Although Oregon lawmakers outlawed payday lenders in 2007, a debt collection firm wants to offer a type of lending that consumer advocates say is equally egregious. Encore Capital persuaded legislators to introduce House Bill 4112, which would allow tax-lien loans. Texas and Nevada are currently the only two states where it is making such loans.
Firms led by Encore are marketing “tax-lien transfers” as relief for struggling property owners and for county governments. With these products, consumers who are delinquent on their property taxes borrow money from Encore, which claims to offer more flexible payment terms than county governments. The owner would use the loan to settle delinquent taxes, and the county would transfer the tax lien to Encore. The company gets a $400 fee for its services, then charges 16 percent interest on the loan as well as potential penalties and fees for late payments. Should the loan wind up in foreclosure, Encore would be in first position to get paid.
Angela Martin, a lobbyist for Economic Fairness Oregon, says that $400 can amount to a big percentage of the taxes owed. She also points out that the penalties and fees are only limited to “reasonable,” a term undefined in the proposed bill. She acknowledges that counties would get their money under the arrangement, but property owners who are already unable to pay their taxes would also owe money to the largest debt collection company in the United States.
Rep. Tobias Read (D-Beaverton), who introduced HB 4112, argues that it gives property owners an alternative to foreclosure. AARP Oregon, the Oregon Mortgage Bankers Association, the Oregon Law Center, and the Association of Oregon Counties have all opposed the legislation.