The Huffington Post Investigative Fund website (the first I’ve heard of it) has a lengthy article on a new way that big banks are driving foreclosures. Apparently local governments do not have the resources to pursue property tax collection themselves so they bundle up past due liens and sell them off to investors that can then collect or foreclose. I hadn’t heard of this practice but the article makes it sound like it has been long standing. What it says is new in the arena is the activity of major banks and hedge funds that buy the debts and then tack on massive “legal fees.”
In May, the Investigative Fund reported how an unemployed former mental health counselor with four children named Vicki Valentine lost her home even though the mortgage had been paid in full. She had owed $362 on an overdue water bill when investors took over and added thousands of dollars in legal fees she couldn’t afford…
D.C. Attorney General Nickles criticizes Aeon Financial, LLC, a bank-financed investment group from Chicago that buys tax liens in some 10 states. Nickles asserts that Aeon has slammed homeowners, who sometimes owed just a few hundred dollars in back taxes, with $7,000 or more in legal fees.
This is in addition to upwards of 18% interest. When people can’t pay then the homes are taken to foreclosure. What is particularly egregious about this process is that everything is done through front companies that are sometimes not even registered in the country. Not even the governments know who they are dealing with:
Banks and hedge funds usually buy the liens through online auctions that permit them to bid in bulk, and they can use any name they want.
The giant Bank of America, for instance, has bid in Florida tax lien sales using colorful names such as Bennu, LLC, named after a mythical bird said to be the soul of the ancient Egyptian sun god. It also has bid as Osprey, LLC, and Ecru, LLC, named after the French word for a pale brown color…
Tax collectors in Florida don’t always know who they’re doing business with, either. Officials in Pinellas County want to know who exactly is behind a company called GL Funding Limited. Sales records show that GL Funding spent more than $10 million and dominated the tax sale in at least 10 Florida counties, most of them rural or smaller cities where interest rates tended to be much higher than in urban and resort areas.
GL Funding registered with several Florida tax collectors as a company with offices in the Cayman Islands. But other counties list a post office box in Philadelphia as its address. The person who registered GL Funding in Pinellas County’s tax sale provided Pinellas with a telephone number in Dallas, Tex. At that number, a man named Jess Weir declined to tell the Investigative Fund who is investing through the name GL Funding.
Said Sam McClelland, deputy tax collector in Pinellas County, Fla., where GL Funding acquired hundreds of liens earlier this year: “We’re still trying to sort this out.”
Yes, banks that are backed explicitly and implicitly by hundreds of billions of dollars from the government each year are tacking on thousands of dollars of fees and then foreclosing on people that owed a few hundred bucks…from the shadows. Ecru, indeed.
Copyright 2010 The Moderate Voice