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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.



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.


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.


What do you think was happening in the months and months before the lien sale happened? There were a million opportunities to avoid the whole process through a straightforward administrative process, no lawyers involved.


That assumes you are still capable to follow that process. Apparently the current procedure does not take your present circumstances into account. (like mild dementia, alzeihmer, nursing home example in the article)

In Europe, once you get too incapacitated to take care of your stuff, social security take you in charge. After you die, they repossess your property and sell them to recover their cost. What's left is then given to whoever is supposed to inherit. I am not quite sure what would be acceptable with the more liberal US culture, but profiteering of the weak is certainly not an american value.


>but profiteering of the weak is certainly not an american value.

Clearly, yes, it has become that. Each day, I become more ashamed of where I live.


> 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)

Administrative hearings are used in a wide range of situations in the U.S. For example, when applying for federal benefits or under compensation programs. They're not a panacea. As organizations, they tend to become biased towards one side or the other. Good luck getting the Department of Labor to rule your way as an employer. One of the values of lawyers is that they force decision makers to justify their decisions to a sophisticated party, which reduces the tendency towards systematic bias or alternatively arbitrary action.

In the context of foreclosures generally, lawyers protect the lenders' interests. Foreclosure is already heavily stacked against the lender. The homeowner has months or sometimes years and numerous second chances to come up with the delinquent payments. Do we need to make the system even more biased by getting rid of the rules and letting a judge decide based on who has the most heartbreaking reason for not paying what they owe?

Incidentally, this situation also clearly demonstrates why the "loser pays legal expenses" rule is a bad one. When the loser pays, the biggest entity in the litigation has no incentive to reign in its legal expenses. Imagine applying "loser pays" to banks in foreclosure proceedings.


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.


Did you even read the article?

It points out this arose from a change in 2001 that occurred because the agency was trying to do LESS work, not more.

"But the work overwhelmed the agency, and in 2001, city leaders made a critical change: They told investors to head directly to court to file a foreclosure case. The move empowered investors to start charging legal fees and court costs — a game changer that allowed them to turn minor delinquencies into insurmountable debts."


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


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


Motive alone does not a case make.


> a judge with the power to use their own judgement (instead of relying on overly-specific, exploitable laws);

Yes, because a single corrupt or idiotic or assholic judge should be able to ruin lives left and right without regard for the law.

> 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.

And you have another system to game, another way for the scummy lawyers to beat people over the head to prevent their crimes from being punished.


I'd rather take my chances with a judge than nearly guaranteeing failure in the current system. We already do this with small-claims court I believe and to be honest I'm not sure of the differences between that and a court that would handle a tax lien.

And yes, any system you make could be gamed, but you could make one that is harder to game than the current one.


It won't help much. Judge elections and appointments will then just be the focus of lobby groups. Watch the movie Hot Coffee to see how state supreme court judge elections are manipulated by business interests to install "friendly" judges.

Why not just make a law to cap the profits. Home must be sold at fair market price and the rest must be given to the owner.


> I'd rather take my chances with a judge than nearly guaranteeing failure in the current system.

Ah yes, the "Let that person solve it" school of fixing major social problems. It works really well right up until it fails really badly: George Washington was, for a while, effectively a dictator in that he could have been President-For-Life long before we came to associate that concept with bad outcomes; sadly, for every Washington who willingly resigns and refuses dictatorial powers, there are multiple leaders who exploit them to the fullest, possibly with good intentions to begin with, but that gets lost on the way to having a syphilitic strongman who eats the flesh of his enemies.

> We already do this with small-claims court I believe and to be honest I'm not sure of the differences between that and a court that would handle a tax lien.

Small-claims courts are, by their very nature, both high-volume and self-limiting: A judge-dominated process is necessary because we can't afford a jury to sit on every case involving piddling small change, and the fact they are limited to piddling small change means the amount of damage a judge can do is extremely limited. It's a trade-off, not a broad social principle.


A small-claims judge also can't just make shit up. The judge generally has to rely on precedent and law and uses his/her own judgement in areas where discretion does make sense.


You're argument that entrusting certain officials with making good publicly known decisions "works really well right up until it fails really badly" based off of a weird GW parable has me scratching my head.

And regarding small claims courts - the amount of damage a judge can do is directly related to how much a person is worth, just like fines for civil infractions. It can be nearly nothing or it can be life altering.

Anyway, the solution to this particular problem would be fine-limits (like in other states) and things like license-renewal restrictions (like you get for not paying a speeding ticket).

Edit: I suppose if people don't pay property taxes continually you have to sell the house to stop the tax revenue loss. Enforcing market-price restrictions might be difficult as lack of sale persists the problem. Maybe taking equity in the house at market price or something like that could work. Any way you look at it though $145 shouldn't be such a high-pri. Unpaid speeding tickets amount to more than that.


