Wednesday, January 23, 2013

DC City Council Considers Bill To Minimize Inflated Fee Scams That Target Homeowners In Connection With Delinquent Real Estate Tax Foreclosures

In Washington, D.C., The Blog of Legal Times reports:

  • District of Columbia Councilmember Jack Evans (D-Ward 2) introduced legislation this week aimed at changing how the city manages the sale of properties with delinquent taxes, from requiring more notice to homeowners to lowering the interest rate and placing caps on attorney fees.

    The bill (PDF) stems from a recent push for reform by a relatively new coalition of legal service providers, law firms, and advocates known as the Alliance to Help Owners Maintain Equity, or AT HOME. Proponents say existing laws don't always protect the due process rights of homeowners, especially elderly and low-income residents, and can require them to pay much more than they owed in taxes to redeem their home.

    But lawyers for investors who participate in tax sales have warned that making some of the proposed changes, such as lowering the interest rate on unpaid taxes and capping attorney fees, could push away investors who generate revenue for the city.
  • Once a property is sold [at a tax foreclosure sale], the bill would require the city to notify the homeowner within two months. Under the current law, owners are notified when they're served with the investor's complaint, at which point attorney fees are on the table. The law would reduce the interest rate from 18 percent to six percent and place caps on attorney fees.

    Attorney fees are often the biggest obstacle for homeowners, [supervising attorney for the Legal Counsel for the Elderly Amy] Mix said. Fees can run as much as $4,000 or $5,000, which she said is prohibitive for a homeowner who had trouble paying $1,000 in taxes.

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