from the article: * Homeowners receive several warnings before their liens are put up at annual auctions. * Once a lien is sold, owners have six months to repay the investor with interest. If that does not happen, the investor can move to foreclose. The article even mentions the families getting their day in court over the post-tax-sale foreclosure. I just realized I'm serial rage-replying on this article. You know that annoyed feeling you get when the news covers a subject you're familiar with? Well.
31reasons 13y ago
"Give me your tired, your poor and we will make them homeless"
Winst 13y ago
Does anyone have any idea how much it costs a traditional newspaper to produce an article like this? They've listed 15 people in the "Credits" section at the bottom. Seems cost-prohibitive. Written by Michael Sallah, Debbie Cenziper, Steven Rich / Graphics by Ted Mellnik, Emily Chow, Laura Stanton / Photos by Michael S. Williamson / Editing by Jeff Leen, Steven Kress / Research by Jennifer Jenkins / Production by Chris George, Connor Jennings, Bronwen Latimer, Michelle Williams, Tim Wong Edit: clarity
- wmil 13y ago
  The "producers" are likely just management and several of the rest may in fact be unpaid interns trying to break into the industry. But researched articles like this are expensive to produce. That's why PR firms are so successful. Reporters need others to find and research stories for them.
  - wpietri 13y ago
    Production has a different meaning in publishing than in movies, which is what I think you're referring to. In print, production is the act of taking the raw inputs (copy, graphics, layout) and getting it out the door. E.g., the print production managers I know manage the physical details of the print medium. There is a similar meaning in advertising. [1] Looking at the resumes of the first couple producers, one's a designer, the other lists himself as "Nerd". So I think they are using the meaning from publishing: people who produce the final product. [1] http://en.wikipedia.org/wiki/Advertising_agency#Production http://en.wikipedia.org/wiki/Advertising_agency#Production
- Refefer 13y ago
  True investigative journalism is a remarkably expensive process with little chance of recouping overall costs. Even after the initial draft, an extraordinary amount of fact checking and editorial requirements/standards are applied to the piece. Some of it's for reputation reasons and a lot of it is for legal reasons: slander suits aren't cheap. I hope papers start providing full 'Credits' to what goes into a piece so as to better inform the reader how many people in the chain it takes to arrive at the final copy.
- unreal37 13y ago
  It took them 10 months to research this. No doubt there was a lot of effort involved.
kisstheblade 13y ago
Apparently he owned this 197k property? Why didn't he borrow money against it or sell it? Did somebody really just take the house, sell it for say 197k to pay his 134 dollar bill? Sounds weird if this is possible. Probably he didn't own his house (even though it is stated in the article that he had bought it with cash earlier), I don't know why they could else foreclose on it. I mean creditors don't have the right to your property if you just owe them money (it may be possible for them to force you to sell your property to pay off debts, but you get to keep the money left over)?
chiph 13y ago
Obscure program?? It happened all the time in the 1930's. If you couldn't pay your tax bill, your property was auctioned off on the courthouse steps.
- scotty79 13y ago
  Via private company operating for profit?
  - larrys 13y ago
    Issue is abuse of that system not the fact that it was by a private company operating for profit. Many prisons are run by for profit enterprises as well as hospitals. The way the program is run is the important thing not the type of enterprise handling the program. Example: Small town with "speed trap" (not a for profit business) gives out excess tickets to raise money.
    - alan_cx 13y ago
      I hardly think citing prisons and hospitals is a ringing endorsement of the profit motive.
snitko 13y ago
And yet I still see people saying "no, how dare you compare government to a bunch of thieves?".
- Refefer 13y ago
  The DC local government is somewhat remarkable in how corrupt it is. It seems like every other day some major political player gets indicted for corruption of some sort.
  - jfb 13y ago
    DC is in some ways an anomaly; US citizens deliberately disenfranchised by the Federal Government. It's not surprising that they might be extravagantly corrupt.
- wpietri 13y ago
  And they should keep saying that. I agree that some portion of government operations are dubious. I believe the portion is pretty small. The people I know who work in government are there because they want to make a difference. They would be just as outraged by this as anybody. More so, really, because they see stuff like this as shaming public service everywhere.
  - snitko 13y ago
    I have no doubt that most low-ranking government employees believe they are doing good and I don't blame them. But it doesn't matter and it doesn't change the fact that they are involved in extracting money from people with a threat of force. If you can't convince people to finance something, whatever it is, and you still collect money from them, you are stealing.
    - wpietri 13y ago
      Ah, maybe the difference is that I live in a democracy, where we vote for people who set budgets, and often vote directly on the taxes ourselves. So the only people threatened by force here are those who try to be free riders on the system that the people have jointly set up. It may be different where you are.
supersaiyan 13y ago
Beautiful photography, I'm hooked before even reading a word
larrys 13y ago
"All because he didn’t pay a $134 property tax bill." [1] What is the scope of the problem here? Ok: "Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations." Out of home many? "The retired Marine sergeant lost his house " Obligatory "and he was a good guy who fought for his country" added in for extra emotion (in addition the picture of course of a respectable citizen). All this is sad and most certainly an interesting read. But it seems more suite for Taibbi in Rolling Stone. Would be nice if in addition to writing emotional appeals they enlisted the help of someone (say a think tank) that could do further analysis and come up with some suggestions as far as reform that are backed up by research and in writing. [1] Noting that this dates back to 2006 and yes if you ignore simple notices bad things happen. Don't pay your insurance bill? You won't have insurance if there is a fire. Etc.
- cromwellian 13y ago
  The problem is, privatizing a state function -- collecting property taxes -- into a profitable enterprise. Ok, the guy owed $134, explain how under any reasonable financial theory, how this should be worth $5000 or $197,000. Why not a lien against his military pension? Why not negotiate a payment plan? Even the IRS has the courtesy to do that. Let's take the best possible return, say 20% annual return, and let's say he owed this for 10 years, then at best, he'd owe $848. I don't see how a firm purchasing a $134 debt from the state can justify such a huge penalty/return.
  - larrys 13y ago
    Good points and agree. But I think when you get into "at best he'd owe $848" then you don't provide proper disincentive to prevent the behavior of ignoring tax bills and other notices. As an aside as someone who has gone through significant pain trying to collect money from people that owe varying amounts (over the years) it's a process that given a bigger stick (not "ordinary" penalties) would go a long way. Noting also that this played out over many years. He didn't just miss a payment of $134 and boom someone profits $5000 or $197,000.
acchow 13y ago
Can someone point me to the laws and regulations that allow this? Someone who owns their home completely (with no mortgage) can lose the entirety of the home due to unpaid taxes? Even if the value of the home far exceeds the tax debt? This is mindboggling to me.
- mynameishere 13y ago
  Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.
  - rch 13y ago
    It has always seemed to me that property taxes are a completely incorrect idea; far more onerous than, for instance, the estate tax. Have there been any serious efforts to get rid of them?
    - rwmj 13y ago
      Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum). The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax). http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/03/in-defense-of-property-taxes.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada: http://www.interstice.com/~drewes/allodial.html http://www.interstice.com/~drewes/allodial.html
brianmcconnell 13y ago
Queue up the Ayn Rand acolytes in 3...2...1 It's not a coincidence that this is happening to mostly elderly people who otherwise own their properties in the clear, people who are often burdened with serious health problems. There is a simple fix. Require the liens to be paid off when there is a change of ownership. The city knows what it is owed, and that it will get the money eventually. If the city needs the money today, it ought to be able to borrow the funds (not all that different that accounts receivable factoring). Throwing people out of their homes over small amounts is inhumane.
- dantheman 13y ago
  Why would an Ayn Rand acolyte support the state taking the property of private individuals?
  - brianmcconnell 13y ago
    I was referring to the generally sociopathic attitude they tend to adopt toward The Poor. BTW, this is a privatized operation wherein predatory debt collectors buy the liens, foreclose the property, and then flip it at a huge profit. Just another example of government acting as stenographer for the financial industry.
    - drcode 13y ago
      > Just another example of government acting as stenographer for the financial industry. Did you actually just say a sentence with the phrase "government acting" in it as an example of something Ayn Rand would be in favor of? HAHAHAHA.... (I'm not in the Ayn Rand camp, but I think you're missing the basic concept of what she was about.)
      - kaonashi 13y ago
        It's privatization of tax collection; a Randian/Thatcherite dream.
nobrains 13y ago
