Posts (RSS)Ohio Tax Liens Putting More Homes into Repo House Listings
More than 3,000 property tax liens in Toledo and in other areas of Lucas County which were sold by the county to private companies are expected to put more homes into repo house listings.
According to housing advocates, while local governments charge low interests and fees, private companies charge high interests and service fees. These later accumulate to thousands of dollars that distressed homeowners could not pay, ultimately forcing them into foreclosure.
Anita Lopez, auditor of Lucas County, said the county gained a cash windfall of $14.7 million by selling off over 3,000 tax liens to private companies. The money is a much needed gain as the city is struggling to find money to finance public services and schools. But in the long run, according to Lopez, the cost of large numbers of foreclosure properties will wipe out the short term gains of selling tax liens.
In contrast, investors insist that the sale of tax liens to private investors benefit all parties. They say that many struggling counties and cities across the country have been selling tax liens to the highest bidders to raise much needed cash for community services, such as fire departments, school districts and public parks.
They also explain that investors take on risky investments, but admittedly, these liens could turn very profitable for them. They pay local governments upfront for the tax liens and acquire the rights to foreclose on the tax delinquent properties and to impose high interest rates. They also take priority over banks that provided the home loans.
According to Howard Liggett, head of the National Tax Lien Association, profits from tax liens beat those earned from certificates of deposits. Liggett reported that tax lien investors earn approximately $10 billion each year.
Lucas County started selling its tax liens in 2006 to New Jersey-based Plymouth Park Tax Services, which is owned by JPMorgan Chase and which also uses the name Xspand.
Plymouth, which was once run by former New Jersey governor James Florio, ended with JPMorgan when it acquired Bear Stearns which earlier bought Plymouth.
Now, Plymouth is one of the biggest companies in tax lien investments. According to Plymouth officials, they have filed over 1,000 foreclosure cases against delinquent taxpayers, but have foreclosed on only 56 of them.
But housing advocates insist more foreclosures will arise from the tax liens, as tax debts amounting to $3,300 have quickly grown to $6,800 when the tax liens were sold.