Vulture Capitalism --- GOOD NEWS
Good news will be when the Supreme Court sides with Ms Tyler. Agree this is a step in the right direction.
Yes, it's great news, but too late for this new victim, an 81-year-old kicked out of her condo with three days notice:
https://www.sfchronicle.com/sf/article/new-s-f-condo-owner-tells-81-year-old-longtime-17911833.php
Also, given the present conservative SCOTUS majority, I'm not optimistic that they will rule in favor of the plaintiff. Fingers crossed.
Hmmm. I didn't have a problem reading it, and I'm not a subscriber. Here's the text:
UPDATE: 81-year-old S.F. resident sues in fight to stay in longtime Upper Haight home
An 81-year-old woman whose $1.4 million condominium in the Upper Haight was auctioned for half its value now has three days to leave.
“Notice is hereby given that Eugene Gardner has purchased the property at a trustee’s sale and title to the property has been duly perfected,” read a notice posted on the door of Rosemarie Benter’s home, an upstairs unit in a cream-colored Victorian on Page Street.
“Within three days after service of this notice on you, you must vacate the premises and deliver possession of them to the owner or to the undersigned who is authorized to receive the same,” continued the note, which was signed by Gardner’s attorney, Joanna Kozubal.
Benter had unwittingly used the home to secure a $9,519 loan in 2021 to help pay her property tax bill, not realizing that she was at risk of losing it if she defaulted. By last October, the loan, bloated by fees and an 8% interest rate, ballooned to more than $11,000.
When Benter failed to pay it back, the lender foreclosed on her property and Gardner bought it at a trustee’s sale in March. Two nonprofit organizations, the San Francisco Community Land Trust and Legal Assistance to the Elderly, had tried intervening to keep Benter in her home, and district Supervisor Dean Preston said he might seek city funding to help.
The 81-year-old longtime San Francisco resident has survived a stroke and suffers from severe arthritis, and faces an uncertain future if she gets displaced. She has a daughter in Seattle, though her two sons died of AIDS.
“I don’t know what to do,” said Benter, who went to the door Friday afternoon to take down the notice after a reporter informed her about it. “I don’t know what’s going to happen. Are they going to show up on Monday morning with a truck to take me out?”
Kozubal did not return multiple phone calls or an email Friday, and an attempt to reach Gardner by phone was unsuccessful.
Reach Rachel Swan: rswan@sfchronicle.com
Thank you. This is a different situation from the tax lien sale issue which is now before the Supreme Court. In this case, the person used their home as collateral on a loan they were unable to repay. The loan could have been for any purpose. Ironically, it was used to pay real property taxes, thus avoiding a tax lien sale. It is another example of Vulture Capitalism since the bank should have been able to recoup only the amount owed including interest and not the entire value for which the property sold at auction. There are multiple laws which need to be changed in multiple States. Hopefully, the NJ State Legislature will see how disastrous the impact of the present law is and rescind it.
You're right to point out that the woman in SF was not the victim of a tax lien sale, but in both the SF and Maplewood instances, foreclosure was involved, and the SF situation is another example of vulture capitalism. If Scotus rules in favor of the tax lien plaintiff, that may send a signal that they would also entertain a case on the question of whether banks should be allowed to abscond with all the equity in a home in the case of foreclosure.
I wonder why this issue is only coming to light recently. I wonder when the laws that permit leaving all the extra equity in the hands of the receiver were enacted and who voted for them? I have no faith the the the current Supreme Court getting this right.
dave said:
I wonder why this issue is only coming to light recently. I wonder when the laws that permit leaving all the extra equity in the hands of the receiver were enacted and who voted for them? I have no faith the the the current Supreme Court getting this right.
It's a typical situation where the individual's rights don't matter to the lawmakers. Corporate interests, banking interests, and upper class interests all matter more to lawmakers who accept $$$ for election and re-election.
There is a reasonable chance of the S.C. doing the right thing, here. The "winners" in these cases are not large corporations like Goldman Sachs or Bank of America.
It's smaller "investors" who gamble that the homeowner is not gonna make up the balance. Furthermore, either way, the towns don't lose, no matter how the court rules.
dave said:
I wonder why this issue is only coming to light recently. I wonder when the laws that permit leaving all the extra equity in the hands of the receiver were enacted and who voted for them? I have no faith the the the current Supreme Court getting this right.
