
Left with Nothing - aviziva
http://www.washingtonpost.com/sf/investigative/2013/09/08/left-with-nothing/
======
grellas
Tax enforcement schemes are conceived, enacted, and executed by governments
because they have a monopoly over the taxing power. If private profiteers are
allowed to exploit local citizens, it is strictly because the entity holding
that power has deliberately chosen to set up an enforcement scheme that arms
those predators with everything they need to conduct their exploitation. The
vultures, despicable as they are, would be powerless to do anything to
delinquent but for being armed for the task by the enabling government. Is
this abusive? Yes, it is massively abusive. But the remedy needs to go to the
source of the abuse and that source is a faceless, uncaring local government
that has elevated cost-savings over fairness and, when caught as it has been
here, is trying to pretend that it can impose a few regulations at the edges
to solve the problem. The real solution is to bring the enforcement back in-
house where it historically resided and then collection procedures can be
controlled and made fair to citizens. But, of course, that would vitiate the
cost savings to the governmental entity from which it benefits under its
current system. It should do it but don't hold your breath waiting for reform.
It is much easier to blame the outside vultures (who are of course eminently
blameworthy), impose a few patches to pretend to deal with the abuse, and go
on with business as usual. Whichever way reform is done, if it is at all, one
can only hope that it will be real and meaningful but I suspect it will not.
Very sad to see the tragic consequences.

~~~
chii
i don't get why the law is so coarse - why a lien worth less than the value of
the house can be used to forclose the house?!

I understand if the value of the lien/debt is equal or greater than the value
of the house. Otherwise, it's just like the article claims - highway robbery.

~~~
rayiner
Any lien can be used to foreclose on property if the lien holder has no other
way to force the owner to pay. Generally, the owner is entitled to whatever
sales proceeds they have left after paying the lien.

------
downandout
I'm all for making money, but this seems predatory and downright evil. Under
no circumstances should someone be able to foreclose on a property because
they hold a lien for less than 1/1000th of the value of the property, then
take all of the equity. According to the article, this is only allowed in a
small handful of jurisdictions - most require the proceeds above the amount
owed to be passed along to the owner.

It's no coincidence that this is happening in Washington DC, the backyard of
some of the most powerful and effective lobbying firms on earth. The set of
laws that allow this insanity are almost certainly the result of lobbying
efforts by tax lien buyers. Lobbying rules at the local and state level range
from non-existent to very lax. As a result, getting a law or ordinance passed
to benefit your company or industry at the local level is a relatively
inexpensive and simple affair. People need to monitor laws and ordinances in
their local jurisdictions, and speak up when they see things that don't pass
the smell test. Otherwise, we'll continue to drown in this type of stuff.

~~~
a8da6b0c91d
I would like to know the names and a little background on the people involved
in these practices. Why doesn't the article name names?

Who owns and works at Heartwood and Aeon Financial? Who are these people at
the tax office facilitating the practices?

~~~
toomuchtodo
Aeon Financial, LLC, aka CapitalSource Bank

[http://www.ilsos.gov/corporatellc/CorporateLlcController?com...](http://www.ilsos.gov/corporatellc/CorporateLlcController?command=mms&fileNbr=02126966&type=MGR)

I'm not quite sure what the HN policy is on personal details, but you can find
the individual whose name is on the ownership of Aeon Financial on court
documents across the US for tax lien purchases.

It appears this document that appeared in a google search indicates that staff
at CapitalSource were trying to separate the tax lien operation from the
business by operating under the DBA Aeon Financial:
[http://www.delaney2012.com/wp-
content/uploads/2012/09/09-07-...](http://www.delaney2012.com/wp-
content/uploads/2012/09/09-07-12-Delaney-for-Jobs-Backup.pdf)

Google "capitalsource bank fbo aeon financial" for a wealth of results.

------
afterburner
The logical outcome of this kind of predatory practice should be that the
"investor" (the purchaser of the liens) gets $5000 out of the $197,000 sale,
and the debtor gets $192,000. And even _that_ seem predatory, never mind
getting _all_ the equity and forcing the person out of their place of
residence.

~~~
jamieb
when someone gets your $197,000 house for $134, they can sell it for $71,000
and take $6000 in legal fees, interest etc, as documented in the article.

The owner loses $130,000. Don't be surprised if the person buying the house
for $71,000 is in on the game too.