Islam has the most fair rules against Interest. The Quran says: Chapter 2 - Baqarah - Verse 275: http://www.usc.edu/org/cmje/religious-texts/quran/verses/002-qmt.php#002.275 http://www.usc.edu/org/cmje/religious-texts/quran/verses/002... (Read the next 10 or so verses) and Chapter 3 - Verse 130: http://www.usc.edu/org/cmje/religious-texts/quran/verses/003-qmt.php#003.130 http://www.usc.edu/org/cmje/religious-texts/quran/verses/003... "O you who believe! Devour not usury (interest), doubled and multiplied; but fear Allah (God); that you may (really) prosper." Some more quotes: http://www.answering-christianity.com/yahya_ahmed/riba.htm http://www.answering-christianity.com/yahya_ahmed/riba.htm Allah (God) has declared war on those who take interest: http://www.hilalplaza.com/islam/Interest.html http://www.hilalplaza.com/islam/Interest.html
- Houshalter 13y ago
  This has nothing to do with anything in the article. Besides what you are saying is ridiculous anyways. A society where people are forbidden from getting loans or investing? You can't even charge interest on risk?
- harrytuttle 13y ago
  As an English atheist, possibly surprisingly, I think Islam is right regarding interest. Unfortunately wrapping it up in mumbo jumbo doesn't give it any credibility. Also it isn't really related to the article.
  - bsullivan01 13y ago
    At least inflation has to be added, and that's without calculating any risk. Otherwise I'll borrow from you $100K and return it 30 years later
    - harrytuttle 13y ago
      Not really. a) growth isn't required in all economic models so inflation isn't necessarily valid. b) goods and services are perfectly good interest. Not that you'd have to borrow it if interest wasn't profitable (it would drive asset value down). c) risk is irrelevant if lending isn't required. you're too in the bank and growth model mindset. It doesn't work like that everywhere.
dpanah 13y ago
Let's just target seniors and be done with it. Take everything they got because they're old and we're worthless scum. Tell it like it is.
mpalme 13y ago
Meta note: this is what journalism can look like today. Made for the web first, not for the paper. Visualizations that are actually insightful - and most importantly a well researched story.
- redsymbol 13y ago
  Absolutely - I noticed that too. Exceptionally well done from a web publishing standpoint.
  - unreal37 13y ago
    They researched this for 10 months, not 10 minutes. The quality of the research shows.
- bengotow 13y ago
  Totally agree. This is an incredibly well presented article that makes great use of the web to create a more insightful, moving experience. Internet storytelling well done.
- esamek 13y ago
  this.
auggierose 13y ago
Reading something like that makes me very angry. What would be the highest punishment against people who do something like that? Personally, I would not have any problem to dish out the highest one.
nateabele 13y ago
Tell me again how government does such a wonderful job protecting the weakest & most vulnerable.
- growupkids 13y ago
  DC is notoriously slimy with taxes. It's not surprising that they would do something like this. For example, DC tries to trick VA and MD based businesses into paying corporate taxes in DC if they work with the federal government based on the unsound lie that because the federal government is based in DC any business that works with the Feds must pay DC taxes. Even if that business never sets foot in DC, or works with a single federal person in DC. Thankfully VA and MD don't recognize this twisted logic.
- sliverstorm 13y ago
  Tell me again what system actually does a wonderful job
  - epsylon 13y ago
    Things like this would never, ever happen in most "socialist" European countries.
- bigfoot13442 13y ago
  Yet another thing I would do if I was rich: buy up the unfortunate circumstances and forgive them. I understand how it would be hard for the government to implement a policy to do the same, but this situation is ridiculous.
  - muzz 13y ago
    Yes many of us would-- in the case of the subject of the article, it would've only required $134 if done early enough (before it snowballed to $4,999). An important part of the article is that the subject profiled had dementia and was thus may not have been able to understand what was going on and was basically taken advantage of, albeit legally.
  - 13y ago
mgulaid 13y ago
House of Fog shed light on this problem. it is tragedy.
- morb 13y ago
  House of Sand and Fog. Yes, excellent movie. https://en.wikipedia.org/wiki/House_of_Sand_and_Fog_%28film%29 https://en.wikipedia.org/wiki/House_of_Sand_and_Fog_%28film%...
- mortenjorck 13y ago
  I believe it was The House of Sand and Fog. And Ben Kingsley and Jennifer Connolly are amazing in it.
alternize 13y ago
the article's title makes it hard for me as a non-us citizen to understand what foreclosure means in this context. what i got from the article is this: due to the financial situation of the owner, a small unpaid tax turns due to unfair practizes into a larger debt of like $5000, which then allowed a judge to enforce the sale of the house so that unpaid taxes could be paid off. now if the house was sold for the mentioned 197'000, does that mean that the owner at least got the proceeds minus the debt? the title suggests that this would not be the case...
- larrik 13y ago
  From what I read: 1) Owner of the house owes a minor amount of taxes. In most of the anecdotes, the homeowners have either no mortgage at all, or otherwise have mostly equity (tiny % of the total value of the home owed). 2) Since the city technically has a lien on the home (or gets one?), they are able to then sell the lien to an "investor", who pays whatever the tax bill is. 3) The investor demands payment, and begins charging huge fees. 4) After 6 months or whatever, the investor forecloses on the house, which is essentially taking ownership (basically a "repossession") 5) The investor sells the house for market value, or whatever price they want. 6) Since the investor is NOT a mortgage company or otherwise holding a mortgage lien, but is holding a lien originated by municipal entity, there is no rule in place that says they need to pay the original homeowner the profit. Therefore, they keep all of the money, minus the tax bill they paid at the start. In the end, the article implies that this company is buying liens for as low as $50, and then selling the houses out from under the homeowners for hundreds of thousands of dollars. At least, that's what I understood.
  - alternize 13y ago
    thanks. unbelievable - modern government sanctioned robbery
afterburner 13y ago
The logical outcome of this kind of predatory practice should be that the "investor" (the purchaser of the liens) gets $5000 out of the $197,000 sale, and the debtor gets $192,000. And even that seem predatory, never mind getting all the equity and forcing the person out of their place of residence.
- ars 13y ago
  That's the law everywhere I've ever checked. Very very odd if it's not the case in D.C.
- hansjorg 13y ago
  I have a hard time believing this story. If it actually is true, the local government in DC is beyond corrupt.
  - theviciousfish 13y ago
    taxation without representation. DC barely has a local government. Its Congress who has jurisdiction. so yes, they are as corrupt as it gets. from wikipedia: "Article One, Section Eight of the United States Constitution grants the U.S. Congress "exclusive jurisdiction" over the city. The District did not have an elected local government until the passage of the 1973 Home Rule Act. The Act devolved certain Congressional powers to an elected mayor, currently Vincent C. Gray, and the thirteen-member Council of the District of Columbia. However, Congress retains the right to review and overturn laws created by the council and intervene in local affairs.[160]"
  - bilbo0s 13y ago
    "...the local government in DC..." That might be part of the problem... they really don't have much local government. Congress holds sway in DC. When I lived in Glover Park I thought it was one of the strangest systems I had ever seen. Never really quite understood it completely.
  - klt0825 13y ago
    Frankly, this is a bigger problem that isn't nationally recognized. The mayor is under federal investigation for his campaign and I've lost count of how many officials have been arrested or investigated at the federal level. Living near the district, I'm shocked daily by how nobody seems to care that the corruption is so widespread.
cletus 13y ago
Well there are two issues here. The first is that laws that allow this to happen are scandalous. Worst case, particularly for the elderly, is that a lien is placed on the home such that it must be paid when the home is transferred in any way. So what if DC has to wait 10 years for $137 mistakenly not paid? Seriously. Unless the debt exceeds some nontrivial amount, the county should be restricted from taking any action whatsoever. All this to recover $137? Seriously? If it does come to foreclosure, it is utterly ridiculous that the "investor" (I prefer "predator") gets to keep the entire sale amount. Fees (that should be capped) may be retained with the rest being returned to the owner. Otherwise this is (or should be) the unlawful seizure of assets. Secondly, if you are such an "investor" how exactly do you live with yourself as a human being doing this? Seriously. I couldn't sleep at night. As for the county or state officials that make this possible, how do they live themselves doing this to their constituents?
- toomuchtodo 13y ago
  Sir or mam, I don't know you, but you're my kind of people.
iopq 13y ago
>owe $147 >you have to pay $5000 >you lose $197,000 How is this acceptable?
- alan_cx 13y ago
  Its quite mind blowing isn't it? Never heard anything like it.
- maxerickson 13y ago
  Well, the paper more or less put the article together because it isn't.
radicalbyte 13y ago
I wouldn't be against this basically being a fraud committed by someone in the local government there. Who else would have the knowledge to have found the loophole? Who else could have abused it so well?
- muzz 13y ago
  The six companies that dominate the auctions for those liens. "When it was over, six companies had swept the bidding, snaring two-thirds of the liens, which totaled $5 million, on properties worth more than $666 million"
will_brown 13y ago
Ironically, a lot of houses owned by banks as a result of foreclosures ("REOs") are in turn getting foreclosed for failure to pay taxes and HOA fees. Banks were/are not equipped to manage the number of properties they own as a result of foreclosures and they lack the basic infrastructure to maintain these properties not limited to paying taxes and HOA fees, but violations of certain civil statutes like failing to maintain lawns that result can result in fines upwards of hundreds of dollars per day for continued violation.
- doki_pen 13y ago
