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Property Tax Lien Foreclosures : Homeowners lose and local governments win

Property Tax Lien Foreclosures : Homeowners lose and local governments win

Thursday, July 12, 2012
(book by Larry B. Loftis)

An often overlooked, but nonetheless important aspect of the foreclosure crisis has involved property tax lien foreclosures.

When a property owner falls behind on mortgage payments, local governments can impose a tax lien that, if not paid off, can result in foreclosure proceedings. In order to secure revenue, the governments sometimes sell the liens to private investors, who, in some instances are able to recover interest at rates of 18% to 50%.

Complicating the problem are tax sale procedures that are understood by only investors and purchasers. As the National Consumer Law Center put it in its report:

“Inadequate notice and a lack of judicial oversight over the process leave many homeowners in the dark about steps they can take to avoid a home loss. Homeowners most at risk are those who have fallen into default because they are incapable of handling their financial affairs, such as individuals suffering from Alzheimers, dementia, or other cognitive disorders.”

More: http://www.allgov.com/Top_Stories/ViewNews/Property_Tax_Lien...

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I don't think this is a fully accurate story.

I am involved in this industry.

Most states require the purchaser of the tax lien to accept the homeowner's payment and thereby extinguishing the debt and removing the lien anytime before an order of sale in the process of a foreclosure.

Additionally, there usually is some very strict service of notice requirements to make sure the homeowner is fully aware of the situation.

I am personally opposed to property taxes, but this angle is a little suspect. I find that capitalism thrives in this area and usually the homeowner is given cash for keys in the process.

Additionally, the bank will extinguish any tax liability if the think there is equity in the property with or without the homeowner's approval.