~~~
briancaw2
This problem is indicative of how screwed up our legal system is. Lawyers
harass regular folks at-will as most people have no recourse (i.e. money to
hire their own lawyer, or knowledge of the expanding and complicated laws).

Two ways I can think of fixing it - one is offering simple, straightforward
hearings in front of a judge with the power to use their own judgement
(instead of relying on overly-specific, exploitable laws); the other is to
implement some counterbalance punitive fee for wrongly harassing citizens -
something that decreases the profit ratio for predators and makes defending
people in otherwise unprofitable cases profitable.

~~~
do-it-good
The complexity of the laws is not a coincidence:

1\. It gives more power to the government and less power to the people.

2\. The majority of lawmakers are lawyers - complexity means them more
job/business opportunities and significance in society.

~~~
31reasons
Law is ripe for disruption. We need something like IBM's Watson to fight the
complexity.

~~~
do-it-good
No, that won't help. When accountants got electronic spreadsheets, the
complexity of accounting laws rised 50 fold.

------
cletus
Well there are two issues here.

The first is that laws that allow this to happen are scandalous. Worst case,
particularly for the elderly, is that a lien is placed on the home such that
it must be paid when the home is transferred in any way. So what if DC has to
wait 10 years for $137 mistakenly not paid? Seriously.

Unless the debt exceeds some nontrivial amount, the county should be
restricted from taking any action whatsoever. All this to recover $137?
Seriously?

If it does come to foreclosure, it is utterly ridiculous that the "investor"
(I prefer "predator") gets to keep the entire sale amount. Fees (that should
be capped) may be retained with the rest being returned to the owner.
Otherwise this is (or should be) the unlawful seizure of assets.

Secondly, if you are such an "investor" how exactly do you live with yourself
as a human being doing this? Seriously. I couldn't sleep at night.

As for the county or state officials that make this possible, how do they live
themselves doing this to their constituents?

~~~
toomuchtodo
Sir or mam, I don't know you, but you're my kind of people.

------
rayiner
The article doesn't come out and say it, but the impetus for tax sales is that
foreclosure proceedings are pretty onerous and take forever. At the same time,
property taxes are the primary source of revenue for the local government and
must be collected. So it doesn't seem ridiculous at face value to sell the
debt to private investors and let them do the collection while being able to
recoup the fees involved in foreclosure which can legitimately run into the
thousands because the foreclosure is a process that drags on for six months or
more (with various redemption windows after that which can be a year or more).

I'm skeptical of the "lien holder gets the equity" claim because it doesn't
work that way outside of DC or in foreclosure generally, so I'd be very
surprised it it wasn't a misunderstanding on the part of the author.

This article talks about DC tax lien sales, and doesn't mention keeping
equity:
[http://taxlieninvestingpro.com/category/statebystateguides/d...](http://taxlieninvestingpro.com/category/statebystateguides/district-
of-columbia-statebystateguides/). It looks like a regular judicial
foreclosure.

~~~
pdonis
_I 'm skeptical of the "lien holder gets the equity" claim because it doesn't
work that way outside of DC or in foreclosure generally_

I'm not sure I understand. Foreclosure means the lien holder takes title to
the property, and the current owner, the one who owes the debt that the lien
holder was unable to collect, loses title. Then the lien holder, who now has
title to the property, sells it for whatever the market will bear, and pockets
the sale price minus whatever costs he has to pay. That effectively means the
lien holder gets whatever equity is in the property once he has foreclosed on
it and sold it.

 _This article talks about DC tax lien sales, and doesn 't mention keeping
equity_

Well, of course not, since it only talks about buying the tax lien and
foreclosing on it; it doesn't talk about the part where once you've
foreclosed, you sell the property and pocket the money.

The article does describe the foreclosure process the same way I did above:

"The District of Columbia statutes require that you file a judicial
foreclosure on your lien. This means that your attorney will run title, notice
all the parties on title and file a foreclosure action in the court to get a
judge to issue a final judgment. Once the judge rules in your favor, you can
go to the DC Office of Tax and Revenue, pay any outstanding taxes and bills
that may be due, and get issued the tax deed."

So you buy the tax lien, and if the tax isn't paid, you foreclose, you pay off
the outstanding taxes and bills, and you get the property. The now former
property owner, whom you've just evicted, gets nothing. Then you can sell the
property for whatever the market will bear. So who has the equity?

