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.
Left with Nothing
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#32Can 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.
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Re: Left with Nothing
#33Queue 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…
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Re: Left with Nothing
#34Islam 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... (Read the next 10 or so verses) and Chapter 3 - Verse 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…
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.
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
Re: Left with Nothing
#35Well 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?
Re: Left with Nothing
#36the 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 mentio…
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.
Re: Left with Nothing
#37"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" ad…
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…
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.
Re: Left with Nothing
#38Earlier quoted context omitted.
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.
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?
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_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:
Re: Left with Nothing
#39Earlier quoted context omitted.
Why would an Ayn Rand acolyte support the state taking the property of private individuals?
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.
> 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.)
Re: Left with Nothing
#40"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" ad…
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 thro…
"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.