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(Washington Post)   A group of eight companies seems to have all the luck when winning tax lien auctions in DC, which raises a few eyebrows since A) they are all owned by the same guy B) that guy was previously convicted of bid-rigging in neighboring MD   (washingtonpost.com) divider line 13
    More: Obvious, criminal conspiracy  
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6446 clicks; posted to Main » on 09 Sep 2013 at 7:07 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-09-09 07:30:54 PM  
5 votes:

ElLoco: It isn't that they didn't pay a bill... they didn't pay their taxes. The local government is seizing the property and putting it up for auction.


The government is allowing another party to pay the tax and then allows that party to put a lien on the property for doing so. If the owner of the property fails to repay the tax to the party that bought the tax lien then that party can seize the property -- not the state.

It's a very scummy system and only benefits those parasites buying the liens. If the government was seizing the property it would make much more sense.
2013-09-09 09:54:01 PM  
2 votes:

Flint Ironstag: The US system sounds like you could be a day late then wham! Your home is being auctioned!


No, not really.

In reality, once it becomes past due, it can go on for years and years, until eventually the local government wants to go to court to seek seizure of the house.  Then there's notice and a court hearing and such, and the debt could be paid any time before the judge actually permits the auction.

Here's a real-life example from earlier this year.

A guy I know grew up in a small town in rural Kentucky.  His father, the homeowner of his childhood home, died of cancer 4 years ago.  The entire family moved out of the house and got a new place to live, because the family was largely living on his pensions/investments and they knew the house was heavily mortgaged.  They assumed that they would be unable to pay the mortgage or property tax, and the house would be seized and auctioned, so they were just going to move out as soon as he died and call it a loss.

Well, earlier this year he visited his old hometown for the first time since the funeral.  He drove by his old childhood home, wondering who ever bought it.  The place was abandoned.  The yard was overgrown, the place looked a little dilapidated.  It was clear it hadn't been inhabited in some time.

He got out of his car and investigated.  He still had on his keyring the old key to the house. . .and it worked.  Inside the place was just as they had left it when they were moving out.  The house had sat abandoned for 4 years.

He knew not a dime had been paid on it in 4+ years, so he wondered what was up.  What happened?

Well, some calls later and he found out his father had a life insurance policy that was set up specifically to pay off the mortgage in the event of his death.  The house was paid for, free and clear.  There was 4 years of back property taxes to pay, and some minor repairs because of how long the house had set abandoned, but for only a few thousand dollars he could get his old childhood home back and get it in livable condition.  The family pooled its money together and did just that and moved back in.

Yeah, in a lot of jurisdictions the city or county government would have sought a tax sale a few months after that first property tax was late, but it's also possible for tax bills to go unpaid for years, all depending on how strict the local government is on the issue.

Once they choose to go to court though, things will likely work fairly quickly (on a scale of weeks, maybe a few months) and in the end the Sheriff will be coming by soon to serve papers and remove you from the property.
2013-09-09 07:20:42 PM  
2 votes:
FTFA: Once the liens were won, the companies charted an aggressive course through the District that would shake families for years to come, pressing to foreclose on homes in every ward - often over tax debts of $500 or less.

In any decent, sane country, people who caused that kind of misery would be flensed.  It's why I laugh when I hear, "America is a Christian nation".  No, it's a nation full of Christians.  Big difference.
2013-09-09 11:51:43 PM  
1 votes:

Flint Ironstag: What a weird system, that someone can put a debt on your home, sell it to someone else and then they demand you pay it. Unheard of in Britain, the only people who have a charge on your home are your mortgage holder and you can use your home as security for a loan, but having something like this imposed for not paying a bill? Just doesn't happen. Or if it does it's so rare and/or only in really rare cases that I've never heard of it.


Except there's the case of you off on holiday and someone breaks in and squats and it takes years to get them out -- after they sell/break all your stuff.

"...squatting in residential property became a criminal offence on September 1, 2012."

A *YEAR* AGO THIS WAS MADE ILLEGAL???
2013-09-09 08:51:46 PM  
1 votes:

Flint Ironstag: The US system sounds like you could be a day late then wham! Your home is being auctioned!


Kinda, sorta... but not at the time that you actually incur any liability. Most counties and cities will let a tax bill ride if you make some attempts at paying it here and there. The last home I bid on at the court house was 5 years in arrears and had accumulated a liability of around 6500 per year. Another that I had interest in was over 4 years in arrears and didn't actually make it to auction as the owner finally paid up when the county gave him his seizure date.

But, when you finally get that date, be it 6 months later or 5 years later, you'll be out on your ass at the curb first thing in the morning the day after.
2013-09-09 08:42:29 PM  
1 votes:

Chagrin: ElLoco: It's the same thing

Not really at all. If the state was seizing the property then the state would be the sole beneficiary, but as it is, it's the purchasers of the tax liens that are the beneficiaries of the seizures. It's allowing a third party to weasel into the system and profit from it. It doesn't need a middleman.


It is the same... with some 'ifs' and 'buts.'

