DC RESIDENTS LOSING PROPERTY TO ‘PREDATORY’ DEBT-COLLECTION PROGRAM-REPORT

Out-of-state investors have been allowed to initiate foreclosures against homeowners defaulting on taxes in Washington DC. DC has for years placed liens (debt security) on properties of tax defaulters, the liens are thereafter auctioned to investors who charge interest on the taxes until they’re paid. However, an investigation reveals this program has been turned into a ‘predatory’ system of debt collection where companies turn $500 delinquencies into $5000 debts rendering many homeowners homeless after foreclosures on their residences.

The case of Bennie Coleman, 76, a veteran of the Marine Corps, best illustrates this. He was forced out of his $197,000 house for being unable to pay $134 in property tax. The investors take up liens against homeowners then start charging exorbitant fees that exceed the original tax bill. Only a fortunate few have been able to save their homes, with the investors demanding foreclosures on nearly 200 houses worth $39 million since 2005 and want to take 1200 more. Many of the houses being fore-closured have been in families for generations.

In just a week, the tax lien investors took control of businesses, parking lots and vacant land summing up to 500 properties according to a Washington Post report. It’s reported in dozens of these cases, the tax liens amounted to less than $500. According to Christopher Leinberger; a distinguished scholar and research professor of urban real estate at George Washington University, this is destroying lives.

DC tax and revenue officials have however defended this controversial program, arguing that without tax sales the property owners wouldn’t feel compelled to pay their bills.

It’s reported that of the 200 or so homeowners who’ve lost their properties in the recent past, one in three of the liens is less than $1000. This is compounded by the fact that more than half of the foreclosures were in two of the District’s most impoverished neighborhoods, where dozens of homeowners were evicted just months before their houses were sold. There was an incident where a brick house with a $287 lien was sold for $129,000 less than eight weeks later. Dozens more homes were taken by companies whose executives were found to have broken laws in other states to win liens.

DC’s tax office has sold nearly 1900 liens in the past six years forcing unwitting families into drawn-out legal battles, and has not taken any steps to solve this problem that causes nightmares to many families. The report highlighted the case of a 64-year-old woman who spent two years fighting to save her home after the tax office charged her $8.61 interest in error. The report spotlights the problem at a time when thousands of individuals and families stand to lose their homes to foreclosure.

The DC superior Court turns chaotic on Wednesdays, when homeowners have to defend themselves. According to the Post, 72% of pending foreclosures are in neighborhoods where less than 20% of their populations are white. It’s highway robbery according to Brenda Adjetey whose $1,100 tax bill nearly quadrupled due to hefty legal fees.