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"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 forec

by 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.
  - alistairSH 13y ago
    "Noting also that this played out over many years." Not so. The article states the liens can be sold after a year and foreclosure initiated after an additional 6 months. In several of the cases listed, the original home owner was in hospice care or otherwise unavailable. I don't disagree that the city needs a way to recoup unpaid taxes. But, there has to be a better way than this.
  - Malician 13y ago
    No reasonable person would intentionally give up their house, paid off, for a tax bill of $134, many years or not. The number of people this is happening to and (one third of them over a bill less than $1,000) suggest that something about the process is screwed up.
    - muzz 13y ago
      The owner had dementia, so may not have been able to make reasonable decisions.
citricsquid 13y ago
The article talks about the real problem: fundamentally you're right, these people should have paid their bills, the problem is they're not given an opportunity to properly make up for their mistakes and the "punishment" does not fit the "crime". After the bill isn't paid the lien is sold to investors who increase the owed amount by an order of magnitude (so that the person really can't pay it now) and drag them through court, to the point where they have no choice but to lose their home. The system sort of worked (as the article noted) when foreclosures were done through the tax office, however now the investors can do it (which is where the fees come from). The core idea is sort-of okay, the problem is how corrupt it has become and how much abuse there is. Vulnerable people (as the article notes) are not given a chance to fix the problem, they're buried in further debt that they have no way to escape from.
- larrys 13y ago
  "After the bill isn't paid the lien is sold to investors who increase the owed amount by an order of magnitude " What is the time period that that happens though? Isn't that an important factor in all of this? Plays out over years? How many chances (and over what time period) could the homeowner have been able to rectify for a more reasonable amount of money? Not disagreeing with your main point or that the punishment not fitting the crime (or opportunists) etc.
  - citricsquid 13y ago
    The article states that the investor can foreclose on the house 6 months after purchasing the debt. Skip to "Outsiders come to buy liens" in the article for a full summary of why it's such a problem.
    - larrys 13y ago
      Ok just read that. I guess I have a wider problem with this "problem". The fact is there aren't really people out there (other than some community activists) who have a brain and can help people like this to navigate the system without charging the rates that attorney's charge. Which seems to be the answer to anyone's problem. Get an attorney to tell you your rights and write a letter so people take you seriously. This is in a sense one of the reasons that poor and/or uneducated people get shafted so often. They have no way to communicate and people don't take their problems as seriously to boot. Of course even if you created an office of "ombudsmen to the normally shafted" that office might simply drown with those that weren't deserving and simply wanted to take advantage of any thing they could to dodge legal process.
aheilbut 13y ago
As they mention, there have been simple reforms in other jurisdictions to prevent this sort of predatory behavior (not selling liens at all, especially if the owners are seniors or disabled, and putting limits on legal fees). It sounds like it's basically an oversight, but nobody in government has bothered to fix it because the people affected are predominantly poor and black.

by larrys 13y ago

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.
- alistairSH 13y ago
  "Noting also that this played out over many years." Not so. The article states the liens can be sold after a year and foreclosure initiated after an additional 6 months. In several of the cases listed, the original home owner was in hospice care or otherwise unavailable. I don't disagree that the city needs a way to recoup unpaid taxes. But, there has to be a better way than this.
- Malician 13y ago
  No reasonable person would intentionally give up their house, paid off, for a tax bill of $134, many years or not. The number of people this is happening to and (one third of them over a bill less than $1,000) suggest that something about the process is screwed up.
  - muzz 13y ago
    The owner had dementia, so may not have been able to make reasonable decisions.

citricsquid 13y ago

The article talks about the real problem: fundamentally you're right, these people should have paid their bills, the problem is they're not given an opportunity to properly make up for their mistakes and the "punishment" does not fit the "crime". After the bill isn't paid the lien is sold to investors who increase the owed amount by an order of magnitude (so that the person really can't pay it now) and drag them through court, to the point where they have no choice but to lose their home. The system sort of worked (as the article noted) when foreclosures were done through the tax office, however now the investors can do it (which is where the fees come from). The core idea is sort-of okay, the problem is how corrupt it has become and how much abuse there is. Vulnerable people (as the article notes) are not given a chance to fix the problem, they're buried in further debt that they have no way to escape from.

larrys 13y ago
"After the bill isn't paid the lien is sold to investors who increase the owed amount by an order of magnitude " What is the time period that that happens though? Isn't that an important factor in all of this? Plays out over years? How many chances (and over what time period) could the homeowner have been able to rectify for a more reasonable amount of money? Not disagreeing with your main point or that the punishment not fitting the crime (or opportunists) etc.
- citricsquid 13y ago
  The article states that the investor can foreclose on the house 6 months after purchasing the debt. Skip to "Outsiders come to buy liens" in the article for a full summary of why it's such a problem.
  - larrys 13y ago
    Ok just read that. I guess I have a wider problem with this "problem". The fact is there aren't really people out there (other than some community activists) who have a brain and can help people like this to navigate the system without charging the rates that attorney's charge. Which seems to be the answer to anyone's problem. Get an attorney to tell you your rights and write a letter so people take you seriously. This is in a sense one of the reasons that poor and/or uneducated people get shafted so often. They have no way to communicate and people don't take their problems as seriously to boot. Of course even if you created an office of "ombudsmen to the normally shafted" that office might simply drown with those that weren't deserving and simply wanted to take advantage of any thing they could to dodge legal process.

aheilbut 13y ago

As they mention, there have been simple reforms in other jurisdictions to prevent this sort of predatory behavior (not selling liens at all, especially if the owners are seniors or disabled, and putting limits on legal fees). It sounds like it's basically an oversight, but nobody in government has bothered to fix it because the people affected are predominantly poor and black.