~~~
rayiner
That's not how foreclosures work. In most states, foreclosure is a judicially
supervised sale in which the lien holder does not take title, but instead is
entitled to part of the proceeds of the sale. Multiple lien holders may
collect in case of say home equity loans, but at the end the original owner is
entitled to whatever is left after satisfying the liens.

In some rare cases, with underwater mortgages, the lender may be allowed to
take title.

~~~
pdonis
_That 's not how foreclosures work._

I do see plenty of web references that describe foreclosures the way you do,
but they all talk specifically about foreclosures when the lien is a mortgage.
Does the same process apply when the lien is a tax lien? What information I
can find suggests it doesn't--or at least, there seems to be a lot of wiggle
room.

------
acchow
Can someone point me to the laws and regulations that allow this? Someone who
owns their home completely (with no mortgage) can lose the entirety of the
home due to unpaid taxes? Even if the value of the home far exceeds the tax
debt?

This is mindboggling to me.

~~~
fnordfnordfnord
The local county government can put a lien on your real property for failing
to pay your property taxes, in some places, even for not mowing your lawn (an
exaggeration of property maint. codes). In Texas, investors can buy a "Tax
Deed" at auction. The property owner has two years to buy the lien back, for a
defined price, IIRC the taxes owed + 50% for each year. After the 2 yr
repayment window, the purchaser of the tax lien gets the title to the
property.

[http://www.nuwireinvestor.com/articles/how-texas-tax-
sales-w...](http://www.nuwireinvestor.com/articles/how-texas-tax-sales-
work-51295.aspx)

[http://www.dallascounty.org/department/pubworks/documents/St...](http://www.dallascounty.org/department/pubworks/documents/StruckListtoPost.pdf)

~~~
helmut_hed
Are tax liens different from other kinds? It's my impression that if e.g. a
lender repossesses, they sell the house, pocket what you owe plus fees, and
have to give you the rest back. It's strange to think it would be different
for unpaid property taxes. Was Coleman truly "left with nothing" or did he get
a portion of the sale proceeds?

~~~
fnordfnordfnord
The rights of the tax lien holder trump any other claims, AFAIK. That's one
reason that mortgagors want you to escrow your annual property taxes with
them.

edit: IRS liens in effect before the sale go with the property, and can delay
the new owner in getting a title policy.

------
nateabele
Tell me again how government does such a wonderful job protecting the weakest
& most vulnerable.

~~~
bigfoot13442
Yet another thing I would do if I was rich: buy up the unfortunate
circumstances and forgive them.

I understand how it would be hard for the government to implement a policy to
do the same, but this situation is ridiculous.

~~~
cam_l
you don't have to be rich!

[http://rollingjubilee.org/](http://rollingjubilee.org/)

[http://strikedebt.org/](http://strikedebt.org/)

[http://www.occupyourhomes.org/](http://www.occupyourhomes.org/)

[http://occupyforeclosure.org/](http://occupyforeclosure.org/)

------
mpalme
Meta note: this is what journalism can look like today. Made for the web
first, not for the paper. Visualizations that are actually insightful - and
most importantly a well researched story.

~~~
redsymbol
Absolutely - I noticed that too. Exceptionally well done from a web publishing
standpoint.

~~~
unreal37
They researched this for 10 months, not 10 minutes. The quality of the
research shows.

------
denzil_correa
Sorry but WTH?!! 134/197000 is 0.068%. And if this was not enough, I read this
-

    
    
        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.
    

Sometimes I wonder what's wrong with people in the world.

~~~
macspoofing
I think so too. Forget the laws, if you're a "investor" who bought a tax lean
for $50, and that lean led you to own the deed to a $100,000-$200,000 house of
Alzheimer's patient, don't you stop for a second and consider the moral and
ethical implications of collecting on that lean?

~~~
denzil_correa
Ethics? I would want to know how is that even an apropos penalty given the
defaulter's age and mental health. This is literally bordering on the
insanity!

------
brianmcconnell
Queue up the Ayn Rand acolytes in 3...2...1

It's not a coincidence that this is happening to mostly elderly people who
otherwise own their properties in the clear, people who are often burdened
with serious health problems.

There is a simple fix. Require the liens to be paid off when there is a change
of ownership. The city knows what it is owed, and that it will get the money
eventually. If the city needs the money today, it ought to be able to borrow
the funds (not all that different that accounts receivable factoring).
Throwing people out of their homes over small amounts is inhumane.

~~~
theorique
Say what you like about Ayn Rand, but she was hardly a fan of out-of-control
government/private collusion to seize individuals property in a manner
completely out of proportion to the size of their debt.

