Local Laws Do Little to Protect Homeowners

December 8, 2013
Washington Post 
debt settlement news

A Washington Post study finds that local governments placed tax liens on more than 1.6 million properties across the United States last year, even as tax collectors acknowledge that the private investors who purchased the liens can -- and often do -- take advantage of distressed homeowners. The newspaper analyzed industry data and found that tax collectors in about half of U.S. counties routinely sell instruments such as liens to investors, who then charge property owners interest and even legal fees until the debts are repaid.

Tax officials say they are trying to keep track of an evolving industry in which deep-pocketed investors buy liens in multiple cities off the Internet, often hiding behind limited-liability companies. The federal government does not track where, when, or how liens are sold; nor does it demand that local officials check the backgrounds of investors. Many local jurisdictions sell tax liens to recoup revenue from delinquent property owners, but abuses are not uncommon.

In Florida in 1998, then-Attorney General Bob Butterworth reported that large companies had rigged auctions to win liens, costing homeowners hundreds of thousands of dollars; and in 2002, the Atlanta Journal-Constitution reported that tax-lien companies were charging homeowners in Georgia tens of thousands of dollars in penalties to reclaim properties. U.S. senators are calling for a national investigation of the industry by the Justice Department and the Consumer Financial Protection Bureau, while housing advocates are calling for reform of an enterprise that affects hundreds of thousands of families.

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