Finance

After Ignoring Earlier Reform Calls, D.C. Officials Now Want Changes to Tax Lien Practices

Top District officials said Monday that they were outraged to learn about an aggressive practice of recouping city tax debts that pushed hundreds of city landowners into foreclosure.
September 10, 2013
 

Top District officials said Monday that they were outraged to learn about an aggressive practice of recouping city tax debts that pushed hundreds of city landowners into foreclosure.

Mayor Vincent C. Gray (D) and a key D.C. Council member said they would pursue emergency legislation next week to reform the practice after learning about it Sunday in an investigative report published in The Washington Post.

But both Gray and council members were warned 16 months ago in a letter from a coalition of community advocates and law firms that the District’s collection system deprived homeowners of fair treatment and due process.

The Post found that the District’s Office of the Chief Financial Officer had for years recovered outstanding tax debts by selling liens on resident’s delinquencies to investors. Some of those investors engaged in a predatory system of debt collection that used legal fees and interest to turn $500 in late payments into $5,000 debts.

The practice has allowed investors to foreclose on nearly 200 houses since 2005; lien holders are in the process of seeking control of 1,200 more.

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