~~~
rdtsc
That was the flaw in her reasoning that big business and govt can and will be
somehow separate entities. They never are. They are effectively the same
entity. Look at chiefs and heads of regulatory agencies, they are often ex or
future CEO of industries those agencies are supposed to police. Look at many
military industrial contractors they often hire ex-generals and so on. And all
this in the land of "law and order". Imagine in other countries with less "law
and order".

~~~
theorique
For sure. Good point about the contractors hiring generals. There are lots of
different revolving doors in different industries.

If you work at a major investment bank, why would you speak out against
government regulation of your industry when you might need a bailout some year
in the future?

If you work at a government regulator (e.g. the SEC), why would you regulate
the industry _too_ hard when they are going to be your biggest source of
consulting fees after you leave your government employment?

For example, Bernie Madoff's brother was a director of SIFMA (Securities
Industry and Financial Markets Association) for two years.

------
frankydp
This story is not about a government department doing what it is charged with
doing. This story is not about privitization of collections. This story is not
about the well known DC corruption issue. This story is not about tax
collection automation, ie removing the knock on the door. This story is not
about people that buy tax liens, which as a side note do not know the
circumstances of the lien.(barring collusion)

This story is about the fact that this man had no one. No one to make sure is
ok. No one to ask if has been forgetting things lately. No neighbors that
might have checked in on him. No family that was attentive enough to realise
he may need help with the 10 giant boxes of mail by the door. No one that gave
enough of a shit to just ask how he was doing.

When was the last time you checked in on that elderly lady that lives next
door to make sure she is doing ok? When is the last time you did a little
checking up on your elderly family? When was the last time you took the time
to make sure the people around you are not getting to the point where they
need help?

As a side note, please read the entire article.

------
Winst
Does anyone have any idea how much it costs a traditional newspaper to produce
an article like this? They've listed 15 people in the "Credits" section at the
bottom. Seems cost-prohibitive.

 _Written by Michael Sallah, Debbie Cenziper, Steven Rich / Graphics by Ted
Mellnik, Emily Chow, Laura Stanton / Photos by Michael S. Williamson / Editing
by Jeff Leen, Steven Kress / Research by Jennifer Jenkins / Production by
Chris George, Connor Jennings, Bronwen Latimer, Michelle Williams, Tim Wong_

Edit: clarity

~~~
wmil
The "producers" are likely just management and several of the rest may in fact
be unpaid interns trying to break into the industry.

But researched articles like this are expensive to produce. That's why PR
firms are so successful. Reporters need others to find and research stories
for them.

~~~
wpietri
Production has a different meaning in publishing than in movies, which is what
I think you're referring to.

In print, production is the act of taking the raw inputs (copy, graphics,
layout) and getting it out the door. E.g., the print production managers I
know manage the physical details of the print medium. There is a similar
meaning in advertising. [1]

Looking at the resumes of the first couple producers, one's a designer, the
other lists himself as "Nerd". So I think they are using the meaning from
publishing: people who produce the final product.

[1]
[http://en.wikipedia.org/wiki/Advertising_agency#Production](http://en.wikipedia.org/wiki/Advertising_agency#Production)

------
snitko
And yet I still see people saying "no, how dare you compare government to a
bunch of thieves?".

~~~
Refefer
The DC local government is somewhat remarkable in how corrupt it is. It seems
like every other day some major political player gets indicted for corruption
of some sort.

~~~
jfb
DC is in some ways an anomaly; US citizens deliberately disenfranchised by the
Federal Government. It's not surprising that they might be extravagantly
corrupt.

------
maximilianburke
In British Columbia you can defer your property taxes until the home is
transferred (to anyone other than your spouse) or sold. That seems, to me, to
be a much more fair and reasonable option than auctioning off these trivial
amounts to the morally corrupt and destroying the lives of the indigent,
elderly, or sick, as well as their families.

------
will_brown
Ironically, a lot of houses owned by banks as a result of foreclosures
("REOs") are in turn getting foreclosed for failure to pay taxes and HOA fees.
Banks were/are not equipped to manage the number of properties they own as a
result of foreclosures and they lack the basic infrastructure to maintain
these properties not limited to paying taxes and HOA fees, but violations of
certain civil statutes like failing to maintain lawns that result can result
in fines upwards of hundreds of dollars per day for continued violation.

