Bulk Tax Lien Purchaser Faces Threat Of Being Foreclosed Out From Under By City Over More Recent Delinquent Property Taxes

In Albany, New York, Courthouse News Service reports:

• A Florida company asked a federal judge to bar the city of Schenectady from foreclosing on tax-delinquent properties, claiming it paid the city $43 million for the right to do so.
  
  American Tax Funding, of Jupiter, Fla., says city foreclosures would thwart its own foreclosures in Schenectady and threaten its livelihood.
  
  American Tax Funding is a collections company that buys tax liens in bulk from municipalities that lack resources to recover back taxes from homeowners. American Tax pays cash up-front, then recoups its money from the property owners through repayment plans or foreclosure.
  
  The company paid more than $43 [million] to Schenectady for its tax liens between 2004 and 2009, American Tax claims in its federal complaint.
  
  But in September the city said it would conduct its own foreclosures on tax liens from 2010 and 2011.
  
  American Tax Funding claims that "would render numerous liens that the city sold to ATF worthless," because they could involve some of the same properties.
  
  "The city's threatened foreclosure action would preclude ATF's foreclosures, would preclude ATF from collecting on the payment plans that it has in place with numerous property owners, and would also preclude ATF from purchasing subsequent tax liens pursuant to its right of first refusal under the contracts," according to the complaint.
  
  "Not only would ATF be left unable to recoup its investment in the tax liens if the city were permitted to proceed, these actions on the part of the city will result in the demise of ATF, as AFT would not be able to repay its bank loans obtained to finance the purchase."
  
  ATF's website describes the company as "the nation's leading bulk sale purchaser and servicer of delinquent property tax liens."

For more, see Tax Farmer Sues NY City Over Tax Liens.