It's nothing new. It's been a big deal in DC for many years. Here's a sad WaPo article from 2013.
https://www.washingtonpost.com/sf/investigative/2013/09/08/left-with-nothing/?tid=a_inl_manual
The opening paragraphs for those who hit the firewall:
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.
The retired Marine sergeant lost his house on that summer day two years ago through a tax lien sale — an obscure program run by D.C. government that enlists private investors to help the city recover unpaid taxes.
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.
As the housing market soared, the investors scooped up liens in every corner of the city, then started charging homeowners thousands in legal fees and other costs that far exceeded their original tax bills, with rates for attorneys reaching $450 an hour.
Families have been forced to borrow or strike payment plans to save their homes.
Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations.
Investors also took storefronts, parking lots and vacant land — about 500 properties in all, or an average of one a week. In dozens of cases, the liens were less than $500.
Coleman, struggling with dementia, was among those who lost a home. His debt had snowballed to $4,999 — 37 times the original tax bill. Not only did he lose his $197,000 house, but he also was stripped of the equity because tax lien purchasers are entitled to everything, trumping even mortgage companies.
But the District, a hotbed for the tax lien industry, has done little to shield its most vulnerable homeowners from unscrupulous operators.
Foreclosures have upended families in some of the city’s most distressed neighborhoods. Houses were taken from a housekeeper, a department store clerk, a seamstress and even the estates of dead people. The hardest hit: elderly homeowners, who were often sick or dying when tax lien purchasers seized their houses.
One 65-year-old flower shop owner lost his Northwest Washington home of 40 years after a company from Florida paid his back taxes — $1,025 — and then took the house through foreclosure while he was in hospice, dying of cancer. A 95-year-old church choir leader lost her family home to a Maryland investor over a tax debt of $44.79 while she was struggling with Alzheimer’s in a nursing home.
Other cities and states took steps to curb abuses, such as capping the fees, safeguarding houses owned by the elderly or scrapping tax sales altogether and instead collecting the money themselves.
“Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”
dave said:
I wonder why this issue is only coming to light recently. I wonder when the laws that permit leaving all the extra equity in the hands of the receiver were enacted and who voted for them? I have no faith the the the current Supreme Court getting this right.
This is far from being a new issue. Another example is foreclosure resulting from reverse mortgages. The incident on Maplewood Avenue that started this discussion may have brought this topic to MOL for the first time but it is far from being a new problem.
Formerlyjerseyjack said:
There is a reasonable chance of the S.C. doing the right thing, here. The "winners" in these cases are not large corporations like Goldman Sachs or Bank of America.
It's smaller "investors" who gamble that the homeowner is not gonna make up the balance. Furthermore, either way, the towns don't lose, no matter how the court rules.
The towns could lose financially because in places like Maplewood these liens sell at auction for far above the face value of the lien. Investors here are bidding on the house rather than the interest they can earn on the lien.
joan_crystal said:
The towns could lose financially because in places like Maplewood these liens sell at auction for far above the face value of the lien. Investors here are bidding on the house rather than the interest they can earn on the lien.
True dat. But "investors" will still buy the liens. The interest amount, upon which they bid, is guaranteed. Bidding will stop when the bid goes below, say 3%. And the money the town earns will not be off the back of some poor, unfortunate.
The tax windfall that Maplewood is currently enjoying from the proliferation of marijuana and CBD dispensaries should offset the loss of the predatory tax lien auctions.
If there was ever a cause that people working on DEI issues should take on, it is the elimination of tax lien auctions. The loss of homes disproportionately affects people of color, as in D.C. and Baltimore. Here's an article about the terrible impact this tax strategy has had in Baltimore:
It's a long one, so I'm not going to post it, but I didn't encounter paywall.
