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Tax Lien Purchases

Sept. 22, 2013

One Hartford homeowner has lived in the same house for thirty-seven years. Butch Lewis raised his children in his home on Vine Street. When the drug dealers tried to take over the neighborhood, Lewis formed a neighborhood watch group and ran the drug dealers out. He plans to stay in his home for the rest of his life.

Mr. Lewis paid off his home years ago. At least he thought he did. According to Lewis, a couple of months ago, he was served with foreclosure papers on the home he thought he had paid off.

In a common practice across this nation, cities sell property tax liens to private companies, companies that then take over the liens, charge interest, and if the lien is not paid off, foreclose on the properties.

According to City Councilman Larry Deutsch, if a homeowner doesn’t pay his taxes, a lien is placed on his property, his tax lien is sold, the lien is taken off the books, and thus, city records show the homeowner is current on all taxes. This is what happened when Butch Lewis checked city records after the ATF representative (American Tax Funding) showed up informing him they were foreclosing on his home.

Unfortunately, Lewis owed the city of Hartford $500 in taxes back in 2006. When he did not pay those taxes, a lien was placed on his home and was the lien was eventually sold to ATF. ATF charges a legal 18 percent interest rate, and waited six years until the $500 debt grew to $13,000 before contacting Lewis.

According to Councilman Deutsch, “It is in the interest of the company to be very quiet and then after two, three, four, five years of 18 percent accumulating, then they’ll let someone know.”

In March of this year, a report by Hartford’s Tax Lien Task Force found:

“the majority of the concerns of taxpayers that have been brought to the attention of the City Council and Mayor’s Office have entered on claims that the taxpayers have not received notice from the lien-buyers…”

According to attorney William Breetz, former city leaders were known to “abuse the system with some, even selling liens to political friends for less than full value.” He did state, however, that this practice is not happening anymore and added that the city of Hartford is not selling liens that are just six months old.

Hartford Tax Collector Marc Nelson said that his office sends multiple tax notices to home owners before selling a lien. And now, instead of just one, lien buying companies must send out additional notices before foreclosing on a property.

According to Deutsch, hundreds of homeowners in Hartford currently face foreclosure because of outstanding liens, and just recently, the City Council voted to approve the sale of another $4 million in tax liens, reaping the city $100,000.

Did ATF foreclose on the home of Butch Lewis? No. Butch was able to refinance his home and pay ATF $10,000 to satisfy the tax lien on his home.

Original story found here.