In most counties, tax sales are terminal. There's no reserve. It brung what it brung, as it were. In many cases, the public sale doesn't even cover the tax liability so the local gov 'wins' by selling the liability at full face value rather than selling the property for what it might bring at auction... but that's not really any thing. You win some, you lose some. There are some basic scenarios for tax sales that prompts these lien auctions, rather than property auctions.

1. A tax lien is sold for face value. The local gov gets exactly what is owed them.
2. A tax lien is sold for a percentage near face value (which is likely what these in the article are). The gov nearly comes up flush, but doesn't have to deal with seizure, physical property, potential EPA liability, etc., etc.
3. The property is seized by the gov, auctioned, and it brings less than the liability. If this happens, the locals may even go in the hole on the deal when the costs are added.
4. The property is seized, auctioned, and brings more than the liability... but there's a property lien on it. The surplus after the liability goes the the second lienholder (local tax liens advance to 1st)
5. The property is seized, it brings a shiatload at auction, and there is no other lien holder. The local gov scores here.

There are others, of course, but those are the basics. As you can see, the local gov is rarely the sole beneficiary since the people buying the property are the ones making the big bucks off the seizure if they have a use for it or a place to go with it. They rarely even come out break-even. The government is more interested in just getting back as much as they can of what is owed them with the least cost and fewest headaches... and that's where auctioning lien paper shines.

Regarding #4 up there, when there is an additional lienholder (and this applies in Texas, among other states) like a bank mortgage, the bank will show up and run up the bids, and in many cases end up buying back the property if the owner's liability to the bank is large enough. In Texas (and I think it is all counties, but I may be wrong here,) when a property sells at the courthouse on a tax liability, all liens are cleared. So for example: A home with an estimated value of 500k goes to auction over a 25k tax liability. There is a 350k mortgage on the home from a bank. I show up and win a bid of 50k. The city/county gets their 25k in full, the bank gets 25k towards their 350k mortage which is then removed from the deed, and I get a half mil house free and clear for my 50k in cash paid to the assessor at the time of the sale. The bank takes it in the ass for 325k and can do absolutely jack about it other than go after the original borrower... who will tell them to get bent since they couldn't even cover the 25k in taxes.
2013-09-09 07:57:16 PM  
1 votes:

ElLoco: It's the same thing


Not really at all. If the state was seizing the property then the state would be the sole beneficiary, but as it is, it's the purchasers of the tax liens that are the beneficiaries of the seizures. It's allowing a third party to weasel into the system and profit from it. It doesn't need a middleman.
2013-09-09 07:39:06 PM  
1 votes:

yeegrek: FTFA: Once the liens were won, the companies charted an aggressive course through the District that would shake families for years to come, pressing to foreclose on homes in every ward - often over tax debts of $500 or less.

In any decent, sane country, people who caused that kind of misery would be flensed.  It's why I laugh when I hear, "America is a Christian nation".  No, it's a nation full of Christians.  Big difference.


It's the state that allows this to happen. The state is creating the system that allows these people to buy the tax liability, charge the property owner interest, and allow them to eventually seize the property.
2013-09-09 07:34:52 PM  
1 votes:

Chagrin: ElLoco: It isn't that they didn't pay a bill... they didn't pay their taxes. The local government is seizing the property and putting it up for auction.

The government is allowing another party to pay the tax and then allows that party to put a lien on the property for doing so. If the owner of the property fails to repay the tax to the party that bought the tax lien then that party can seize the property -- not the state.

It's a very scummy system and only benefits those parasites buying the liens. If the government was seizing the property it would make much more sense.


It benefits the government that is selling the tax liens. Blame them for the admittedly scummy system.
2013-09-09 07:19:05 PM  
1 votes:
Proof there is no property ownership in the United States: Try not paying your property taxes.
2013-09-09 07:15:40 PM  
1 votes:

HMS_Blinkin: Flint Ironstag: What a weird system, that someone can put a debt on your home, sell it to someone else and then they demand you pay it. Unheard of in Britain, the only people who have a charge on your home are your mortgage holder and you can use your home as security for a loan, but having something like this imposed for not paying a bill? Just doesn't happen. Or if it does it's so rare and/or only in really rare cases that I've never heard of it.

That's because you guys are socialists who don't understand the value of unregulated banks.  Look how well it's working out for American homeowners.


...

There aren't any banks involved. They were tax lien seizures. That was in the first two sentences of the article.
2013-09-09 07:13:20 PM  
1 votes:

Flint Ironstag: What a weird system, that someone can put a debt on your home, sell it to someone else and then they demand you pay it. Unheard of in Britain, the only people who have a charge on your home are your mortgage holder and you can use your home as security for a loan, but having something like this imposed for not paying a bill? Just doesn't happen. Or if it does it's so rare and/or only in really rare cases that I've never heard of it.


That's because you guys are socialists who don't understand the value of unregulated banks.  Look how well it's working out for American homeowners.
2013-09-09 05:53:46 PM  
1 votes:
They're not actually all owned by the same guy, subby, but that's OK. You would have had to read 6 sentences into the article to know that, and who's got time for that noise.

All the same, Steve Berman deserves a robust bamboo caning.
 
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