Woman facing foreclosure fights tax lien sale policies
Kathleen Moore 6/17/12
Schenectady NY: A woman who owns her home outright is in danger of losing it because she fell behind on her taxes when she lost her job.
Linda Hart, of Linda Lane, is being foreclosed upon by American Tax Funding even though she has faithfully paid them $300 a month for three years to cover her back taxes.
In response to the foreclosure notice, she has hired an attorney who is arguing in state Supreme Court in Schenectady County that the city illegally sold Hart’s liens to ATF.
Attorney Anthony Pietrafesa is also questioning ATF’s 21 percent interest rate, which he says is usurious…He said the interest rate led to Hart owing $3,500 in interest every year. She used to pay $1,200 a year. “She can’t catch up. They don’t want you to pay it off,” he said.
ATF says she owes another $19,000. At the current tax rate for the [taxes] she would have owed a total of $12,836…“The property taxes in Schenectady are way too high,” she said. “The city ought to focus on cutting the expenses and the waste.”
…she owns her house because it has been passed down through family members, and…ATF is no longer willing to accept her monthly payments. Pietrafesa has filed court papers arguing that the foreclosure is invalid…If a judge sides with him, many foreclosures will be stopped in their tracks.
ATF originally bought liens from the city in 2004 after the state passed special legislation allowing a one-time sale. The legislation was unclear. Either it allowed the city to sell liens until Dec. 31, 2004, or it allowed the city to enter into a contract by that date. In 2009, the city asked for “permanent” legislation to sell tax liens, which would have allowed Schenectady to take bids from many companies and select a new buyer.
Instead, the state passed a narrower law, allowing one more sale in late 2009 but specifying that the law would expire on December 31, 2011 and be automatically repealed. Pietrafesa says…that the state’s second law clearly showed that it had not intended a continuous sale.
City Corporation Counsel John Polster said the city could prove it sold the liens legally. And even if the 2004 law wasn’t clear, he said, the 2009 law retroactively approved the later sales. The 2009 law did authorize the city to sell any liens “held by it,” but does not mention sales occurring prior to the passage of the legislation. The 2009 law also doesn’t specifically allow 21 percent interest. It says ATF can charge “reasonable and necessary collection costs.”
Coach Mitch’s REFLECTIONS™
Do we need any more examples of government gone crazy? Here, a professional tax lien collection/investment company is collecting monies, on time and at a very high interest rate – but somehow that isn’t enough, they are seeking the taxpayers’ home.
Greed Gone Goofy
Readers of this blog will recall the many times that I have iterated, treat people in a decent way, as if it were you going through tough times and facing the loss of the family home.
My ethos requires that I try to find a solution fitting to the situation. There have been times when I have come across similar situations. I always ask, “What would you like to have happen?” If the delinquent taxpayer wants to stay in the home, and if they have the ability to pay, I help them to set up a payment plan with the county.
Set the good example
I make the three-way call between myself, the tax delinquent and the proper person at the county who handles the collection of late payment accounts. I tell the clerk that I’m a real estate investor and I came across this tax delinquent situation. I say I told the owner the county has a policy to accept monthly payments for the back taxes (most counties do). Instead of selling, this taxpayer would like to set up an account to pay the back taxes. This action puts me in good stead with the county. I am viewed as a “good guy” investor and, as a result, the county people treat me well when I need records or inside information or some little courtesy.
I don’t need, nor do I want a situation where a disgruntled seller calls an attorney, as above. Invariably, the attorney will think that a big payday awaits, because every real estate investor has assets like Donald Trump. Yes, it’s true. I saw it on the internet.
Leopards don’t change their spots. Once someone pays their taxes late, then, probably, they will again be a tax delinquent payer. I anticipate this and stay in touch with the delinquent tax payer to see if their situation remains poor or if it gets better.
If the tax delinquent is not able to make the monthly catch-up tax payments, the county will proceed with tax foreclosure. Therefore, as the only person who tried to help this owner in distress, you could be the first call they make when deciding to sell. This is why it is wise to treat people in a considerate manner. You may have to wait a little while for your reward, but it will come, and you won’t have to worry about any lawsuits; sellers will view you as a valued person because you did not take advantage when you could have.
In addition, the tax delinquent’s financial situation probably has gotten worse. You will be able to get better price and terms than would otherwise be the case because: 1 they recall your good intentions and will trust your evaluation of the situation, 2 they are typically in a worse predicament than before, and 3 they will give you the benefit of the doubt and trust they will be paid when you ask them to take their profit by holding a note which may have no interest nor collateral.
I own a rental property in the same city. The taxes are indeed much, much too high!
Do the right thing
As you can see, the rewards can be substantial when doing the right thing, in the right way, with the right intention.
This is what I teach and what I preach.
See Coach Mitch’s “Ridiculously Simple System…” ™ for details.
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