> You're argument that entrusting certain officials with making good publicly known decisions "works really well right up until it fails really badly" based off of a weird GW parable has me scratching my head.

You're the one who advocated that judges be allowed to ignore the law and judge entirely based on their own good judgement. I pointed out that there are few people who even have good enough judgement to abdicate at the right time.

> And regarding small claims courts - the amount of damage a judge can do is directly related to how much a person is worth, just like fines for civil infractions. It can be nearly nothing or it can be life altering.

That's why we have laws and we make judges follow those laws. It ill-serves society to force extremely good judges to follow poorly-thought-out laws, but the losses on that end are more than made up for by forcing the idiot and asshole judges to adhere to laws written by people who aren't explicitly out to screw you over.


I never said they should be able to ignore the law and judge entirely based on their own good judgement.

A single point of reference argument about people not having good enough judgement to abdicate (which relied on a case of abdication?) isn't a sealed argument that people/judges have bad judgement.

"but the losses on that end are more than made up for by forcing the idiot and asshole judges to adhere to laws written by people who aren't explicitly out to screw you over." Based on what? Why are judges explicitly out to screw you over? And are you joking that judges are more out to screw you over than law makers?

And your argument about idiot and asshole judges out to screw you over is coming from where? If I had to guess I'd say that most judges follow the status quo, a smallish portion can be pricks at times (but within the boundaries of the law), and the ones who truly go out of their way to be exceptional are doing so in the name of civil rights and civil liberties.


Your two-sentence summary is better than the entire article in understanding what's going on.

I read the whole article, and I somehow missed that sentence buried in the middle of the story. So Mr. Coleman wasn't "left with nothing" but presumably received something like $65,000 (i.e., $71,000 minus $6,000 or whatever the final legal bill was). Nowhere does the article say exactly what he received in the end.

The way the tax sale works sounds quite unjust and corrupt -- we don't need the reporter to make it even more evil ("left with nothing") by obscuring key facts.


No, that's not what happened at all. Try reading again.

>The Maryland company that took Coleman’s house sold it for $71,000 two months after evicting him. The company was owned by Steven Berman, who was convicted in 2008 in the Maryland bid-rigging case. He declined to comment. The law firm for Berman’s company said it was willing to reduce Coleman’s bill to $3,500 but could not reach him.


> No, that's not what happened at all.

What part are you saying I still don't understand? The point I was trying to make is that Mr. Coleman does get some money from the sale, although unjustly much less than the house is worth. But the reporter is obscuring this simple fact.


> 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.

That's not "obscuring this simple fact", that's stating clearly and unambiguously that your "fact" isn't true. The person you initially responded to was creating an example, based on how liens usually work. The reason the profit margins are so high in this case is that it doesn't work that way.


As I read it the company kept the money from the house after seizing it.


Ahhh... I use Noscript and the result is when I scroll down about 20 lines there's blank space, so I stopped reading and figured it was the end of a very short article...

So the $197,000 was likely the appraised value, with the $71,000 the actual sale value when the predators unloaded it.

But it sounds from the article like the original owner does lose everything, which I hope is so ridiculous as to be untrue, but I can't tell...

EDIT: I wonder if I got downvoted for using Noscript, or what...


I'm very skeptical of that part of the article and its a little disappointing to me that HN is so ready to take it at face value. It could be true, but it could be a journalist mangling the story like they do for any technically complicated topic.


That's the law everywhere I've ever checked. Very very odd if it's not the case in D.C.


I have a hard time believing this story. If it actually is true, the local government in DC is beyond corrupt.


Frankly, this is a bigger problem that isn't nationally recognized. The mayor is under federal investigation for his campaign and I've lost count of how many officials have been arrested or investigated at the federal level.

Living near the district, I'm shocked daily by how nobody seems to care that the corruption is so widespread.


"...the local government in DC..."

That might be part of the problem... they really don't have much local government. Congress holds sway in DC. When I lived in Glover Park I thought it was one of the strangest systems I had ever seen. Never really quite understood it completely.


taxation without representation. DC barely has a local government. Its Congress who has jurisdiction. so yes, they are as corrupt as it gets. from wikipedia: "Article One, Section Eight of the United States Constitution grants the U.S. Congress "exclusive jurisdiction" over the city. The District did not have an elected local government until the passage of the 1973 Home Rule Act. The Act devolved certain Congressional powers to an elected mayor, currently Vincent C. Gray, and the thirteen-member Council of the District of Columbia. However, Congress retains the right to review and overturn laws created by the council and intervene in local affairs.[160]"




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