  This simply means that the banks should hurry up and auction the houses instead of sitting on them and waiting for their value to increase.
  - will_brown 13y ago
    Agreed, but there is a lot of debate on this for the following reasons. The banks own so many homes, that there is an argument that they could flood the housing market with under priced homes which would slow the housing recovering by driving down the prices of all homes. Additionally, there is a lot of speculation that part of the $1.2 trillion stimulus packages went directly to the banks to account for the above argument and actually requires the banks to slowly release their inventory of homes in order to prevent flooding the housing market with under priced homes (again because that would continue to drive down value across the board). All that said, as mentioned above I do agree with you, because assuming banks are keeping homes off the market this only artificially keeps home prices stable, and many of those REOs are failing into disrepair. In my opinion it is better to have ownership and people in homes, even at a short term cost of flooding the market with under valued homes. After all it is the banks who originally to the risk on these loans they foreclosed on and they lost.
- muzz 13y ago
  Yeah because banks have no experience with things called Impound or Escrow accounts...
  - 13y ago
mcescalante 13y ago
Maybe it's just me, but this reminds me a whole lot of all of the special pieces that the Times has released over the last year or so
spiritplumber 13y ago
Thanks, I will definitely put this on the plate as I decide to apply for US citizenship.
- ars 13y ago
  No need. This is a bizarre story and not the normal - which is precisely why you are reading about it on the news. Basically everything you read about on the news is what almost never happens.
acjohnson55 13y ago
What a clever disruption of the property tax industry! But seriously, things like this are why we must not get too carried away focusing only on market opportunity. Some ideas are profitable, but socially disruptive. In this case, public policy is enabling predatory with very obviously antisocial results, but I think there are plenty of cases where the government isn't so directly involved and the results aren't so obviously destructive, yet antisocial, nonetheless. This is really addressed to the small but vocal minority that seems infatuated with profit-seeking, without concern for anything else.
Fizzadar 13y ago
And this is what happens when you privatise the tax man.
denzil_correa 13y ago
Sorry but WTH?!! 134/197000 is 0.068%. And if this was not enough, I read this - 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. Sometimes I wonder what's wrong with people in the world.
- macspoofing 13y ago
  I think so too. Forget the laws, if you're a "investor" who bought a tax lean for $50, and that lean led you to own the deed to a $100,000-$200,000 house of Alzheimer's patient, don't you stop for a second and consider the moral and ethical implications of collecting on that lean?
  - denzil_correa 13y ago
    Ethics? I would want to know how is that even an apropos penalty given the defaulter's age and mental health. This is literally bordering on the insanity!
- rglover 13y ago
  Sad, right? If I had to guess, people are getting increasingly desperate. The things that used to help them get by don't work anymore (or don't meet the full capacity), and in exchange for money, they're willing to destroy the lives of others. Scary fucking world.
- deleted 13y ago
  [deleted]
- sprash 13y ago
  Not in the world. Only in the "Land of the free".
  - enraged_camel 13y ago
    Not sure why you are downvoted, when you are pretty much correct. In the Western world, America seems to be rather unique when it comes to the economically strong preying on the weak.
michaelochurch 13y ago
So, I generally disagree with libertarians (especially, the 25-year-old white male type who know nothing about the economy and have never met a poor person who tend to show up on HN) and one of those grating libertarian tropes is that government is essentially an extortionate body, insofar as it demands payment for non-refusable services and punishes those who do not pay. Now, in general, I would find this argument to be very silly. However, this sort of behavior makes that "silly" libertarian smear appear to be, in fact, entirely spot-on. All of this, the extreme pursuit of small debts, the tacking-on of "legal fees" to skirt usury/extortion laws, and the transfer of debt to more vicious investors (who are more likely to engage in usury, extortion, et al) is textbook mob shit.
jmomo 13y ago
I question if outrage articles like this belong on Hacker News. This is just a hot-button troll. Queue discussion regarding the decline of commenter quality on Hacker News.
unono 13y ago
This is why we hackers should all be helping Google get their self-driving cars on the road. It could save so many lives if people could have the option of living in their car.
- krapp 13y ago
  The kind of people who would be able to afford Google cars are not going to be the kind of people who might end up having to live in them. And if they were, the government would just make Google drive the car to an impound or something, probably, and they'd take that as well.
  - unono 13y ago
    The guy in the article wasn't completely moneyless, he just came up against the recurring costs of taxes/rent which can trip up the unorganized. Google car expense is overplayed. In mass production and with competition the cost would go way down. Also, if the government makes the 'homeless' drive to specific places out in the desert or something, that's better than the current situation where you're exposed to other homeless and dangerous people. I actually wouldn't mind going 'homeless' for a while to save money on rent, but currently it's really dangerous to do so. Moving to low rent places is also usually more 'dangerous', especially with children. With a driverless car you can just take your family out into the desert or forest and pretend you're camping. The current system of full-time rv-ing is quite hard because of parking restrictions and because sending kids off too school and getting groceries from out of town is hard, and because the rv's are too small. With self-driving rv's you can have a few of them to space out in.
    - krapp 13y ago
      Also, if the government makes the 'homeless' drive to specific places out in the desert or something, that's better than the current situation where you're exposed to other homeless and dangerous people. But what if they're driving all of the homeless people out to the same spot in the desert? Cars, sure, are better than nothing but better still are cars the government can't use to expel or trap undesirables. I'm sorry, but the idea of self-driving cars just creep me out.
EGF 13y ago
This may not be the right place for this, but does anyone know who to contact about a similar instance? I have family members that experienced this and lost a house due to predatory lending practices, but there is little to no recourse or resources out there. If anyone has information about the Bank of America/Countrywide issues I would like to know about them.
ahmad19526 13y ago
Reading some of the comments here, everyone is talking about the laws being broken and how they need fixing but I don't think any amount of law writing can make up for the moral bankruptcy that has led to these situations and many others. I think when people seek money they should ask themselves if what they are doing has any bit 'unethicalness'.. But who knows if those investors knew of the stories that made their investments possible. We have the concept of a carbon footprint - what about an ethical footprint?
maximilianburke 13y ago
In British Columbia you can defer your property taxes until the home is transferred (to anyone other than your spouse) or sold. That seems, to me, to be a much more fair and reasonable option than auctioning off these trivial amounts to the morally corrupt and destroying the lives of the indigent, elderly, or sick, as well as their families.
general_failure 13y ago
Strange he cannot afford 134. He has articles in his house he could have sold no?
- muzz 13y ago
  Less than 1/10th of the way into the article, they make it clear that he has dementia
Ellipsis753 13y ago
I don't mean to be taking the wrong side here but I'd be interested to know why didn't he didn't pay the money (It seems he was given warning). If he couldn't pay then I'm surprised he didn't sell his TV/remorgage his house/borrow money/ask friends or family to help or something. Perhaps I'm naive and he really couldn't do anything about this but it would have been nice if the article had covered this. Yes this is awful but I don't like the suggestions from some that the government simply shouldn't try to collect small debts. Surely no one would pay small debts they have then?
- Lewisham 13y ago
  It says in the article that he was struggling with dementia. One highly possible reason is that he simply forgot.
- kylebgorman 13y ago
  In TFA, it's mentioned that he has dementia.
- jnardiello 13y ago
  Maybe he forgot. Maybe he couldn't. Life is hard and complex. Not everyone is smart and clever. The weak side, for a debt of $40 gets all his properties auctioned and report a loss comparable to life-long savings. Totally reasonable and fair. Agree with you, can't see anything wrong going on here too. (i'll state the obvious: i'm joking). It's not simply a case that here we talk about: - People with dementia or major problems - Lonely - Most of the times, old enough to be completely invisible And the state, private contractors and greedy individuals use them to refill their bank accounts. And it's perfectly legal. And some people, as you are doing now, simply try to justify it. I'll tell you what is fair here: - He doesn't pay - Warnings should be issued - He should be given a greater amount to pay (i guess 100x the original amount should be enough) - He still doesn't pay - Insitutions try to understand why this person isn't paying - Take appropriate actions according to the situation. If the lack is anyhow justified (eg. person incapable of self-support) simply drop it and warn social services. Otherwise proceed to court. Seems a lot more reasonable. But ehi, this would mean lot of effort. Why not just raping and looting the weaks. Keep up with the great job!
hemancuso 13y ago
How is there not a huge angry thread about this not being appropriate for hacker news. Seriously guys. Flag this.
- batgaijin 13y ago
  Start your own forum if you don't like what the community votes for.
