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Left with Nothing

washingtonpost.com

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Re: Left with Nothing

#191

Post by downandout »

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.

Re: Left with Nothing

#192

Post by muzz »

cmccabe wrote: post #177
sliverstorm wrote: post #87

Earlier quoted context omitted.

Property tax is primarily a disincentive to buy lots of land you can't do anything with and sit on it (metaphorically). That's a good thing- it means the incentives will push land into the hands of people who are actually going to do something with it (making it worth paying the property tax)

Absolutely. If we had reasonable property taxes in CA, we wouldn't have a housing shortage, and middle-class people would be able to live in SF again. But try explaining this to the average voter...

By reasonable you mean the same taxes for the same value, ie the opposite of Prop 13, right?

Re: Left with Nothing

#193

Post by pdonis »

rayiner wrote: post #158

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 fore…

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

I'm not sure I understand. Foreclosure means the lien holder takes title to the property, and the current owner, the one who owes the debt that the lien holder was unable to collect, loses title. Then the lien holder, who now has title to the property, sells it for whatever the market will bear, and pockets the sale price minus whatever costs he has to pay. That effectively means the lien holder gets whatever equity is in the property once he has foreclosed on it and sold it.

This article talks about DC tax lien sales, and doesn't mention keeping equity

Well, of course not, since it only talks about buying the tax lien and foreclosing on it; it doesn't talk about the part where once you've foreclosed, you sell the property and pocket the money.

The article does describe the foreclosure process the same way I did above:

"The District of Columbia statutes require that you file a judicial foreclosure on your lien. This means that your attorney will run title, notice all the parties on title and file a foreclosure action in the court to get a judge to issue a final judgment. Once the judge rules in your favor, you can go to the DC Office of Tax and Revenue, pay any outstanding taxes and bills that may be due, and get issued the tax deed."

So you buy the tax lien, and if the tax isn't paid, you foreclose, you pay off the outstanding taxes and bills, and you get the property. The now former property owner, whom you've just evicted, gets nothing. Then you can sell the property for whatever the market will bear. So who has the equity?

Re: Left with Nothing

#194

Post by muzz »

fnordfnordfnord wrote: post #82
aheilbut wrote: post #48

Earlier quoted context omitted.

What is also crazy about it is that the government is apparently not setting a high enough price for the liens. If they correctly priced the 'option' that the lien wouldn't be paid and the buyer could foreclose, then it wouldn't be so attractive for the predatory buyers. So the government is allowing itself to get ripped off too.

Well, in Texas the liens are sold at auction. But yeah.

The article clearly states that the liens in DC are sold at auction.

Re: Left with Nothing

#195

Post by fnordfnordfnord »

rayiner wrote: post #158

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 fore…

Tax lien certificates do work (sort of) like this in Texas. This is a real thing. Bid rigging is not uncommon, sometimes though, it just isn't necessary. In rural areas there are occasionally auctions where very few qualified buyers show up. Terms are usually cash on the barrel-head. Example terms of sale follow.

http://www.co.jefferson.tx.us/taxoffice/del_tax_Sale/sale_in...

Re: Left with Nothing

#196

Post by wisty »

dnautics wrote: post #159
rwmj wrote: post #149

Earlier quoted context omitted.

Property is harder to hide than other forms of wealth. You can hide your money in an offshore bank account. It's pretty hard to hide land. If there's a piece of land, someone should be paying the land tax on it (if whoever owns it is hiding, the people can grab it back). So land tax is fair and progressive (the more land you own, the more tax you pay).

Gaming the property tax system is not a binary proposition. How do you assess its value? How does the state choose whom to go after? Did you even read the WaPo article? Do you not see how the existence of a property tax has come around to hurt exactly the most vulnerable population (and in this case, through no directed malice) I promise you, people living in Palisades (the richest part of DC) are not worried about p…

It's not the tax that's the problem. It's a law which lets them seize the land for a few dollars in unpaid tax. That's just a heinous law. What's the next step? Repossessing kidneys for small unpaid medical bills?

Many countries have land taxes which work reasonably well. There can be some proscribed formula (based on a regression on nearby property). Or they can do valuations. There'll always be problems, but it's not more evil than many other taxes (unless they enforce it by stealing property).

Maybe the government will send in SWAT teams to collect unpaid land tax bills from poor people, and a friendly note to rich people; but that's not because it's a land tax. How do you think they treat unpaid parking tickets?

The advantage of taxing the use or consumption of a scare resource (land) instead of income should be obvious. If Bill Gates wants a mansion, he's making it harder for normal people to buy a home. If Bill Gates makes a billion dollars selling some operation system, he's presumably creating jobs, and making a lot of people happy (since they can get on the internet without buying an expensive Mac, or having to figure out how to configure their modem using Linux). (Note - some rich people make their money by being parasites, but capitalism works because this usually isn't the case).

Finally, there's the stabilising effect that a land tax has. Property is a huge investment, driven by unsophisticated retail investors (who may be putting most of their life's savings into a single home), prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny. Taxing it helps keep it a little rational (as the taxes will encourage people to avoid it when it starts heating up).

Re: Left with Nothing

#197

Post by kevingadd »

unono wrote: post #131

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.

Joke's on you: Silicon Valley localities like Palo Alto are passing laws that make it illegal to live in your car.

Re: Left with Nothing

#198

Post by tpainton »

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.

Re: Left with Nothing

#199

Post by muzz »

bigfoot13442 wrote: post #100
nateabele wrote: post #24

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

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.

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.

Re: Left with Nothing

#200

Post by a8da6b0c91d »

downandout wrote: post #191

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'…

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?

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