Did you know that the big banks have a way to legally steal your house from you even if you don’t owe a single penny on your mortgage? Big banks and hedge funds are buying billions of dollars worth of tax liens from local governments all over the nation, and they are ruthlessly foreclosing on homeowners when they can’t pay the absolutely ridiculous penalties and legal fees that are tacked on to the original tax bill. As you will see below, one 76-year-old man lost his $197,000 home that he fully owned over a $134 tax bill. A 95-year-old woman lost her $300,000 home over a $44.79 tax bill. This is a very, very dirty way to make money, and the predatory financial institutions that are involved in this business definitely do not want to talk about it.
Of course much of the blame should also be shouldered by the local governments that are coldly selling these tax liens to these ruthless predators. If local governments want to collect their tax bills, they should do it themselves. They should not be auctioning off their tax liens to cold-hearted financial institutions that are very eager to commit a legal version of highway robbery.
A few days ago, the Washington Post reported on the tragic story of a 76-year-old former Marine named Bennie Coleman. Coleman had originally purchased his home with cash, but that didn’t stop tax lien predators from stealing his home over an unpaid $134 property tax bill…
On the day Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.
Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.
All because he didn’t pay a $134 property tax bill.
So why couldn’t he pay such a small bill?
Well, as the Post explained, these big banks and hedge funds keep tacking on interest, penalties and legal fees until the tax bills are many times the size that they originally were. When the distressed homeowners can’t come up with thousands of dollars to pay off the debts, the big banks and the hedge funds move in for the kill…
For decades, the District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.
But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.
In particular, hedge funds have discovered that this is a great way to make huge piles of money. The following is a short excerpt from a CNN article that was published back in May…