- choult 13y ago
  It's at the top of HN because it's been upvoted by HNers. How is it irrelevant if the masses say it should be up there?
rayiner 13y ago
The article doesn't come out and say it, but the impetus for tax sales is that foreclosure proceedings are pretty onerous and take forever. At the same time, property taxes are the primary source of revenue for the local government and must be collected. So it doesn't seem ridiculous at face value to sell the debt to private investors and let them do the collection while being able to recoup the fees involved in foreclosure which can legitimately run into the thousands because the foreclosure is a process that drags on for six months or more (with various redemption windows after that which can be a year or more). I'm skeptical of the "lien holder gets the equity" claim because it doesn't work that way outside of DC or in foreclosure generally, so I'd be very surprised it it wasn't a misunderstanding on the part of the author. This article talks about DC tax lien sales, and doesn't mention keeping equity: http://taxlieninvestingpro.com/category/statebystateguides/district-of-columbia-statebystateguides/ http://taxlieninvestingpro.com/category/statebystateguides/d.... It looks like a regular judicial foreclosure.
- jnardiello 13y ago
  Which still seems totally fine and fair, right? Great, keep up with the great job!
  - rayiner 13y ago
    The alternative is for the district to carry the burden of foreclosing, which costs taxpayers money (foreclosures are involved to protect homeowners) or alternatively just forgiving the tax debts of Alzheimer's patients. These foreclosure don't just happen one day. They happen after six months of warnings, letters, phone calls, etc.
    - toomuchtodo 13y ago
      The burden? Excuse me? That's their job. I'm sorry there is a cost associated with doing your job. If you're prepared to outsource that job and have the private sector do it extremely poorly and with no regulation, thereby effectively raping people of their wealth over a pittance, you should be prepared to pay the consequence for that.
gradstudent 13y ago
As an external observer I find it ridiculous that the recovery of small amount of debt -- to the government no less! -- involves foreclosing on someone's home. WTF is wrong with you America?
hummingbird12 13y ago
Can someone please tell me, why do US courts keep approving things like this? Like they can't just foreclose a house without government approval. Why does the court approve the foreclosure in the first place over such a small debt?
denzil_correa 13y ago
Does or shouldn't this contradict some law set by the government themselves? I need to do some research on the origins of taxes now. This seems unbelievable to me, I'm literally dumbfounded.
downandout 13y ago
I'm all for making money, but this seems predatory and downright evil. Under no circumstances should someone be able to foreclose on a property because they hold a lien for less than 1/1000th of the value of the property, then take all of the equity. According to the article, this is only allowed in a small handful of jurisdictions - most require the proceeds above the amount owed to be passed along to the owner. It's no coincidence that this is happening in Washington DC, the backyard of some of the most powerful and effective lobbying firms on earth. The set of laws that allow this insanity are almost certainly the result of lobbying efforts by tax lien buyers. Lobbying rules at the local and state level range from non-existent to very lax. As a result, getting a law or ordinance passed to benefit your company or industry at the local level is a relatively inexpensive and simple affair. People need to monitor laws and ordinances in their local jurisdictions, and speak up when they see things that don't pass the smell test. Otherwise, we'll continue to drown in this type of stuff.
- a8da6b0c91d 13y ago
  I would like to know the names and a little background on the people involved in these practices. Why doesn't the article name names? Who owns and works at Heartwood and Aeon Financial? Who are these people at the tax office facilitating the practices?
  - toomuchtodo 13y ago
    Aeon Financial, LLC, aka CapitalSource Bank http://www.ilsos.gov/corporatellc/CorporateLlcController?command=mms&fileNbr=02126966&type=MGR http://www.ilsos.gov/corporatellc/CorporateLlcController?com... I'm not quite sure what the HN policy is on personal details, but you can find the individual whose name is on the ownership of Aeon Financial on court documents across the US for tax lien purchases. It appears this document that appeared in a google search indicates that staff at CapitalSource were trying to separate the tax lien operation from the business by operating under the DBA Aeon Financial: http://www.delaney2012.com/wp-content/uploads/2012/09/09-07-12-Delaney-for-Jobs-Backup.pdf http://www.delaney2012.com/wp-content/uploads/2012/09/09-07-... Google "capitalsource bank fbo aeon financial" for a wealth of results.
tpainton 13y ago
I especially like how the people who made the laws are in no way to blame... Nope once again, it's the lobbyists and the evil corporations, never the people who actually made the rule that allowed it to happen...made the rule to retain power.. No they are the good guys.
- muzz 13y ago
  What would be your solution? To not sell the liens to private investors and instead and have the government try to collect on them? I.e., is your alternative bigger government?
grellas 13y ago
Tax enforcement schemes are conceived, enacted, and executed by governments because they have a monopoly over the taxing power. If private profiteers are allowed to exploit local citizens, it is strictly because the entity holding that power has deliberately chosen to set up an enforcement scheme that arms those predators with everything they need to conduct their exploitation. The vultures, despicable as they are, would be powerless to do anything to delinquent but for being armed for the task by the enabling government. Is this abusive? Yes, it is massively abusive. But the remedy needs to go to the source of the abuse and that source is a faceless, uncaring local government that has elevated cost-savings over fairness and, when caught as it has been here, is trying to pretend that it can impose a few regulations at the edges to solve the problem. The real solution is to bring the enforcement back in-house where it historically resided and then collection procedures can be controlled and made fair to citizens. But, of course, that would vitiate the cost savings to the governmental entity from which it benefits under its current system. It should do it but don't hold your breath waiting for reform. It is much easier to blame the outside vultures (who are of course eminently blameworthy), impose a few patches to pretend to deal with the abuse, and go on with business as usual. Whichever way reform is done, if it is at all, one can only hope that it will be real and meaningful but I suspect it will not. Very sad to see the tragic consequences.
- aptwebapps 13y ago
  Exactly. There is an unending supply of vultures, as you describe them, to take advantage of these situations. The only real solution is for the government to stop staking people out in the sun for the sake of modest savings.
- chii 13y ago
  i don't get why the law is so coarse - why a lien worth less than the value of the house can be used to forclose the house?! I understand if the value of the lien/debt is equal or greater than the value of the house. Otherwise, it's just like the article claims - highway robbery.
  - rayiner 13y ago
    Any lien can be used to foreclose on property if the lien holder has no other way to force the owner to pay. Generally, the owner is entitled to whatever sales proceeds they have left after paying the lien.
djvu9 13y ago
Not sure if you guys have noticed this "In 2006, he forgot to pay a $134 tax bill, prompting the city to place a lien on the home and add $183 in interest and penalties. His son paid the $317 bill in 2009, records show, but that wasn’t enough." His son did pay the tax later. I don't know how penalties/government fees are made and justified.
- westicle 13y ago
  The writing is horribly obfuscated. What it means to say is that the original bill was $134. Presumably he received dozens of notices and warnings that it needed to be paid, before it was sold as a lien. The lien holder would then have sent notices and warnings that the debt needed to be paid. Eventually after no response, it filed foreclosure proceedings in the court (at some significant cost). At that point, the son decided to pay the original tax bill, however the holder of the lien presumably wanted its legal costs paid before it would surrender the lien. What happened next was very unjust. But would make more sense if the article was clear on the timeline of events.
smutticus 13y ago
It's shit like this that makes molotov cocktails seem like rational behavior.
frankydp 13y ago
This story is not about a government department doing what it is charged with doing. This story is not about privitization of collections. This story is not about the well known DC corruption issue. This story is not about tax collection automation, ie removing the knock on the door. This story is not about people that buy tax liens, which as a side note do not know the circumstances of the lien.(barring collusion) This story is about the fact that this man had no one. No one to make sure is ok. No one to ask if has been forgetting things lately. No neighbors that might have checked in on him. No family that was attentive enough to realise he may need help with the 10 giant boxes of mail by the door. No one that gave enough of a shit to just ask how he was doing. When was the last time you checked in on that elderly lady that lives next door to make sure she is doing ok? When is the last time you did a little checking up on your elderly family? When was the last time you took the time to make sure the people around you are not getting to the point where they need help? As a side note, please read the entire article.
noarchy 13y ago
Property taxes are, effectively, rent paid to the local government by people who otherwise think that they own said property. Fail to pay it, and you get evicted. It is quite a racket already, but combine this with crony deals with private companies, and corruption shows its ugly face. It is all "legal", since the ones carrying out the scheme also happen to make the rules.
rajahafify 13y ago
I really love the UI. Big ass photo with magazine like header. And followed by article. Salute.

