People losing homes over $400 in taxes.

[aceplace57]

It's no surprise that taxes have to be paid. I've seen auctions of delinquent property.

What did surprise me is the blood sucking investors getting rich off this. Targeting the elderly who can easily be confused by the paperwork they send. Those double digit interest charges can quickly turn a small tax bill into something a person on a fixed income can never pay.

This article from CNN Money was a real eye opener for me. Never, ever let a tax bill go unpaid or even your city water bill. Here in the south these kinds of vultures were called carpet baggers. People who profit at others misery.

http://money.cnn.com/2012/07/10/real...iens/index.htm

Outdated state laws that allow local governments to sell tax liens on delinquent properties to investors in order to more quickly collect on overdue property taxes is sparking a second "foreclosure crisis," a report from the National Consumer Law Center said Tuesday.

Investors, in return, effectively own a claim against the property until the homeowner pays the county or municipality back or until they default on the debt entirely. The investor can either collect interest on the taxes owed from the homeowner. Or, if the homeowner fails to pay up, the investor can take possession, or foreclose, on the home.

"It's a win-win for investors," said John Rao, a consumer credit and bankruptcy attorney and the author of the report. Either the investor gets their investment back with interest or they get the home -- typically, for a pretty sizable discount to what the home is worth.

[Tom Tildrum]

That article left me scratching my head a bit. I understand the notion of foreclosing over a tax lien, but presumably the overage at foreclosure goes to the homeowner, doesn't it? In other words, the investor gets paid the $400 out of the foreclosure proceeds, and the rest goes to the evicted homeowner. How did that one old woman lose $150K in equity?

[Moonlitherial]

Originally Posted by Tom Tildrum

That article left me scratching my head a bit. I understand the notion of foreclosing over a tax lien, but presumably the overage at foreclosure goes to the homeowner, doesn't it? In other words, the investor gets paid the $400 out of the foreclosure proceeds, and the rest goes to the evicted homeowner. How did that one old woman lose $150K in equity?

If the investor is in charge of the sale and is willing to sell it to themselves for the value of their debt the homeowner is screwed.

[Tom Tildrum]

Originally Posted by Moonlitherial

If the investor is in charge of the sale and is willing to sell it to themselves for the value of their debt the homeowner is screwed.

Foreclosures are not closed proceedings, though, are they? I thought the house had to be auctioned off.

[msmith537]

Originally Posted by Tom Tildrum

That article left me scratching my head a bit. I understand the notion of foreclosing over a tax lien, but presumably the overage at foreclosure goes to the homeowner, doesn't it? In other words, the investor gets paid the $400 out of the foreclosure proceeds, and the rest goes to the evicted homeowner. How did that one old woman lose $150K in equity?

In this case, the investor apparently becomes the homeowner.

The article sounds a little thin to me.

[LurkerInNJ]

My boyfriend has bought tax certs before. Where he bought them, the homeowners had three years to redeem them before he could start foreclosure proceedings. All the homeowners paid them off.

If you can't pay your water bill or taxes or any other item that will create a lien against your home, then you have to find a way to get that money or sell your property, pay off the liens and find a cheaper place to live with the money you have left. It's not bloodsucking to expect people to cover the costs of keeping their own damn investment, because that is exactly what their home is.

[aceplace57]

My concern was mostly about the elderly. Early dementia sometimes results in bills not getting paid. Letters sent to them aren't read or understood. They may have the money and just never write the check. As our relatives age its important that trusted members of the family make sure routine finances are in order.

At least with utilities, somebody will notice when the power or gas gets shut off. I'm guessing that unpaid taxes simply creates a stream of letters. If they aren't read or understood then I can easily see it snowballing out of control. Double digit interest charges seem a bit greedy imho.

I agree that younger people have no excuses. If you buy a home then expect additional costs. Utilities will be more, taxes and insurance, it adds up quick.

I paid off my mortgage in 2007. The annual tax and insurance bill was a bit of a shock. Those costs had been buried in my mortgage payment before. I set aside money every month for taxes & insurance. Then use it to pay the annual bill when it comes due. For me, taxes and insurance are nearly 4k a year.

[Kimballkid]

Originally Posted by aceplace57

I paid off my mortgage in 2007. The annual tax and insurance bill was a bit of a shock. Those costs had been buried in my mortgage payment before.

Didn't you ever get a quarterly statement from your mortgage lender/holder? Didn't you ever read it? Mine clearly spells out how much is paid from escrow and to whom.

[aceplace57]

My mortgage ticket book had the taxes and insurance costs on a escrow page. iirc the monthly ticket I mailed in also had the costs broken down.

I know in my case, writing that monthly mortgage check became a 20 year habit. I never thought that much about how much was going to taxes & insurance.

After paying off my mortgage, I had that brief euphoric moment. I'm free, I'm free. Then a few months later the annual tax & insurance bill comes. Nope, we're not free. Still shackled to those bills as always.

Not complaining. It's the reality of owning a home. I save a little every month for that annual bill. I do love the luxury of not writing that mortgage payment anymore. I paid a little extra every month for over a decade to pay it off early.

I just hope when I'm 82 (way off in the future) that I'm still mentally sharp enough to stay on top of my finances.

[Omar Little]

Why are the investors the bloodsuckers and not the local governments that sold them the liens?

[aceplace57]

I was responding to the CNN Money article. Double Digit interest, seizing homes from the elderly etc. I find personally reprehensible. It's not how I choose to earn a living. YMMV

I hope the National Consumer Law Center recommendations are implemented. Especially court supervision of the property seizures.

To prevent outstanding debts from becoming insurmountable for homeowners to pay off, the National Consumer Law Center recommends that states lower the maximum interest rates allowed and limit other costs and fees. Rao also believes tax lien sales should be conducted in a two-step process with a court supervising the final property seizures.