August 18, 2009
Tax liens go private, but at a cost
Thousands of struggling homeowners' property tax debts have been sold to private collection companies that charge high interest and fees, records show.
Governments rid themselves of a collection hassle and put quick cash into their reserves by selling the liens, The New York Times reported Tuesday. Lucas County, Ohio, for example, sold 3,000 tax liens to a private firm for $14.7 million.
Homeowners, however, often must pay punitive fees and double-digit interest rates as a consequence of the transactions, the Times reported.
Private companies also buy the rights to foreclose on the property, turning a
windfall of cash into an open door for urban blight, said Anita Lopez, the Lucas County auditor.
When you think about abandoned properties "¦ the cost to the community is far more expensive than the short-term benefits, she said.
John Garzone, president of Plymouth Park, which has bought $2 billion in tax liens, said less than 1 percent of the firm's business results in a foreclosure.
Our main interest is to try and get the properties back onto the tax rolls, he said.
For some, that's not easy. Plymouth Park added $1,853 to Toledo resident Christopher Clark's $6,450 tax bill and Clark filed for foreclosure, the Times said.