460 points by aviziva 13y ago

"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." Why does that section of the 14th amendment not apply?

xsmasher 13y ago
What makes you think the public tax sale took place without due process of law? Straight from the article: * Homeowners receive several warnings before their liens are put up at annual auctions. * Once a lien is sold, owners have six months to repay the investor with interest. If that does not happen, the investor can move to foreclose. The article even mentions the families getting their day in court over the post-tax-sale foreclosure. I just realized I'm serial rage-replying on this article. You know that annoyed feeling you get when the news covers a subject you're familiar with? Well.

31reasons 13y ago

"Give me your tired, your poor and we will make them homeless"

Winst 13y ago

Does anyone have any idea how much it costs a traditional newspaper to produce an article like this? They've listed 15 people in the "Credits" section at the bottom. Seems cost-prohibitive. Written by Michael Sallah, Debbie Cenziper, Steven Rich / Graphics by Ted Mellnik, Emily Chow, Laura Stanton / Photos by Michael S. Williamson / Editing by Jeff Leen, Steven Kress / Research by Jennifer Jenkins / Production by Chris George, Connor Jennings, Bronwen Latimer, Michelle Williams, Tim Wong Edit: clarity

wmil 13y ago
The "producers" are likely just management and several of the rest may in fact be unpaid interns trying to break into the industry. But researched articles like this are expensive to produce. That's why PR firms are so successful. Reporters need others to find and research stories for them.
- wpietri 13y ago
  Production has a different meaning in publishing than in movies, which is what I think you're referring to. In print, production is the act of taking the raw inputs (copy, graphics, layout) and getting it out the door. E.g., the print production managers I know manage the physical details of the print medium. There is a similar meaning in advertising. [1] Looking at the resumes of the first couple producers, one's a designer, the other lists himself as "Nerd". So I think they are using the meaning from publishing: people who produce the final product. [1] http://en.wikipedia.org/wiki/Advertising_agency#Production http://en.wikipedia.org/wiki/Advertising_agency#Production
Refefer 13y ago
True investigative journalism is a remarkably expensive process with little chance of recouping overall costs. Even after the initial draft, an extraordinary amount of fact checking and editorial requirements/standards are applied to the piece. Some of it's for reputation reasons and a lot of it is for legal reasons: slander suits aren't cheap. I hope papers start providing full 'Credits' to what goes into a piece so as to better inform the reader how many people in the chain it takes to arrive at the final copy.
unreal37 13y ago
It took them 10 months to research this. No doubt there was a lot of effort involved.

kisstheblade 13y ago

Apparently he owned this 197k property? Why didn't he borrow money against it or sell it? Did somebody really just take the house, sell it for say 197k to pay his 134 dollar bill? Sounds weird if this is possible. Probably he didn't own his house (even though it is stated in the article that he had bought it with cash earlier), I don't know why they could else foreclose on it. I mean creditors don't have the right to your property if you just owe them money (it may be possible for them to force you to sell your property to pay off debts, but you get to keep the money left over)?

chiph 13y ago

Obscure program?? It happened all the time in the 1930's. If you couldn't pay your tax bill, your property was auctioned off on the courthouse steps.

scotty79 13y ago
Via private company operating for profit?
- larrys 13y ago
  Issue is abuse of that system not the fact that it was by a private company operating for profit. Many prisons are run by for profit enterprises as well as hospitals. The way the program is run is the important thing not the type of enterprise handling the program. Example: Small town with "speed trap" (not a for profit business) gives out excess tickets to raise money.
  - alan_cx 13y ago
    I hardly think citing prisons and hospitals is a ringing endorsement of the profit motive.

snitko 13y ago

And yet I still see people saying "no, how dare you compare government to a bunch of thieves?".

Refefer 13y ago
The DC local government is somewhat remarkable in how corrupt it is. It seems like every other day some major political player gets indicted for corruption of some sort.
- jfb 13y ago
  DC is in some ways an anomaly; US citizens deliberately disenfranchised by the Federal Government. It's not surprising that they might be extravagantly corrupt.
wpietri 13y ago
And they should keep saying that. I agree that some portion of government operations are dubious. I believe the portion is pretty small. The people I know who work in government are there because they want to make a difference. They would be just as outraged by this as anybody. More so, really, because they see stuff like this as shaming public service everywhere.
- snitko 13y ago
  I have no doubt that most low-ranking government employees believe they are doing good and I don't blame them. But it doesn't matter and it doesn't change the fact that they are involved in extracting money from people with a threat of force. If you can't convince people to finance something, whatever it is, and you still collect money from them, you are stealing.
  - wpietri 13y ago
    Ah, maybe the difference is that I live in a democracy, where we vote for people who set budgets, and often vote directly on the taxes ourselves. So the only people threatened by force here are those who try to be free riders on the system that the people have jointly set up. It may be different where you are.

supersaiyan 13y ago

Beautiful photography, I'm hooked before even reading a word

larrys 13y ago

"All because he didn’t pay a $134 property tax bill." [1] What is the scope of the problem here? Ok: "Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations." Out of home many? "The retired Marine sergeant lost his house " Obligatory "and he was a good guy who fought for his country" added in for extra emotion (in addition the picture of course of a respectable citizen). All this is sad and most certainly an interesting read. But it seems more suite for Taibbi in Rolling Stone. Would be nice if in addition to writing emotional appeals they enlisted the help of someone (say a think tank) that could do further analysis and come up with some suggestions as far as reform that are backed up by research and in writing. [1] Noting that this dates back to 2006 and yes if you ignore simple notices bad things happen. Don't pay your insurance bill? You won't have insurance if there is a fire. Etc.

cromwellian 13y ago
The problem is, privatizing a state function -- collecting property taxes -- into a profitable enterprise. Ok, the guy owed $134, explain how under any reasonable financial theory, how this should be worth $5000 or $197,000. Why not a lien against his military pension? Why not negotiate a payment plan? Even the IRS has the courtesy to do that. Let's take the best possible return, say 20% annual return, and let's say he owed this for 10 years, then at best, he'd owe $848. I don't see how a firm purchasing a $134 debt from the state can justify such a huge penalty/return.
- larrys 13y ago
  Good points and agree. But I think when you get into "at best he'd owe $848" then you don't provide proper disincentive to prevent the behavior of ignoring tax bills and other notices. As an aside as someone who has gone through significant pain trying to collect money from people that owe varying amounts (over the years) it's a process that given a bigger stick (not "ordinary" penalties) would go a long way. Noting also that this played out over many years. He didn't just miss a payment of $134 and boom someone profits $5000 or $197,000.

acchow 13y ago

Can someone point me to the laws and regulations that allow this? Someone who owns their home completely (with no mortgage) can lose the entirety of the home due to unpaid taxes? Even if the value of the home far exceeds the tax debt? This is mindboggling to me.

mynameishere 13y ago
Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.
- rch 13y ago
  It has always seemed to me that property taxes are a completely incorrect idea; far more onerous than, for instance, the estate tax. Have there been any serious efforts to get rid of them?
  - rwmj 13y ago
    Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum). The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax). http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/03/in-defense-of-property-taxes.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada: http://www.interstice.com/~drewes/allodial.html http://www.interstice.com/~drewes/allodial.html

brianmcconnell 13y ago

Queue up the Ayn Rand acolytes in 3...2...1 It's not a coincidence that this is happening to mostly elderly people who otherwise own their properties in the clear, people who are often burdened with serious health problems. There is a simple fix. Require the liens to be paid off when there is a change of ownership. The city knows what it is owed, and that it will get the money eventually. If the city needs the money today, it ought to be able to borrow the funds (not all that different that accounts receivable factoring). Throwing people out of their homes over small amounts is inhumane.

dantheman 13y ago
Why would an Ayn Rand acolyte support the state taking the property of private individuals?
- brianmcconnell 13y ago
  I was referring to the generally sociopathic attitude they tend to adopt toward The Poor. BTW, this is a privatized operation wherein predatory debt collectors buy the liens, foreclose the property, and then flip it at a huge profit. Just another example of government acting as stenographer for the financial industry.
  - drcode 13y ago
    > Just another example of government acting as stenographer for the financial industry. Did you actually just say a sentence with the phrase "government acting" in it as an example of something Ayn Rand would be in favor of? HAHAHAHA.... (I'm not in the Ayn Rand camp, but I think you're missing the basic concept of what she was about.)
    - kaonashi 13y ago
      It's privatization of tax collection; a Randian/Thatcherite dream.

