Mayor Acts Fast, Calls For Moratorium on Predatory Tax Lien Sale System

• September 9th 2013

by Shilpi Paul

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After reading a recent Washington Post exposé that revealed a predatory tax lien sale system that resulted in homeowners losing their houses over minor tax debts, Mayor Gray called for an immediate moratorium on the practice, reported Housing Complex Monday morning.

As outlined in the Post, when homeowners fail to pay property taxes, the District’s Office of Tax and Revenue will place a lien on the property. Then, once a year, they hold an auction and sell the liens to investors who then charge interest and legal fees on the debts. Debts originally as small as $134 can quickly balloon to thousands, and if the homeowner is unable to pay, their home goes into foreclosure.

Since 2005, 200 houses have been foreclosed on, and apparently 1,200 more are at immediate risk. The victims are often elderly and living in poor neighborhoods, and many owned their homes outright.

Mayor Gray was reportedly “shocked and outraged” by the findings. From Gray spokesman Pedro Ribeiro:

“[The mayor] is calling for an immediate moratorium on OCFO’s sales of liens and foreclosures, and will transmit emergency legislation addressing the situation to the Council for them to consider when they come back from recess. The legislation will put in place needed protections for homeowners – and particularly seniors, who appear to have been the group most frequently affected by this practice.”

Mayor Gray acted quickly; the article was published in Sunday’s paper. A follow-up story, which casts a shadow of suspicion on the District and the six firms who won many of the liens, was published today. Tomorrow, the third article in the series will dig into mistakes made by the District in declaring property owners delinquent even after they paid their tax debts.

This article originally published at https://dc.urbanturf.com/articles/blog/mayor_gray_acts_fast_calls_for_moratorium_on_predatory_tax_lien_sale_system/7531.