~~~
doki_pen
This simply means that the banks should hurry up and auction the houses
instead of sitting on them and waiting for their value to increase.

~~~
will_brown
Agreed, but there is a lot of debate on this for the following reasons. The
banks own so many homes, that there is an argument that they could flood the
housing market with under priced homes which would slow the housing recovering
by driving down the prices of all homes. Additionally, there is a lot of
speculation that part of the $1.2 trillion stimulus packages went directly to
the banks to account for the above argument and actually requires the banks to
slowly release their inventory of homes in order to prevent flooding the
housing market with under priced homes (again because that would continue to
drive down value across the board).

All that said, as mentioned above I do agree with you, because assuming banks
are keeping homes off the market this only artificially keeps home prices
stable, and many of those REOs are failing into disrepair. In my opinion it is
better to have ownership and people in homes, even at a short term cost of
flooding the market with under valued homes. After all it is the banks who
originally to the risk on these loans they foreclosed on and they lost.

------
djvu9
Not sure if you guys have noticed this "In 2006, he forgot to pay a $134 tax
bill, prompting the city to place a lien on the home and add $183 in interest
and penalties. His son paid the $317 bill in 2009, records show, but that
wasn’t enough." His son did pay the tax later. I don't know how
penalties/government fees are made and justified.

~~~
westicle
The writing is horribly obfuscated. What it means to say is that the original
bill was $134. Presumably he received dozens of notices and warnings that it
needed to be paid, before it was sold as a lien.

The lien holder would then have sent notices and warnings that the debt needed
to be paid. Eventually after no response, it filed foreclosure proceedings in
the court (at some significant cost). At that point, the son decided to pay
the original tax bill, however the holder of the lien presumably wanted its
legal costs paid before it would surrender the lien.

What happened next was very unjust. But would make more sense if the article
was clear on the timeline of events.

------
EGF
This may not be the right place for this, but does anyone know who to contact
about a similar instance? I have family members that experienced this and lost
a house due to predatory lending practices, but there is little to no recourse
or resources out there. If anyone has information about the Bank of
America/Countrywide issues I would like to know about them.

------
acjohnson55
What a clever disruption of the property tax industry!

But seriously, things like this are why we must not get too carried away
focusing only on market opportunity. Some ideas are profitable, but socially
disruptive. In this case, public policy is enabling predatory with very
obviously antisocial results, but I think there are plenty of cases where the
government isn't so directly involved and the results aren't so obviously
destructive, yet antisocial, nonetheless. This is really addressed to the
small but vocal minority that seems infatuated with profit-seeking, without
concern for anything else.

------
chiph
Obscure program?? It happened all the time in the 1930's. If you couldn't pay
your tax bill, your property was auctioned off on the courthouse steps.

~~~
scotty79
Via private company operating for profit?

~~~
larrys
Issue is abuse of that system not the fact that it was by a private company
operating for profit. Many prisons are run by for profit enterprises as well
as hospitals. The way the program is run is the important thing not the type
of enterprise handling the program.

Example: Small town with "speed trap" (not a for profit business) gives out
excess tickets to raise money.

~~~
alan_cx
I hardly think citing prisons and hospitals is a ringing endorsement of the
profit motive.

------
auggierose
Reading something like that makes me very angry. What would be the highest
punishment against people who do something like that? Personally, I would not
have any problem to dish out the highest one.

------
31reasons
"Give me your tired, your poor and we will make them homeless"

------
iopq
>owe $147

>you have to pay $5000

>you lose $197,000

How is this acceptable?

~~~
maxerickson
Well, the paper more or less put the article together because it isn't.

------
noarchy
Property taxes are, effectively, rent paid to the local government by people
who otherwise think that they _own_ said property. Fail to pay it, and you get
evicted. It is quite a racket already, but combine this with crony deals with
private companies, and corruption shows its ugly face. It is all "legal",
since the ones carrying out the scheme also happen to make the rules.

------
switch007
"No State shall make or enforce any law which shall abridge the privileges or
immunities of citizens of the United States; nor shall any State deprive any
person of life, liberty, or property, without due process of law; nor deny to
any person within its jurisdiction the equal protection of the laws."

