City Council Bill 20-0593 was introduced by Councilperson McCray to protect vulnerable homeowners from the predatory tax sale. This bill as amended will only provide limited protection for some legacy homeowners. The City’s finance department seems hell bent on protecting this unscrupulous practice of selling tax debt and thus the interest of investors in tax sale certificates. Investors target owner-occupied units because the redemption rates are higher. Evidence suggests that many vulnerable homeowners live in predominantly Black neighborhoods which have been subject to disproportionate property taxes, pushing more owner-occupied units into tax sale. This is in part why the tax sale has been judged to be predatory by advocates.
Continuing this practice is clear evidence that the city has failed to use the tools at its disposal:
- state statute allowing comptroller to remove elderly, disabled and low
income homeowners from tax sale - state statute allowing redemption via payment plan - city law allowing city councilpersons to challenge and have removed properties in their district from tax sale - Homeowner's Tax Credit (which cost the city nothing as the state would pay the city its portion of the taxes on approved applications) to protect vulnerable homeowners in order to make money.
If the intent is to protect vulnerable homeowners this bill should be amended as follows:
1. Remove vulnerable (65 or older, disabled or low income less than $60,000) homeowners from tax sale and put them in a payment plan
a. Enable a 3-5 year deficiency spread to avoid tax sale - charge 5% to cover cost
associated with payment plan
b. Allow all owner-occupied to pay taxes via payment plan - no charge c. Allow non-owner occupied to use payment plan as well -charge 10% to cover costs associated with payment plan
Note: Vulnerable homeowners in this context should include residents of family homes where a grandparent, parent, sibling, aunt, uncle or cousin died intestate and they would become owner of the property at the conclusion of a probate process.
2. Require the City Tax Sale Ombudsman to collect and disseminate a report annually to include but not limited to data and information on:
a. how many tax sale certificates were sold
b. how many properties were removed from tax sale based on the criteria outlined in section 1a
c. how many tax sale foreclosures were filed
d. how many right-to-redeem judgments occurred
e. how many excess funds applications were processed
f. how many properties where removed from tax sale due to city councilpersons
challenge and in what district
g. how many new homeowners tax credit applications were submitted and
approved
h. how many tax sale certificates were offered for vacant and abandoned properties
i. the average amount of the liens for both owner occupied properties and
separately vacant and abandoned properties
j. how many property tax accounts are being paid via payment plan by category (previously delinquent, owner occupied in advance and non owner occupied in advance)
3. In the working sessions for this bill we have heard multiple mentions of potential fraud by residents when using the tax sale exemption. Yet no evidence was presented to indicate that there has been any instance of fraud with the existing credits. In fact the existing credits have been underutilized. But there is evidence that tax certificate purchasers participate in bid-rigging. In fact several were convicted of it. Perhaps the city should focus its ire on fraud and other illegal or unethical actions of tax certificate purchasers by
a. requiring disclosure of when the tax sale certificate purchaser and the lawyer are on in the same
b. requiring law firms to return funds paid to them when there is a subsequent tax sale foreclosure
c. ensuring the return of excess funds when a tax sale foreclosure does occur
d. requiring the Tax Sale Ombudsman to conduct an analysis of the tax sale results to determine if patterns indicative of bid rigging are occurring within the tax sale
Stopping the vicious cycle of tax sale on the most vulnerable homeowners will
- stabilize population loss
- make property upkeep possible
- decrease vacancy
- attract new property owners thus expand the tax base
- enable the city to collect more tax revenue before delinquency occurs
Most importantly these measures will also help build and/or preserve assets for these vulnerable homeowners and their families, thus providing a stepping stone toward wealth creation and retention. This is particularly important for many Black homeowners who have repeatedly had their property rights and values eroded by laws, policies, regulations and practices of Baltimore City, State and Federal Government.
Nneka N’namdi
Bree Jones
Andre Robinson
John Kern/ Tim Chance
Stop Oppressive Seizures Fund
