Left With Nothing: Washington Post Series on Tax Lien Sales

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There's a thread, started by Catherina, elsewhere at DU about this. I wanted to put a link to it and the original series in the Washington Post at the District of Columbia group. The series had three main parts, and there were sidebars and lots of comments.

Man owed $134 in property taxes. The District sold the lien to an investor who foreclosed
http://www.democraticunderground.com/10023621658

Left with nothing
http://www.washingtonpost.com/sf/investigative/2013/09/08/left-with-nothing/

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1. "The scams were exposed by two Baltimore Sun reporters,..."

Hat tip, DCrtv.com

Did WaPo Slight Sun In Foreclosure Series? - 11/25 - From medillwatchdog.org: "Washington Post reporters did a great job recently exposing how District Of Columbia workers failed to protect impoverished homeowners from foreclosure schemes that cost them their homes. The question that remains: Just how much credit should have been afforded to reporters who previously covered the same culprits doing the same scheme 40 miles up the road?".....

How much credit is enough credit?
http://medillwatchdog.org/blog/2013/11/25/how-much-credit-is-enough-credit/

Washington Post reporters did a great job recently exposing how District of Columbia workers failed to protect impoverished homeowners from foreclosure schemes that cost them their homes. The question that remains: Just how much credit should have been afforded to reporters who previously covered the same culprits doing the same scheme 40 miles up the road?

Back around 2007, a small group of speculators won title to many Baltimore houses by buying up small debts the homeowners had run up, and then winning title to the properties through lien auctions that turned out to be rigged.

The scams were exposed by two Baltimore Sun reporters, Fred Schulte and June Arney, who examined people losing their houses over small debts incurred by an archaic local system of “ground rents,” and then on debts for water bills and unpaid property taxes that the city sold off. Investors often tacked on exorbitant fees that left the homeowners in distress.

The stories were novel and the result of plenty of old-fashioned hard work by the reporters, who obtained computerized records of nearly 90,000 liens offered for sale by the city of Baltimore over a period of years. The data showed which property owners were cited for unpaid property taxes, water bills or other municipal fees. With property addresses as a common link, The Sun then connected those records with more than 10,000 local lawsuits filed by lien buyers against homeowners. Schulte and Arney found a small group of investors buying the liens, then tacking on fees and other costs. They tracked down the homeowners whose houses ended up, in the worst cases, taken away. The names of some investors – Steve Berman, Jack Stollof, and Harvey Nusbaum among them – kept recurring.

Let's go to the story in the first link to the Sun. The level of abuse is eye-opening.

On shaky ground
http://www.baltimoresun.com/business/real-estate/bal-groundrent1-12102006,0,2042038.story

By Fred Schulte and June Arney Baltimore Sun reporters
December 10, 2006

Baltimore's arcane system of ground rents, widely viewed as a harmless vestige of colonial law, is increasingly being used by some investors to seize homes or extract large fees from people who often are ignorant of the loosely regulated process, an investigation by The Sun has found.

Tens of thousands of Baltimore homeowners must pay rent twice a year on the land under their houses. If they fall behind on the payments, the ground rent holders can sue to seize the houses-- and have done so nearly 4,000 times in the past six years, sometimes over back rent as little as $24, The Sun found.

More than half of the ground rent suits filed in the past six years were brought by entities associated with four groups of individuals and families, court records show.

[mahatmakanejeeves]

2. Mystery company buys tax liens ‘like a machine’

HOMES FOR THE TAKING: LIENS, LOSS AND PROFITEERS — Part 4

Mystery company buys tax liens ‘like a machine’
http://www.washingtonpost.com/sf/investigative/2013/12/08/debt-collecting-machine/

Homes for the taking
Michael Sallah and Debbie Cenziper

The firm that threatened to foreclose on hundreds of struggling D.C. homeowners is a mystery: It lists no owners, no local office, no Web site. ... Aeon Financial is incorporated in Delaware, operates from mail-drop boxes in Chicago and is represented by a law firm with an address at a 7,200-square-foot estate on a mountainside near Vail, Colo.

Yet no other tax lien purchaser in the District has been more aggressive in recent years, buying the liens placed on properties when owners fell behind on their taxes, then charging families thousands in fees to save their homes from foreclosure.

Aeon has been accused by the city’s attorney general of predatory and unlawful practices and has been harshly criticized by local judges for overbilling. All along, the firm has remained shrouded in corporate secrecy as it pushed to foreclose on more than 700 houses in every ward of the District.

“Who the heck is Aeon?” said David Chung, a local lawyer who said he wasn’t notified that he owed $575 in back taxes on his Northwest Washington condominium until he received a notice from Aeon. “They said, ‘We bought the right to take over your property. If you want it back — pay us.’ ”
....

