Stories about people losing their homes because lenders jack up monthly mortgage payments are all too common, but there are also people in Washington D.C. who are losing their homes because they fail to pay a small property tax.
According to The Washington Post, 76-year-old Bennie Coleman lost his Washington D.C. home because he didn’t pay a $134 property tax bill.
His tax bill suddenly ballooned up to $4,999. He lost his $197,000 house and all of the equity.
The Washington D.C. city government has an obscure tax lien sale program that is devastating for homeowners, but pays off for corporations.
If someone doesn't pay their property tax, even as low $33, the city of Washington D.C. places a lien on the property. Then the city government sells a lien for the tax debt to a private company.
After that, the company adds thousands in legal fees onto the lien that far exceed the original tax bill. So what starts out as a small unpaid property tax turns into an enormous bill that many property owners can't pay, and thus they subsequently lose their homes.
Companies that bought tax liens in D.C. have foreclosed on nearly 200 homes since 2005 and have 1200 more in their sights. In dozens of cases, the original liens were less than $500.
One in three homeowners had liens that were less than $1,000.
The people hardest hit by this scheme are elderly homeowners, who are often sick or dying when tax lien purchasers foreclose on their houses.
“This is destroying lives,” said Christopher Leinberger, a research professor at George Washington University.
“The tax sale is the last resort. It’s also the first resort, it’s the only way in the statute to collect debt,” claims Stephen Cordi of the D.C. Office of Tax and Revenue.
Even people who do pay their property taxes are in peril. The D.C. Office of Tax and Revenue sold 1,900 liens by mistake in the past six years. Those same homeowners have to hire lawyers to fight the foreclosure in court.
Source: The Washington Post