nobrains 13y ago

Islam has the most fair rules against Interest. The Quran says: Chapter 2 - Baqarah - Verse 275: http://www.usc.edu/org/cmje/religious-texts/quran/verses/002-qmt.php#002.275 http://www.usc.edu/org/cmje/religious-texts/quran/verses/002... (Read the next 10 or so verses) and Chapter 3 - Verse 130: http://www.usc.edu/org/cmje/religious-texts/quran/verses/003-qmt.php#003.130 http://www.usc.edu/org/cmje/religious-texts/quran/verses/003... "O you who believe! Devour not usury (interest), doubled and multiplied; but fear Allah (God); that you may (really) prosper." Some more quotes: http://www.answering-christianity.com/yahya_ahmed/riba.htm http://www.answering-christianity.com/yahya_ahmed/riba.htm Allah (God) has declared war on those who take interest: http://www.hilalplaza.com/islam/Interest.html http://www.hilalplaza.com/islam/Interest.html

Houshalter 13y ago
This has nothing to do with anything in the article. Besides what you are saying is ridiculous anyways. A society where people are forbidden from getting loans or investing? You can't even charge interest on risk?
harrytuttle 13y ago
As an English atheist, possibly surprisingly, I think Islam is right regarding interest. Unfortunately wrapping it up in mumbo jumbo doesn't give it any credibility. Also it isn't really related to the article.
- bsullivan01 13y ago
  At least inflation has to be added, and that's without calculating any risk. Otherwise I'll borrow from you $100K and return it 30 years later
  - harrytuttle 13y ago
    Not really. a) growth isn't required in all economic models so inflation isn't necessarily valid. b) goods and services are perfectly good interest. Not that you'd have to borrow it if interest wasn't profitable (it would drive asset value down). c) risk is irrelevant if lending isn't required. you're too in the bank and growth model mindset. It doesn't work like that everywhere.

dpanah 13y ago

Let's just target seniors and be done with it. Take everything they got because they're old and we're worthless scum. Tell it like it is.

mpalme 13y ago

Meta note: this is what journalism can look like today. Made for the web first, not for the paper. Visualizations that are actually insightful - and most importantly a well researched story.

redsymbol 13y ago
Absolutely - I noticed that too. Exceptionally well done from a web publishing standpoint.
- unreal37 13y ago
  They researched this for 10 months, not 10 minutes. The quality of the research shows.
bengotow 13y ago
Totally agree. This is an incredibly well presented article that makes great use of the web to create a more insightful, moving experience. Internet storytelling well done.
esamek 13y ago
this.

auggierose 13y ago

Reading something like that makes me very angry. What would be the highest punishment against people who do something like that? Personally, I would not have any problem to dish out the highest one.

nateabele 13y ago

Tell me again how government does such a wonderful job protecting the weakest & most vulnerable.

growupkids 13y ago
DC is notoriously slimy with taxes. It's not surprising that they would do something like this. For example, DC tries to trick VA and MD based businesses into paying corporate taxes in DC if they work with the federal government based on the unsound lie that because the federal government is based in DC any business that works with the Feds must pay DC taxes. Even if that business never sets foot in DC, or works with a single federal person in DC. Thankfully VA and MD don't recognize this twisted logic.
sliverstorm 13y ago
Tell me again what system actually does a wonderful job
- epsylon 13y ago
  Things like this would never, ever happen in most "socialist" European countries.
bigfoot13442 13y ago
Yet another thing I would do if I was rich: buy up the unfortunate circumstances and forgive them. I understand how it would be hard for the government to implement a policy to do the same, but this situation is ridiculous.
- muzz 13y ago
  Yes many of us would-- in the case of the subject of the article, it would've only required $134 if done early enough (before it snowballed to $4,999). An important part of the article is that the subject profiled had dementia and was thus may not have been able to understand what was going on and was basically taken advantage of, albeit legally.
- 13y ago

mgulaid 13y ago

House of Fog shed light on this problem. it is tragedy.

morb 13y ago
House of Sand and Fog. Yes, excellent movie. https://en.wikipedia.org/wiki/House_of_Sand_and_Fog_%28film%29 https://en.wikipedia.org/wiki/House_of_Sand_and_Fog_%28film%...
mortenjorck 13y ago
I believe it was The House of Sand and Fog. And Ben Kingsley and Jennifer Connolly are amazing in it.

alternize 13y ago

the article's title makes it hard for me as a non-us citizen to understand what foreclosure means in this context. what i got from the article is this: due to the financial situation of the owner, a small unpaid tax turns due to unfair practizes into a larger debt of like $5000, which then allowed a judge to enforce the sale of the house so that unpaid taxes could be paid off. now if the house was sold for the mentioned 197'000, does that mean that the owner at least got the proceeds minus the debt? the title suggests that this would not be the case...

larrik 13y ago
From what I read: 1) Owner of the house owes a minor amount of taxes. In most of the anecdotes, the homeowners have either no mortgage at all, or otherwise have mostly equity (tiny % of the total value of the home owed). 2) Since the city technically has a lien on the home (or gets one?), they are able to then sell the lien to an "investor", who pays whatever the tax bill is. 3) The investor demands payment, and begins charging huge fees. 4) After 6 months or whatever, the investor forecloses on the house, which is essentially taking ownership (basically a "repossession") 5) The investor sells the house for market value, or whatever price they want. 6) Since the investor is NOT a mortgage company or otherwise holding a mortgage lien, but is holding a lien originated by municipal entity, there is no rule in place that says they need to pay the original homeowner the profit. Therefore, they keep all of the money, minus the tax bill they paid at the start. In the end, the article implies that this company is buying liens for as low as $50, and then selling the houses out from under the homeowners for hundreds of thousands of dollars. At least, that's what I understood.
- alternize 13y ago
  thanks. unbelievable - modern government sanctioned robbery

afterburner 13y ago

The logical outcome of this kind of predatory practice should be that the "investor" (the purchaser of the liens) gets $5000 out of the $197,000 sale, and the debtor gets $192,000. And even that seem predatory, never mind getting all the equity and forcing the person out of their place of residence.

ars 13y ago
That's the law everywhere I've ever checked. Very very odd if it's not the case in D.C.
hansjorg 13y ago
I have a hard time believing this story. If it actually is true, the local government in DC is beyond corrupt.
- theviciousfish 13y ago
  taxation without representation. DC barely has a local government. Its Congress who has jurisdiction. so yes, they are as corrupt as it gets. from wikipedia: "Article One, Section Eight of the United States Constitution grants the U.S. Congress "exclusive jurisdiction" over the city. The District did not have an elected local government until the passage of the 1973 Home Rule Act. The Act devolved certain Congressional powers to an elected mayor, currently Vincent C. Gray, and the thirteen-member Council of the District of Columbia. However, Congress retains the right to review and overturn laws created by the council and intervene in local affairs.[160]"
- bilbo0s 13y ago
  "...the local government in DC..." That might be part of the problem... they really don't have much local government. Congress holds sway in DC. When I lived in Glover Park I thought it was one of the strangest systems I had ever seen. Never really quite understood it completely.
- klt0825 13y ago
  Frankly, this is a bigger problem that isn't nationally recognized. The mayor is under federal investigation for his campaign and I've lost count of how many officials have been arrested or investigated at the federal level. Living near the district, I'm shocked daily by how nobody seems to care that the corruption is so widespread.

cletus 13y ago

Well there are two issues here. The first is that laws that allow this to happen are scandalous. Worst case, particularly for the elderly, is that a lien is placed on the home such that it must be paid when the home is transferred in any way. So what if DC has to wait 10 years for $137 mistakenly not paid? Seriously. Unless the debt exceeds some nontrivial amount, the county should be restricted from taking any action whatsoever. All this to recover $137? Seriously? If it does come to foreclosure, it is utterly ridiculous that the "investor" (I prefer "predator") gets to keep the entire sale amount. Fees (that should be capped) may be retained with the rest being returned to the owner. Otherwise this is (or should be) the unlawful seizure of assets. Secondly, if you are such an "investor" how exactly do you live with yourself as a human being doing this? Seriously. I couldn't sleep at night. As for the county or state officials that make this possible, how do they live themselves doing this to their constituents?

toomuchtodo 13y ago
Sir or mam, I don't know you, but you're my kind of people.

iopq 13y ago

>owe $147 >you have to pay $5000 >you lose $197,000 How is this acceptable?

alan_cx 13y ago
Its quite mind blowing isn't it? Never heard anything like it.
maxerickson 13y ago
Well, the paper more or less put the article together because it isn't.

radicalbyte 13y ago

I wouldn't be against this basically being a fraud committed by someone in the local government there. Who else would have the knowledge to have found the loophole? Who else could have abused it so well?

