AJC Shines More Light On Fulton County Tax Lien Inflating Rackets; Investors Who May Not Be Responsible Players An Important Public Policy Concern

In Fulton County, Georgia, The Atlanta Journal Constitution reports:

• Companies that buy Fulton County liens for unpaid property taxes themselves owe hundreds of thousands of dollars in overdue property taxes, calling into question the county’s justification for selling the liens: that it saves taxpayers’ money.

• Fulton County government’s practice of allowing private companies to collect delinquent taxes is controversial and barred by almost every other Georgia county and by 30 states, largely because of its potential to victimize property owners.

• But a closer look at the industry by The Atlanta Journal-Constitution raises questions about the lien purchasing companies and about Fulton’s defense of the practice. Fulton tax officials declined to be interviewed for this story, but have said in the past that selling liens to private companies helps them collect a higher percentage of overdue tax bills.

• Experts such as Frank Alexander, a law professor at Emory University who specializes in real estate and foreclosure law, question the practice. “The important public policy point is that the purchaser of the tax liens and properties at tax sale are not necessarily responsible players, and they may actually contribute to the problem,” Alexander said. “We are selling to these [companies] governmental power to collect tax liens and the question is, are these players who we want exercising this power?” Alexander said.

• Fulton County routinely sells tax liens to private third parties who can pump up the lien value by tacking on monthly interest charges and use foreclosure to collect the debt.

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• [F]or an article published in December, the AJC talked to Fulton property owners who, because of failings of the system, didn’t discover they owed overdue taxes until their homes were in foreclosure and they owed thousands of dollars to settle relatively small tax bills.(1)

• There’s a built-in incentive for the private lien purchasers to draw out the already complex process, because they make more money: The companies can continue adding fees and interest to the costs a property owner will have to pay to settle the debt.(2)

For more, see Private firms collecting back Fulton taxes fall behind (Controversial practice not allowed in most places).

(1) See Private Investors Score Big Profits In Tax Lien Ripoffs As County Process Allows For One Homeowner's $291 Delinquent Tax Bill To Grow To $8,200.

(2) For similar "tax lien-inflating" rackets reportedly going on elsewhere, see:

• Louisville, Kentucky: Louisville-Area Tax Lien Investors Accused Of Squeezing Delinquent Owners w/ Bogus Legal Fees When Redeeming Homes; Suit Seeks Class Action Status,

• District of Columbia: DC AG Targets Tax Lien Investor In Alleged Legal Fee Ripoff Of Delinquent Taxpayer-Homeowners,

• Anne Arundel County, Maryland: Maryland Judge Grants Ground Rent Investors Class Action Status In Suit To Preserve Their Ability To Snatch Homes Over Miniscule Debts,

• Baltimore, Maryland: More Light Shines On Baltimore City Tax Sale Auctions & Bid-Rigging Allegations (Real estate investors snatched one homeowner's property over what began with an unpaid city water bill of $362. The homeowner was incredulous when the price to keep her property shot past $3,600.).

• Baltimore, Maryland: The Other Foreclosure Menace (Mortgage Paid Off, Woman Loses Home -- Over a Small Water Bill); and go here for accompanying VIDEO: Tapped Out: How an Unpaid Water Bill Cost a Baltimore Woman Her Home.