NJ Homeowner's Tab To Recover Home Lost In Municipal Lien Foreclosure Stemming From Unpaid $140 Sewer Bill Could Top $50K

In Middletown, New Jersey, NBCNews.com reports:

• For Dominick Vulpis, a $140 sewer bill has become a $50,000 nightmare. Vulpis didn’t know he had a big problem with the four-year-old bill until last December, he said, when he was served with papers notifying him that he had lost his Middletown, N.J., home to foreclosure. Neither he nor his wife were notified of the foreclosure process until the final judgment was granted last December, he said.
  
  “It was never brought to my attention until it was too late and we were served with papers saying we had to move out of our house,” said Vulpis, a 60-year-old plumber. “I may pay a bill late, but I pay them. I’m not trying to beat anyone for $140.”
  
  Incredibly, that $140 debt snowballed to the loss of his home after the town sold the lien on his property to an investor, an increasingly common practice as cash-strapped cities and towns try to raise badly needed revenues to close widening budget gaps.
  
  Vulpis eventually got the foreclosure overturned and didn't have to move out of his house, but not before his attorney negotiated a settlement with the investor. His mortgage company put up $37,500, which was paid to the investor and will be added to Vulpis’ mortgage balance, according to his attorney, who is now negotiating a loan modification with the lender. Combined with attorney fees and added interest for the higher mortgage balance, Vulpis’ total tab could top $50,000.

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• [A]ttorneys say homeowners often aren’t given proper notice to defend their home from seizure before it’s too late.
  
  Two years ago, the District of Columbia sold a tax lien on the home Stanley Stefan lived in for nearly 40 years. The problem started six years ago, after district tax officials erroneously revoked a homestead exemption, which has since been restored, he said.
  
  But Stefan, a 68-year-old retired chauffeur, said he didn’t learn until this year that there’s still an unpaid balance on his tax bill, which an investor is now trying to collect, with interest. Stefan has hired an attorney to try to reverse the tax sale.
  
  “I want my property and no payment: I don’t think I’ve done anything wrong,” he said. “I paid what I owed. I shouldn’t be held accountable for a mistake the district made.”

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• Some states and local governments have moved to protect homeowners from the harshest outcomes. Last year, New York City passed an ordinance that allows homeowners to work out payment plans when they fall behind, caps the rate investors can charge on uncollected tax bills and banned tax lien sales for debts of less than $2,000.
  
  The law also made it easier for homeowners to apply for an exemption that prevents their liens from being sold. As a result, the number of tax lien sales has dropped 24 percent so far this year, according to the New York City Comptroller's office.

For more, see How a $140 bill snowballed into foreclosure.