muzz 13y ago
The six companies that dominate the auctions for those liens. "When it was over, six companies had swept the bidding, snaring two-thirds of the liens, which totaled $5 million, on properties worth more than $666 million"

will_brown 13y ago

Ironically, a lot of houses owned by banks as a result of foreclosures ("REOs") are in turn getting foreclosed for failure to pay taxes and HOA fees. Banks were/are not equipped to manage the number of properties they own as a result of foreclosures and they lack the basic infrastructure to maintain these properties not limited to paying taxes and HOA fees, but violations of certain civil statutes like failing to maintain lawns that result can result in fines upwards of hundreds of dollars per day for continued violation.

doki_pen 13y ago
This simply means that the banks should hurry up and auction the houses instead of sitting on them and waiting for their value to increase.
- will_brown 13y ago
  Agreed, but there is a lot of debate on this for the following reasons. The banks own so many homes, that there is an argument that they could flood the housing market with under priced homes which would slow the housing recovering by driving down the prices of all homes. Additionally, there is a lot of speculation that part of the $1.2 trillion stimulus packages went directly to the banks to account for the above argument and actually requires the banks to slowly release their inventory of homes in order to prevent flooding the housing market with under priced homes (again because that would continue to drive down value across the board). All that said, as mentioned above I do agree with you, because assuming banks are keeping homes off the market this only artificially keeps home prices stable, and many of those REOs are failing into disrepair. In my opinion it is better to have ownership and people in homes, even at a short term cost of flooding the market with under valued homes. After all it is the banks who originally to the risk on these loans they foreclosed on and they lost.
muzz 13y ago
Yeah because banks have no experience with things called Impound or Escrow accounts...
- 13y ago

mcescalante 13y ago

Maybe it's just me, but this reminds me a whole lot of all of the special pieces that the Times has released over the last year or so

spiritplumber 13y ago

Thanks, I will definitely put this on the plate as I decide to apply for US citizenship.

ars 13y ago
No need. This is a bizarre story and not the normal - which is precisely why you are reading about it on the news. Basically everything you read about on the news is what almost never happens.

acjohnson55 13y ago

What a clever disruption of the property tax industry! But seriously, things like this are why we must not get too carried away focusing only on market opportunity. Some ideas are profitable, but socially disruptive. In this case, public policy is enabling predatory with very obviously antisocial results, but I think there are plenty of cases where the government isn't so directly involved and the results aren't so obviously destructive, yet antisocial, nonetheless. This is really addressed to the small but vocal minority that seems infatuated with profit-seeking, without concern for anything else.

Fizzadar 13y ago

And this is what happens when you privatise the tax man.

denzil_correa 13y ago

Sorry but WTH?!! 134/197000 is 0.068%. And if this was not enough, I read this - 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. Sometimes I wonder what's wrong with people in the world.

macspoofing 13y ago
I think so too. Forget the laws, if you're a "investor" who bought a tax lean for $50, and that lean led you to own the deed to a $100,000-$200,000 house of Alzheimer's patient, don't you stop for a second and consider the moral and ethical implications of collecting on that lean?
- denzil_correa 13y ago
  Ethics? I would want to know how is that even an apropos penalty given the defaulter's age and mental health. This is literally bordering on the insanity!
rglover 13y ago
Sad, right? If I had to guess, people are getting increasingly desperate. The things that used to help them get by don't work anymore (or don't meet the full capacity), and in exchange for money, they're willing to destroy the lives of others. Scary fucking world.
deleted 13y ago
[deleted]
sprash 13y ago
Not in the world. Only in the "Land of the free".
- enraged_camel 13y ago
  Not sure why you are downvoted, when you are pretty much correct. In the Western world, America seems to be rather unique when it comes to the economically strong preying on the weak.

michaelochurch 13y ago

So, I generally disagree with libertarians (especially, the 25-year-old white male type who know nothing about the economy and have never met a poor person who tend to show up on HN) and one of those grating libertarian tropes is that government is essentially an extortionate body, insofar as it demands payment for non-refusable services and punishes those who do not pay. Now, in general, I would find this argument to be very silly. However, this sort of behavior makes that "silly" libertarian smear appear to be, in fact, entirely spot-on. All of this, the extreme pursuit of small debts, the tacking-on of "legal fees" to skirt usury/extortion laws, and the transfer of debt to more vicious investors (who are more likely to engage in usury, extortion, et al) is textbook mob shit.

jmomo 13y ago

I question if outrage articles like this belong on Hacker News. This is just a hot-button troll. Queue discussion regarding the decline of commenter quality on Hacker News.

unono 13y ago

This is why we hackers should all be helping Google get their self-driving cars on the road. It could save so many lives if people could have the option of living in their car.

krapp 13y ago
The kind of people who would be able to afford Google cars are not going to be the kind of people who might end up having to live in them. And if they were, the government would just make Google drive the car to an impound or something, probably, and they'd take that as well.
- unono 13y ago
  The guy in the article wasn't completely moneyless, he just came up against the recurring costs of taxes/rent which can trip up the unorganized. Google car expense is overplayed. In mass production and with competition the cost would go way down. Also, if the government makes the 'homeless' drive to specific places out in the desert or something, that's better than the current situation where you're exposed to other homeless and dangerous people. I actually wouldn't mind going 'homeless' for a while to save money on rent, but currently it's really dangerous to do so. Moving to low rent places is also usually more 'dangerous', especially with children. With a driverless car you can just take your family out into the desert or forest and pretend you're camping. The current system of full-time rv-ing is quite hard because of parking restrictions and because sending kids off too school and getting groceries from out of town is hard, and because the rv's are too small. With self-driving rv's you can have a few of them to space out in.
  - krapp 13y ago
    Also, if the government makes the 'homeless' drive to specific places out in the desert or something, that's better than the current situation where you're exposed to other homeless and dangerous people. But what if they're driving all of the homeless people out to the same spot in the desert? Cars, sure, are better than nothing but better still are cars the government can't use to expel or trap undesirables. I'm sorry, but the idea of self-driving cars just creep me out.

EGF 13y ago

This may not be the right place for this, but does anyone know who to contact about a similar instance? I have family members that experienced this and lost a house due to predatory lending practices, but there is little to no recourse or resources out there. If anyone has information about the Bank of America/Countrywide issues I would like to know about them.

ahmad19526 13y ago

Reading some of the comments here, everyone is talking about the laws being broken and how they need fixing but I don't think any amount of law writing can make up for the moral bankruptcy that has led to these situations and many others. I think when people seek money they should ask themselves if what they are doing has any bit 'unethicalness'.. But who knows if those investors knew of the stories that made their investments possible. We have the concept of a carbon footprint - what about an ethical footprint?

maximilianburke 13y ago

In British Columbia you can defer your property taxes until the home is transferred (to anyone other than your spouse) or sold. That seems, to me, to be a much more fair and reasonable option than auctioning off these trivial amounts to the morally corrupt and destroying the lives of the indigent, elderly, or sick, as well as their families.

general_failure 13y ago

Strange he cannot afford 134. He has articles in his house he could have sold no?

muzz 13y ago
Less than 1/10th of the way into the article, they make it clear that he has dementia

Ellipsis753 13y ago

I don't mean to be taking the wrong side here but I'd be interested to know why didn't he didn't pay the money (It seems he was given warning). If he couldn't pay then I'm surprised he didn't sell his TV/remorgage his house/borrow money/ask friends or family to help or something. Perhaps I'm naive and he really couldn't do anything about this but it would have been nice if the article had covered this. Yes this is awful but I don't like the suggestions from some that the government simply shouldn't try to collect small debts. Surely no one would pay small debts they have then?