A crucial paragraph:
The Banner’s analysis found that the costs of this system are not borne equally: In the city’s majority-Black census tracts, such as the East Baltimore community that includes Owens-Phillips’ house, homes have liens placed on them and are sold at much higher rates than in minority-Black census tracts.
kthnry said:
It's nothing new. It's been a big deal in DC for many years. Here's a sad WaPo article from 2013.
https://www.washingtonpost.com/sf/investigative/2013/09/08/left-with-nothing/?tid=a_inl_manual
The opening paragraphs for those who hit the firewall:
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.
The retired Marine sergeant lost his house on that summer day two years ago through a tax lien sale — an obscure program run by D.C. government that enlists private investors to help the city recover unpaid taxes.
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.
As the housing market soared, the investors scooped up liens in every corner of the city, then started charging homeowners thousands in legal fees and other costs that far exceeded their original tax bills, with rates for attorneys reaching $450 an hour.
Families have been forced to borrow or strike payment plans to save their homes.
Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations.
Investors also took storefronts, parking lots and vacant land — about 500 properties in all, or an average of one a week. In dozens of cases, the liens were less than $500.
Coleman, struggling with dementia, was among those who lost a home. His debt had snowballed to $4,999 — 37 times the original tax bill. Not only did he lose his $197,000 house, but he also was stripped of the equity because tax lien purchasers are entitled to everything, trumping even mortgage companies.
But the District, a hotbed for the tax lien industry, has done little to shield its most vulnerable homeowners from unscrupulous operators.
Foreclosures have upended families in some of the city’s most distressed neighborhoods. Houses were taken from a housekeeper, a department store clerk, a seamstress and even the estates of dead people. The hardest hit: elderly homeowners, who were often sick or dying when tax lien purchasers seized their houses.
One 65-year-old flower shop owner lost his Northwest Washington home of 40 years after a company from Florida paid his back taxes — $1,025 — and then took the house through foreclosure while he was in hospice, dying of cancer. A 95-year-old church choir leader lost her family home to a Maryland investor over a tax debt of $44.79 while she was struggling with Alzheimer’s in a nursing home.
Other cities and states took steps to curb abuses, such as capping the fees, safeguarding houses owned by the elderly or scrapping tax sales altogether and instead collecting the money themselves.
“Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”
Basically this predatory practice was only affecting the poor in gentrifying areas, (DC is the example in the above article) Now that the demographics are changing its getting the attention it deserves.
joan_crystal said:
dave said:
I wonder why this issue is only coming to light recently. I wonder when the laws that permit leaving all the extra equity in the hands of the receiver were enacted and who voted for them? I have no faith the the the current Supreme Court getting this right.
This is far from being a new issue. Another example is foreclosure resulting from reverse mortgages. The incident on Maplewood Avenue that started this discussion may have brought this topic to MOL for the first time but it is far from being a new problem.
Yes, I can see that now that you mention it, but at least with a reverse mortgage (provided the owner is fully informed of how it works) the owner will receive a negotiated price with payments made over a number or years rather than lose their total equity for want of a smaller amount to pay utility bills or taxes. Unless I am not getting that right, which is entirely possible. Perhaps unscrupulous reverse mortgage companies intentionally don't pay the taxes, leading to the same situation?
My understanding of reverse mortgages... Payments are made to the homeowner, until the equity is drained. Then they foreclose and the poor schlub is out on the street.
To me, the only circumstances this would be a worthwhile decision, would be to pay for medical care in response to a severe illness. Another choice would be viatical settlement of insurance.
What about bail money? Alimony where one parent wants to keep the kids in the same district / neighborhood / house? Reverse mortgage might be worth it. In most cases, though, rev mortgages are likely leading to bad outcomes. After all, half of the population has below average mathematical intelligence ....
dave said:
Yes, I can see that now that you mention it, but at least with a reverse mortgage (provided the owner is fully informed of how it works) the owner will receive a negotiated price with payments made over a number or years rather than lose their total equity for want of a smaller amount to pay utility bills or taxes. Unless I am not getting that right, which is entirely possible. Perhaps unscrupulous reverse mortgage companies intentionally don't pay the taxes, leading to the same situation?
There is a long history of unscrupulous lenders. There are all sorts of small print conditions that can trip up the borrower too such as a lengthy hospitalization or stay in a nursing facility which can violate the clause that the borrower has to remain in the house. Reverse mortgages are often marketed to those who have the least ability to get enough from the mortgage to pay real property taxes. Failure of the borrower to be able to continue to pay real property taxes is another frequent cause for foreclosure.