Steven Rich, Jennifer Jenkins and Alexia Campbell contributed to this report.

I own mutual funds, bonds, and stocks, including stock in a company that will benefit should the EPA regulations (proposed or actual, I'm not sure which) regarding emissions from coal plants get knocked down. I've worked for an aerospace and defense contractor, and I have money in their retirement fund. I don't join picket lines or protests. I'm about as far from a Marxist as anyone can get.

But this, being threatened by anonymous strangers with extortion or else the loss of your home, really gets to me. It's like primetime television. You think, "they can't get any worse than this," and then they go right ahead and prove you wrong.

Can't anyone stop this?

Part 1: How a small debt becomes a big problem
http://www.washingtonpost.com/sf/investigative/2013/09/08/left-with-nothing/

Part 2: Suspicious bids go unnoticed in D.C.
http://www.washingtonpost.com/sf/investigative/2013/09/09/suspicious-bidding/

Part 3: D.C. tax office mix-ups put homes in peril
http://www.washingtonpost.com/sf/investigative/2013/09/10/mistakes-put-homes-in-peril/

Mark Schwartz, an attorney who owns this $1.7 million estate on a mountainside outside Vail, Colo., has been a constant force behind Aeon Financial. His law firm lists its address at the property. (Marc Piscotty for The Washington Post)

Schwartz has a medical degree from the University of Illinois and a law degree from John Marshall Law School in Chicago.

[mahatmakanejeeves]

3. Local laws do little to protect owners from aggressive investors

Local laws do little to protect homeowners
http://www.washingtonpost.com/sf/investigative/2013/12/08/local-laws-do-little-to-protect-homeowners/

Written by Alexia Campbell, Danielle DeCourcey, Ted Mellnik
Published on December 8, 2013

Local governments placed tax liens on more than 1.6 million properties nationwide last year, but tax collectors from Illinois to Florida to New Jersey acknowledge there are few safeguards in local laws to prevent the private investors who bought them from taking advantage of distressed homeowners, according to a Washington Post study.
....

With few protections in place, abusive practices have emerged. ... In Florida in 1998, then-Attorney General Bob Butterworth found large companies were rigging auctions to win liens, costing homeowners hundreds of thousands of dollars.

In Georgia in 2002, the Atlanta Journal-Constitution reported that tax lien companies were charging homeowners tens of thousands of dollars in penalties to reclaim their properties. The Birmingham News described a similar trend in Alabama three years later.

In 2006, The Capital newspaper in Annapolis reported that a small group of well-financed bidders had dominated the local auction, buying 74 percent of all the liens sold. ... In 2007, the Baltimore Sun conducted an investigation that found some of those same bidders were dominating tax auctions in Baltimore, where they were buying up water and sewer liens and charging high fees. Federal investigators would ultimately find that the bidders were rigging auctions across Maryland, leading to three convictions for criminal conspiracy.

Please go to the article to see the interactive graphic.

Citing abuses, federal lawmakers call for examination of tax-lien programs nationwide
http://www.washingtonpost.com/investigations/citing-abuses-federal-lawmakers-call-for-examination-of-tax-lien-programs-nationwide/2013/09/19/c4f74b76-212b-11e3-b73c-aab60bf735d0_story.html

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4. Executive takes issue with Washington Post piece on Aeon Financial

Executive takes issue with Washington Post piece on Aeon Financial
http://www.crainscleveland.com/article/20131210/BLOGS03/131219975

EDITOR'S CHOICE -- SCOTT SUTTELL
Executive takes issue with Washington Post piece on Aeon Financial

Blog entry: December 10, 2013, 12:22 pm | Author: SCOTT SUTTELL

An executive representing Aeon Financial is taking issue with a Washington Post investigation of the company's business practices, which was a story summarized in Monday's Editor's Choice.

The executive, Mark A. Schwartz, CEO of Axis Capital Management Inc., sent a letter to The Post that called the paper's investigation “substantially misleading and inaccurate.” It's a long letter, and you can find the full text of it here, under the subheadline, “Aeon's response.”

Cleveland suffers from an 'extra-vicious' Aeon Financial
http://www.crainscleveland.com/article/20131209/BLOGS03/131209828

EDITOR'S CHOICE -- SCOTT SUTTELL
Cleveland suffers from an 'extra-vicious' Aeon Financial

Blog entry: December 9, 2013, 9:54 am | Author: SCOTT SUTTELL

(This blog post was updated at 11 a.m. on Tuesday, Dec. 10, to include a response from an Aeon Financial executive criticizing the Washington Post investigation.)

A must-read investigation by The Washington Post looks at a mysterious company called Aeon Financial, which buys tax liens in several U.S. cities, including Cleveland, then files foreclosure cases and charges families thousands in fees to save their homes.

Be sure to read Schwartz's letter. He's a saint.