Lewisham 13y ago
It says in the article that he was struggling with dementia. One highly possible reason is that he simply forgot.
kylebgorman 13y ago
In TFA, it's mentioned that he has dementia.
jnardiello 13y ago
Maybe he forgot. Maybe he couldn't. Life is hard and complex. Not everyone is smart and clever. The weak side, for a debt of $40 gets all his properties auctioned and report a loss comparable to life-long savings. Totally reasonable and fair. Agree with you, can't see anything wrong going on here too. (i'll state the obvious: i'm joking). It's not simply a case that here we talk about: - People with dementia or major problems - Lonely - Most of the times, old enough to be completely invisible And the state, private contractors and greedy individuals use them to refill their bank accounts. And it's perfectly legal. And some people, as you are doing now, simply try to justify it. I'll tell you what is fair here: - He doesn't pay - Warnings should be issued - He should be given a greater amount to pay (i guess 100x the original amount should be enough) - He still doesn't pay - Insitutions try to understand why this person isn't paying - Take appropriate actions according to the situation. If the lack is anyhow justified (eg. person incapable of self-support) simply drop it and warn social services. Otherwise proceed to court. Seems a lot more reasonable. But ehi, this would mean lot of effort. Why not just raping and looting the weaks. Keep up with the great job!

hemancuso 13y ago

How is there not a huge angry thread about this not being appropriate for hacker news. Seriously guys. Flag this.

batgaijin 13y ago
Start your own forum if you don't like what the community votes for.
choult 13y ago
It's at the top of HN because it's been upvoted by HNers. How is it irrelevant if the masses say it should be up there?

rayiner 13y ago

The article doesn't come out and say it, but the impetus for tax sales is that foreclosure proceedings are pretty onerous and take forever. At the same time, property taxes are the primary source of revenue for the local government and must be collected. So it doesn't seem ridiculous at face value to sell the debt to private investors and let them do the collection while being able to recoup the fees involved in foreclosure which can legitimately run into the thousands because the foreclosure is a process that drags on for six months or more (with various redemption windows after that which can be a year or more). I'm skeptical of the "lien holder gets the equity" claim because it doesn't work that way outside of DC or in foreclosure generally, so I'd be very surprised it it wasn't a misunderstanding on the part of the author. This article talks about DC tax lien sales, and doesn't mention keeping equity: http://taxlieninvestingpro.com/category/statebystateguides/district-of-columbia-statebystateguides/ http://taxlieninvestingpro.com/category/statebystateguides/d.... It looks like a regular judicial foreclosure.

jnardiello 13y ago
Which still seems totally fine and fair, right? Great, keep up with the great job!
- rayiner 13y ago
  The alternative is for the district to carry the burden of foreclosing, which costs taxpayers money (foreclosures are involved to protect homeowners) or alternatively just forgiving the tax debts of Alzheimer's patients. These foreclosure don't just happen one day. They happen after six months of warnings, letters, phone calls, etc.
  - toomuchtodo 13y ago
    The burden? Excuse me? That's their job. I'm sorry there is a cost associated with doing your job. If you're prepared to outsource that job and have the private sector do it extremely poorly and with no regulation, thereby effectively raping people of their wealth over a pittance, you should be prepared to pay the consequence for that.

gradstudent 13y ago

As an external observer I find it ridiculous that the recovery of small amount of debt -- to the government no less! -- involves foreclosing on someone's home. WTF is wrong with you America?

hummingbird12 13y ago

Can someone please tell me, why do US courts keep approving things like this? Like they can't just foreclose a house without government approval. Why does the court approve the foreclosure in the first place over such a small debt?

denzil_correa 13y ago

Does or shouldn't this contradict some law set by the government themselves? I need to do some research on the origins of taxes now. This seems unbelievable to me, I'm literally dumbfounded.

downandout 13y ago

I'm all for making money, but this seems predatory and downright evil. Under no circumstances should someone be able to foreclose on a property because they hold a lien for less than 1/1000th of the value of the property, then take all of the equity. According to the article, this is only allowed in a small handful of jurisdictions - most require the proceeds above the amount owed to be passed along to the owner. It's no coincidence that this is happening in Washington DC, the backyard of some of the most powerful and effective lobbying firms on earth. The set of laws that allow this insanity are almost certainly the result of lobbying efforts by tax lien buyers. Lobbying rules at the local and state level range from non-existent to very lax. As a result, getting a law or ordinance passed to benefit your company or industry at the local level is a relatively inexpensive and simple affair. People need to monitor laws and ordinances in their local jurisdictions, and speak up when they see things that don't pass the smell test. Otherwise, we'll continue to drown in this type of stuff.

a8da6b0c91d 13y ago
I would like to know the names and a little background on the people involved in these practices. Why doesn't the article name names? Who owns and works at Heartwood and Aeon Financial? Who are these people at the tax office facilitating the practices?
- toomuchtodo 13y ago
  Aeon Financial, LLC, aka CapitalSource Bank http://www.ilsos.gov/corporatellc/CorporateLlcController?command=mms&fileNbr=02126966&type=MGR http://www.ilsos.gov/corporatellc/CorporateLlcController?com... I'm not quite sure what the HN policy is on personal details, but you can find the individual whose name is on the ownership of Aeon Financial on court documents across the US for tax lien purchases. It appears this document that appeared in a google search indicates that staff at CapitalSource were trying to separate the tax lien operation from the business by operating under the DBA Aeon Financial: http://www.delaney2012.com/wp-content/uploads/2012/09/09-07-12-Delaney-for-Jobs-Backup.pdf http://www.delaney2012.com/wp-content/uploads/2012/09/09-07-... Google "capitalsource bank fbo aeon financial" for a wealth of results.

tpainton 13y ago

I especially like how the people who made the laws are in no way to blame... Nope once again, it's the lobbyists and the evil corporations, never the people who actually made the rule that allowed it to happen...made the rule to retain power.. No they are the good guys.

muzz 13y ago
What would be your solution? To not sell the liens to private investors and instead and have the government try to collect on them? I.e., is your alternative bigger government?

grellas 13y ago

Tax enforcement schemes are conceived, enacted, and executed by governments because they have a monopoly over the taxing power. If private profiteers are allowed to exploit local citizens, it is strictly because the entity holding that power has deliberately chosen to set up an enforcement scheme that arms those predators with everything they need to conduct their exploitation. The vultures, despicable as they are, would be powerless to do anything to delinquent but for being armed for the task by the enabling government. Is this abusive? Yes, it is massively abusive. But the remedy needs to go to the source of the abuse and that source is a faceless, uncaring local government that has elevated cost-savings over fairness and, when caught as it has been here, is trying to pretend that it can impose a few regulations at the edges to solve the problem. The real solution is to bring the enforcement back in-house where it historically resided and then collection procedures can be controlled and made fair to citizens. But, of course, that would vitiate the cost savings to the governmental entity from which it benefits under its current system. It should do it but don't hold your breath waiting for reform. It is much easier to blame the outside vultures (who are of course eminently blameworthy), impose a few patches to pretend to deal with the abuse, and go on with business as usual. Whichever way reform is done, if it is at all, one can only hope that it will be real and meaningful but I suspect it will not. Very sad to see the tragic consequences.

aptwebapps 13y ago
Exactly. There is an unending supply of vultures, as you describe them, to take advantage of these situations. The only real solution is for the government to stop staking people out in the sun for the sake of modest savings.
chii 13y ago
i don't get why the law is so coarse - why a lien worth less than the value of the house can be used to forclose the house?! I understand if the value of the lien/debt is equal or greater than the value of the house. Otherwise, it's just like the article claims - highway robbery.
- rayiner 13y ago
  Any lien can be used to foreclose on property if the lien holder has no other way to force the owner to pay. Generally, the owner is entitled to whatever sales proceeds they have left after paying the lien.

djvu9 13y ago

Not sure if you guys have noticed this "In 2006, he forgot to pay a $134 tax bill, prompting the city to place a lien on the home and add $183 in interest and penalties. His son paid the $317 bill in 2009, records show, but that wasn’t enough." His son did pay the tax later. I don't know how penalties/government fees are made and justified.

westicle 13y ago
The writing is horribly obfuscated. What it means to say is that the original bill was $134. Presumably he received dozens of notices and warnings that it needed to be paid, before it was sold as a lien. The lien holder would then have sent notices and warnings that the debt needed to be paid. Eventually after no response, it filed foreclosure proceedings in the court (at some significant cost). At that point, the son decided to pay the original tax bill, however the holder of the lien presumably wanted its legal costs paid before it would surrender the lien. What happened next was very unjust. But would make more sense if the article was clear on the timeline of events.

smutticus 13y ago

It's shit like this that makes molotov cocktails seem like rational behavior.

frankydp 13y ago

This story is not about a government department doing what it is charged with doing. This story is not about privitization of collections. This story is not about the well known DC corruption issue. This story is not about tax collection automation, ie removing the knock on the door. This story is not about people that buy tax liens, which as a side note do not know the circumstances of the lien.(barring collusion) This story is about the fact that this man had no one. No one to make sure is ok. No one to ask if has been forgetting things lately. No neighbors that might have checked in on him. No family that was attentive enough to realise he may need help with the 10 giant boxes of mail by the door. No one that gave enough of a shit to just ask how he was doing. When was the last time you checked in on that elderly lady that lives next door to make sure she is doing ok? When is the last time you did a little checking up on your elderly family? When was the last time you took the time to make sure the people around you are not getting to the point where they need help? As a side note, please read the entire article.

noarchy 13y ago

Property taxes are, effectively, rent paid to the local government by people who otherwise think that they own said property. Fail to pay it, and you get evicted. It is quite a racket already, but combine this with crony deals with private companies, and corruption shows its ugly face. It is all "legal", since the ones carrying out the scheme also happen to make the rules.

rajahafify 13y ago

I really love the UI. Big ass photo with magazine like header. And followed by article. Salute.