Why does that section of the 14th amendment not apply?

~~~
xsmasher
What makes you think the public tax sale took place without due process of
law?

Straight from the article:

* Homeowners receive several warnings before their liens are put up at annual auctions.

* Once a lien is sold, owners have six months to repay the investor with interest. If that does not happen, the investor can move to foreclose.

The article even mentions the families getting their day in court over the
post-tax-sale foreclosure.

I just realized I'm serial rage-replying on this article. You know that
annoyed feeling you get when the news covers a subject you're familiar with?
Well.

------
Ellipsis753
I don't mean to be taking the wrong side here but I'd be interested to know
why didn't he didn't pay the money (It seems he was given warning). If he
couldn't pay then I'm surprised he didn't sell his TV/remorgage his
house/borrow money/ask friends or family to help or something. Perhaps I'm
naive and he really couldn't do anything about this but it would have been
nice if the article had covered this. Yes this is awful but I don't like the
suggestions from some that the government simply shouldn't try to collect
small debts. Surely no one would pay small debts they have then?

~~~
jnardiello
Maybe he forgot. Maybe he couldn't. Life is hard and complex. Not everyone is
smart and clever. The weak side, for a debt of $40 gets all his properties
auctioned and report a loss comparable to life-long savings. Totally
reasonable and fair.

Agree with you, can't see anything wrong going on here too. (i'll state the
obvious: i'm joking).

It's not simply a case that here we talk about: \- People with dementia or
major problems \- Lonely \- Most of the times, old enough to be completely
invisible

And the state, private contractors and greedy individuals use them to refill
their bank accounts. And it's perfectly legal. And some people, as you are
doing now, simply try to justify it.

I'll tell you what is fair here: \- He doesn't pay \- Warnings should be
issued \- He should be given a greater amount to pay (i guess 100x the
original amount should be enough) \- He still doesn't pay \- Insitutions try
to understand why this person isn't paying \- Take appropriate actions
according to the situation. If the lack is anyhow justified (eg. person
incapable of self-support) simply drop it and warn social services. Otherwise
proceed to court.

Seems a lot more reasonable. But ehi, this would mean lot of effort. Why not
just raping and looting the weaks. Keep up with the great job!

~~~
frankydp
\--- Institutions try to understand why this person isn't paying

How does a city like NY or LA scale this, when 1 or 2 out of hundreds or
thousands is this type of situation. This situation only happens because a
city doesn't have the manpower to do a social viability check on every tax
lien.

I agree on principle, but the monitoring of elderly is not the role of
government, but of community, neighbors, and family.

------
alternize
the article's title makes it hard for me as a non-us citizen to understand
what foreclosure means in this context.

what i got from the article is this: due to the financial situation of the
owner, a small unpaid tax turns due to unfair practizes into a larger debt of
like $5000, which then allowed a judge to enforce the sale of the house so
that unpaid taxes could be paid off.

now if the house was sold for the mentioned 197'000, does that mean that the
owner at least got the proceeds minus the debt? the title suggests that this
would not be the case...

~~~
larrik
From what I read:

1) Owner of the house owes a minor amount of taxes. In most of the anecdotes,
the homeowners have either no mortgage at all, or otherwise have mostly equity
(tiny % of the total value of the home owed). 2) Since the city technically
has a lien on the home (or gets one?), they are able to then sell the lien to
an "investor", who pays whatever the tax bill is. 3) The investor demands
payment, and begins charging huge fees. 4) After 6 months or whatever, the
investor forecloses on the house, which is essentially taking ownership
(basically a "repossession") 5) The investor sells the house for market value,
or whatever price they want. 6) Since the investor is NOT a mortgage company
or otherwise holding a mortgage lien, but is holding a lien originated by
municipal entity, there is no rule in place that says they need to pay the
original homeowner the profit. Therefore, they keep all of the money, minus
the tax bill they paid at the start.

In the end, the article implies that this company is buying liens for as low
as $50, and then selling the houses out from under the homeowners for hundreds
of thousands of dollars.

At least, that's what I understood.

~~~
alternize
thanks. unbelievable - modern government sanctioned robbery

------
ahmad19526
Reading some of the comments here, everyone is talking about the laws being
broken and how they need fixing but I don't think any amount of law writing
can make up for the moral bankruptcy that has led to these situations and many
others.

I think when people seek money they should ask themselves if what they are
doing has any bit 'unethicalness'.. But who knows if those investors knew of
the stories that made their investments possible.

We have the concept of a carbon footprint - what about an ethical footprint?

------
unono
This is why we hackers should all be helping Google get their self-driving
cars on the road. It could save so many lives if people could have the option
of living in their car.

