76-Year-Old Widow Living On Food Stamps, Social Security Leads Fight To "Clean Up Part Of What Has Become A Really Ugly System" That Leaves Tax-Delinquent Homeowners Vulnerable To Tax Lien Investors Running Inflated Fee Ripoffs; Out-Of-Town-Based Outfit's Attempted $4,221 Clip To Satisfy Unpaid $469 Bill Triggers Battle
In Louisville, Kentucky, the Courier-Journal reports:
- Rose Harper, a 76-year-old widow who lives on food stamps and Social Security, “darn-near fainted” in February when she learned Tax Ease Lien Servicing was foreclosing on her Portland house over a $469 tax bill someone else didn’t pay four years ago.
“To this day, I just don’t understand it,” said Harper, who lives in the home on North 17th Street with two grown sons, a grandson and 10 cats.
The foreclosure stems from a Jefferson County property tax bill that Harper’s former landlord failed to pay in 2009 — a debt Harper and her son Deddo Goldsmith inherited when they bought the home in 2011. Harper said she has lived in the house, assessed at $28,880 for taxes, since 1974.
Dallas-based Tax Ease, one of the biggest purchasers of overdue tax bills in Jefferson County, now demands $4,221 to settle the bill — an amount Harper and Goldsmith are challenging as excessive in a class-action countersuit filed in April.
John Dwyer, a Louisville attorney representing Harper and Goldsmith, said the countersuit is an effort to “clean up part of what has become a really ugly system” in which companies like Tax Ease try to reap a bigger return on their investment in tax debt by overcharging homeowners to settle unpaid bills.
When homeowners don’t pay their taxes, companies like Tax Ease can pay the bill and then charge the homeowner 12 percent interest plus fees until the overdue tax — and interest — are paid.
In addition to the interest, state law allows such investors to add pre-litigation costs, attorney fees and other costs to the final tab. The Harper and Goldsmith suit claims Tax Ease inflated these charges, some of which were paid to affiliated companies.
- The other counterclaimants in the class action are Phillip and Karyn Julian, owners of a home on West Kentucky Street near Victory Park, who got a $3,993 payoff demand from Tax Ease for a 2009 tax bill that was originally $461, according to the suit and Courier-Journal research.
- The single biggest charge [in dispute] is $961 in legal fees charged by [...] Hayden, Craig & Grant, to file the foreclosure on Harper’s home. The counterclaim says $961 is unreasonably high for a foreclosure complaint containing multiple errors that appeared to be “generated by an automatic template.”
- The suit alleges that Tax Ease used what [what are described as] “shell” companies to provide services at inflated costs, which pumped up the bill and increased its return on investment.
For example, the list of charges Tax Ease gave Harper and Goldsmith includes a $595 fee “estimate” for a title report prepared by a company called Blue Grass Abstract.
Blue Grass Abstract is an affiliate of Tax Ease, and Kentucky records show it has the same Dallas address as Tax Ease. Phillip Migicovsky, a Texas resident, is involved with both companies, according to the counterclaim.
The $595 estimate for a title report is “up to 800 percent above the usual and customary rate” for Jefferson County, according to the suit. The counterclaim references a 2011 order from a judge in Shelby County allowing Tax Ease to charge $100 for a “title search.” State law allows tax investors like Tax Ease to recoup “actual, reasonable” attorney fees when foreclosing to enforce their liens.
- Tax Ease’s list of charges also includes $100 for a second affiliated company, Lien Data Services, to perform an “address check” using Jefferson County PVA records, a service that has a “maximum statutory cost” of $2, according to the counterclaim.