Losing a home for $400 in back taxes
The elderly and other vulnerable homeowners are losing their homes because they owe as little as a few hundred dollars in back taxes, according to a report from a consumer group. Credit: iStock
Homeowners can lose their homes because they owe as little as a few hundred dollars in back taxes, a national study found. But Long Island officials said the practice generally does not happen here.
Outdated laws in some states allow big banks and other investors to reap windfall profits by buying the houses for a pittance and reselling them, the National Consumer Law Center said in a report released Tuesday.
Tax debts as small as $400 can cause people to lose their homes because of arcane laws and misinformation among consumers, NCLC attorney John Rao said.
Here's how it works: The government files a tax lien saying it can seize a property if the taxes remain unpaid. If the taxes aren't paid, the government auctions the lien to investors.
For a limited time, the homeowner may buy back the home by paying to the investors the purchase price of the lien, plus interest. That's possible because investors haven't bought the home itself -- they have purchased the tax lien, which gives them the right to seize the home later. If the owner fails to pay, investors can sell the home.
On Long Island, homeowners with tax liens are unlikely to lose their properties to investors, said Bruce J. Bergman, a real estate attorney in Garden City and author of "Bergman on New York Mortgage Foreclosure."
"My sense is that this has not been a problem," either on Long Island or elsewhere in New York, he said.