~~~
krapp
The kind of people who would be able to afford Google cars are not going to be
the kind of people who might end up having to live in them.

And if they were, the government would just make Google drive the car to an
impound or something, probably, and they'd take that as well.

~~~
unono
The guy in the article wasn't completely moneyless, he just came up against
the recurring costs of taxes/rent which can trip up the unorganized.

Google car expense is overplayed. In mass production and with competition the
cost would go way down.

Also, if the government makes the 'homeless' drive to specific places out in
the desert or something, that's better than the current situation where you're
exposed to other homeless and dangerous people.

I actually wouldn't mind going 'homeless' for a while to save money on rent,
but currently it's really dangerous to do so. Moving to low rent places is
also usually more 'dangerous', especially with children. With a driverless car
you can just take your family out into the desert or forest and pretend you're
camping.

The current system of full-time rv-ing is quite hard because of parking
restrictions and because sending kids off too school and getting groceries
from out of town is hard, and because the rv's are too small. With self-
driving rv's you can have a few of them to space out in.

~~~
krapp
_Also, if the government makes the 'homeless' drive to specific places out in
the desert or something, that's better than the current situation where you're
exposed to other homeless and dangerous people._

But what if they're driving all of the homeless people out to the same spot in
the desert? Cars, sure, are better than nothing but better still are cars the
government can't use to expel or trap undesirables.

I'm sorry, but the idea of self-driving cars just creep me out.

------
tpainton
I especially like how the people who made the laws are in no way to blame...
Nope once again, it's the lobbyists and the evil corporations, never the
people who actually made the rule that allowed it to happen...made the rule to
retain power.. No they are the good guys.

~~~
muzz
What would be your solution? To not sell the liens to private investors and
instead and have the government try to collect on them? I.e., is your
alternative bigger government?

------
spiritplumber
Thanks, I will definitely put this on the plate as I decide to apply for US
citizenship.

~~~
ars
No need. This is a bizarre story and not the normal - which is precisely why
you are reading about it on the news.

Basically everything you read about on the news is what almost never happens.

------
hummingbird12
Can someone please tell me, why do US courts keep approving things like this?

Like they can't just foreclose a house without government approval. Why does
the court approve the foreclosure in the first place over such a small debt?

------
radicalbyte
I wouldn't be against this basically being a fraud committed by someone in the
local government there. Who else would have the knowledge to have found the
loophole? Who else could have abused it so well?

~~~
muzz
The six companies that dominate the auctions for those liens.

"When it was over, six companies had swept the bidding, snaring two-thirds of
the liens, which totaled $5 million, on properties worth more than $666
million"

------
denzil_correa
Does or shouldn't this contradict some law set by the government themselves? I
need to do some research on the origins of taxes now. This seems unbelievable
to me, I'm literally dumbfounded.

------
gradstudent
As an external observer I find it ridiculous that the recovery of small amount
of debt -- to the government no less! -- involves foreclosing on someone's
home.

WTF is wrong with you America?

------
jmomo
I question if outrage articles like this belong on Hacker News. This is just a
hot-button troll. Queue discussion regarding the decline of commenter quality
on Hacker News.

------
Fizzadar
And this is what happens when you privatise the tax man.

------
mgulaid
House of Fog shed light on this problem. it is tragedy.

~~~
mortenjorck
I believe it was The House of Sand and Fog. And Ben Kingsley and Jennifer
Connolly are amazing in it.

------
mcescalante
Maybe it's just me, but this reminds me a whole lot of all of the special
pieces that the Times has released over the last year or so

------
rajahafify
I really love the UI. Big ass photo with magazine like header. And followed by
article. Salute.

------
smutticus
It's shit like this that makes molotov cocktails seem like rational behavior.

------
general_failure
Strange he cannot afford 134. He has articles in his house he could have sold
no?

~~~
muzz
Less than 1/10th of the way into the article, they make it clear that he has
dementia

------
supersaiyan
Beautiful photography, I'm hooked before even reading a word

------
dpanah
Let's just target seniors and be done with it. Take everything they got
because they're old and we're worthless scum. Tell it like it is.

------
michaelochurch
So, I generally disagree with libertarians (especially, the 25-year-old white
male type who know nothing about the economy and have never met a poor person
who tend to show up on HN) and one of those grating libertarian tropes is that
government is essentially an extortionate body, insofar as it demands payment
for non-refusable services and punishes those who do not pay. Now, in general,
I would find this argument to be very silly.

However, this sort of behavior makes that "silly" libertarian smear appear to
be, in fact, entirely spot-on. All of this, the extreme pursuit of small
debts, the tacking-on of "legal fees" to skirt usury/extortion laws, and the
transfer of debt to more vicious investors (who are more likely to engage in
usury, extortion, et al) is textbook mob shit.

------
hemancuso
How is there not a huge angry thread about this not being appropriate for
hacker news. Seriously guys. Flag this.