Bank foreclosures on property used as collateral for loans have also been around for a very long time. Neither of these will change if the tax lien law in NJ or through the Supreme Court is modified to remove the full loss of equity provision.
joan_crystal said:
The towns could lose financially because in places like Maplewood these liens sell at auction for far above the face value of the lien. Investors here are bidding on the house rather than the interest they can earn on the lien.
A win for the plaintiff could have a beneficial effect for towns. These liens are bid out. Bidders who hopes to win the property, will bid lower and lower for the gamble to win the property in case of default. So the municipality gets 1 or 2% from the bid.
In non confiscatory states, towns get 3 or 4 % when there is no chance to own the property in case of default. There is less incentive to want to hold the lien. In the 90's, there were cases in Michigan where liens on distressed property, were sold for 18%. I don't know if that still happens.
The case was heard on Wednesday. Questioning of the lawyers seemed to favor the plaintiff's position. Gorsuch, in particular, seemed to be against the county's position.
The S.C. ruled that the practice of confiscating all income from the sale of property, due to tax default, is illegal.
One of her neighbors stood in front of Eve's former house during the Memorial Day parade with this sign. A few Maplewood officials acknowledged her.
It was painful to see the parade go by and not have Eve there.
I noticed her as I walked by. While I agree that something needs to be done to end the practice of enabling purchasers of tax liens to collect full equity on foreclosure, I question whether a parade in memory of members of the US military who died as a direct result of their participation in war is really the most appropriate setting for this. A more appropriate action would be to join with those of us who are fighting to get the law changed and to put procedures in place which would reduce the number of properties that appear on the tax lien listing in the first place.
Fantastic news, Jersey Jack. Thank you for the alert! I hope this SC decision will usher in positive change for homeowners.
joan_crystal said:
I noticed her as I walked by. While I agree that something needs to be done to end the practice of enabling purchasers of tax liens to collect full equity on foreclosure, I question whether a parade in memory of members of the US military who died as a direct result of their participation in war is really the most appropriate setting for this. A more appropriate action would be to join with those of us who are fighting to get the law changed and to put procedures in place which would reduce the number of properties that appear on the tax lien listing in the first place.
It was a parade, not a service. I understand how you feel about the day, Joan, but I also have some idea about how that bystander — a friend of mine — feels, and how much she already put into her neighbor’s fight. As I see it, her small, sideline gesture has meaning because of the gravity of the community event, not in spite of it.
DaveSchmidt said:
It was a parade, not a service. I understand how you feel about the day, Joan, but I also have some idea about how that bystander — a friend of mine — feels, and how much she already put into her neighbor’s fight. As I see it, her small, sideline gesture has meaning because of the gravity of the community event, not in spite of it.
Please don't get me wrong. I feel very strongly about what happened to the woman on Maplewood Avenue who lost her home to a tax lien sale that took all her equity. I have lobbied members of the township committee and gotten their support for getting the law changed in NJ so hopefully this will not happen again. Working through the Seniors Advisory Committee, I have pressed the administration to send out notices in advance of each quarterly payment due so residents who pay their real property taxes directly will receive a timely reminder when each quarterly tax payment is due. I have been assured that the town will notify each property owner that their property is on the tax lien sales list in sufficient lead time for them to settle with the town and avoid the tax lien sale. There needs to be financial counseling and other services in place to help residents make their real property tax payments on time or, if this is not possible, understand that they need to sell their property before losing all equity in a tax lien sale. Anyone who can recommend such services, especially by a not for profit organization, should advise the town so this information can be made available to those who could benefit from it. That is a much more effective way of getting the message across.
joan_crystal said:
That is a much more effective way of getting the message across.
The neighbor had her own, personal message she wanted to get across on that particular day in those particular circumstances. It appears that she did.
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The U.S. Supreme Court has agreed to hear a case, Tyler V. Hennepin County (Minn.) that resulted when Ms. Tyler lost the equity from her house to Hennepin County. It was a tax sale, like the one in Maplewood.
Twelve states, including N.J., allow "vulture capitalism."