~~~
choult
It's at the top of HN because it's been upvoted by HNers. How is it irrelevant
if the masses say it should be up there?

------
larrys
"All because he didn’t pay a $134 property tax bill." [1]

What is the scope of the problem here?

Ok:

"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."

Out of home many?

"The retired Marine sergeant lost his house "

Obligatory "and he was a good guy who fought for his country" added in for
extra emotion (in addition the picture of course of a respectable citizen).

All this is sad and most certainly an interesting read. But it seems more
suite for Taibbi in Rolling Stone.

Would be nice if in addition to writing emotional appeals they enlisted the
help of someone (say a think tank) that could do further analysis and come up
with some suggestions as far as reform that are backed up by research and in
writing.

[1] Noting that this dates back to 2006 and yes if you ignore simple notices
bad things happen. Don't pay your insurance bill? You won't have insurance if
there is a fire. Etc.

~~~
cromwellian
The problem is, privatizing a state function -- collecting property taxes --
into a profitable enterprise. Ok, the guy owed $134, explain how under any
reasonable financial theory, how this should be worth $5000 or $197,000. Why
not a lien against his military pension? Why not negotiate a payment plan?
Even the IRS has the courtesy to do that.

Let's take the best possible return, say 20% annual return, and let's say he
owed this for 10 years, then at best, he'd owe $848. I don't see how a firm
purchasing a $134 debt from the state can justify such a huge penalty/return.

~~~
larrys
Good points and agree. But I think when you get into "at best he'd owe $848"
then you don't provide proper disincentive to prevent the behavior of ignoring
tax bills and other notices.

As an aside as someone who has gone through significant pain trying to collect
money from people that owe varying amounts (over the years) it's a process
that given a bigger stick (not "ordinary" penalties) would go a long way.

Noting also that this played out over many years. He didn't just miss a
payment of $134 and boom someone profits $5000 or $197,000.

~~~
Malician
No reasonable person would intentionally give up their house, paid off, for a
tax bill of $134, many years or not.

The number of people this is happening to and (one third of them over a bill
less than $1,000) suggest that something about the process is screwed up.

~~~
muzz
The owner had dementia, so may not have been able to make reasonable
decisions.

------
nobrains
Islam has the most fair rules against Interest. The Quran says: Chapter 2 -
Baqarah - Verse 275: [http://www.usc.edu/org/cmje/religious-
texts/quran/verses/002...](http://www.usc.edu/org/cmje/religious-
texts/quran/verses/002-qmt.php#002.275) (Read the next 10 or so verses)

and

Chapter 3 - Verse 130: [http://www.usc.edu/org/cmje/religious-
texts/quran/verses/003...](http://www.usc.edu/org/cmje/religious-
texts/quran/verses/003-qmt.php#003.130)

"O you who believe! Devour not usury (interest), doubled and multiplied; but
fear Allah (God); that you may (really) prosper."

Some more quotes: [http://www.answering-
christianity.com/yahya_ahmed/riba.htm](http://www.answering-
christianity.com/yahya_ahmed/riba.htm)

Allah (God) has declared war on those who take interest:
[http://www.hilalplaza.com/islam/Interest.html](http://www.hilalplaza.com/islam/Interest.html)

~~~
harrytuttle
As an English atheist, possibly surprisingly, I think Islam is right regarding
interest. Unfortunately wrapping it up in mumbo jumbo doesn't give it any
credibility. Also it isn't really related to the article.

~~~
bsullivan01
At least inflation has to be added, and that's without calculating any risk.
Otherwise I'll borrow from you $100K and return it 30 years later

~~~
harrytuttle
Not really.

a) growth isn't required in all economic models so inflation isn't necessarily
valid.

b) goods and services are perfectly good interest. Not that you'd have to
borrow it if interest wasn't profitable (it would drive asset value down).

c) risk is irrelevant if lending isn't required.

you're too in the bank and growth model mindset. It doesn't work like that
everywhere.

