Homeowners

How Big Banks Can Steal Your Home From You Even If Your Mortgage Is Totally Paid Off

Foreclosure - Photo by respresDid you know that the big banks have a way to legally steal your house from you even if you don’t owe a single penny on your mortgage?  Big banks and hedge funds are buying billions of dollars worth of tax liens from local governments all over the nation, and they are ruthlessly foreclosing on homeowners when they can’t pay the absolutely ridiculous penalties and legal fees that are tacked on to the original tax bill.  As you will see below, one 76-year-old man lost his $197,000 home that he fully owned over a $134 tax bill.  A 95-year-old woman lost her $300,000 home over a $44.79 tax bill.  This is a very, very dirty way to make money, and the predatory financial institutions that are involved in this business definitely do not want to talk about it.

Of course much of the blame should also be shouldered by the local governments that are coldly selling these tax liens to these ruthless predators.  If local governments want to collect their tax bills, they should do it themselves.  They should not be auctioning off their tax liens to cold-hearted financial institutions that are very eager to commit a legal version of highway robbery.

A few days ago, the Washington Post reported on the tragic story of a 76-year-old former Marine named Bennie Coleman.  Coleman had originally purchased his home with cash, but that didn’t stop tax lien predators from stealing his home over an unpaid $134 property tax bill…

On the day Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.

Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.

All because he didn’t pay a $134 property tax bill.

So why couldn’t he pay such a small bill?

Well, as the Post explained, these big banks and hedge funds keep tacking on interest, penalties and legal fees until the tax bills are many times the size that they originally were.  When the distressed homeowners can’t come up with thousands of dollars to pay off the debts, the big banks and the hedge funds move in for the kill…

For decades, the District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.

But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.

In particular, hedge funds have discovered that this is a great way to make huge piles of money.  The following is a short excerpt from a CNN article that was published back in May…

With buyers identified only by numbers or unrelated names, the fragmented, unregulated industry is opaque. Even the market’s size is debated — $15 billion a year, according to Howard Liggett, the chief executive of Distressed Real Estate Consulting Services, or $5 billion a year, according to the National Tax Lien Association, a trade group. While returns are a closely kept secret, investors typically make between 2.5% and 10% a year, or in the low teens for larger buys.

“The hedge funds are chasing yield in this business” says Albert Friedman, a principal at Alterna Capital, an alternative investment firm in Boca Raton that buys tax liens.

Insiders estimate hedge funds now control 40% of the tax-lien market, from under 5% five years ago, with regional banks, obscure partnerships sporting names like God’s ATM LLC, and mom-and-pop investors making up the rest.

And a number of “too big to fail” banks are involved in this business as well.

In a previous article, I described exactly how this works…

1) The big Wall Street banks set up or invest in shell companies that will disguise who they really are.

2) These shell companies run around and buy up all of the tax liens that they can get their hands on.

3) Predatory levels of interest (in some states as high as 18 percent), fees and penalties rapidly pile up on these unpaid tax liens.  The affected homeowners quickly end up owing much, much more than what the original tax bills were for.

4) If the collecting firm has to hire a lawyer, then that gets charged to the homeowner as well.  The bloated legal fees for some of these lawyers can end up being the biggest expense of all.

5) If the tax liens do not get paid, the collecting firms move in to foreclose as quickly as legally possible.

According to the Huffington Post, Wall Street banks such as Bank of America and JPMorgan Chase have been gobbling up several hundred thousand tax liens from local governments.  It appears that “distressed housing markets” are being particularly targeted.

Many of these tax liens are sold in online auctions, so it is unclear if many local government officials even realize who the big money behind many of these shell companies is.

These big financial institutions may consider this to be “good business”, but the truth is that they are absolutely shattering lives in the process.  This is particularly true when it comes to older people that do not fully understand what is happening to them.  Just consider the following examples from a recent Washington Post article…

A 48-year-old math teacher paid his taxes in 2007, but the tax office took his $1,400 payment and applied it to the wrong house, crediting an entirely different taxpayer.

A 58-year-old bank employee almost lost her house in 2010 because the tax office mistakenly sent bills and notices to a wooded lot across from a strip shopping center in Virginia — 12 times.

A 69-year-old hat designer was given the wrong payoff amount and ended up in court to save her property, owned by her family since 1943.

Those homeowners found out about the mistakes in time to fight. Ninety-five-year-old Daisy Dolsey, living in a nursing home and struggling with Alzheimer’s, wasn’t so lucky: She lost her $300,000 house over a $44.79 tax debt even after she paid her taxes.

Doesn’t that just sicken you?

And then the big banks and the hedge funds have the gall to wonder why people dislike them so much.

In this day and age, large financial institutions have become more cold-hearted than ever before.

Always make sure that your property taxes are fully paid, and always keep a paper record of all financial transactions involving your home.

If you do slip up and make a mistake at some point, there is a very good chance that a ruthless financial institution will try to swoop in and steal your home right out from under your nose.

“This Is A Glock Block” – Frustrated Homeowners All Over America Are Taking Matters Into Their Own Hands

Glock - Photo by SmarterlamAll over the United States, frustrated homeowners are banding together, arming themselves and patrolling their own streets.  One of the primary reasons this is happening is because police budgets all over the nation are being slashed at a time when violent crime rates in the United States are increasing and many our our largest cities are being transformed into crime-infested war zones.  So instead of waiting for government to come up with a solution, many Americans are taking matters into their own hands.  For example, one community group in Milwaukie, Oregon has started posting flyers with an ominous message for potential criminals: “This is a Glock block. We don’t call 911.”  You can see a photo of this flyer right here.  One of the founders of the “Glock Block” is a breast cancer survivor named Coy Tolonen.  She decided to arm herself after a thief stole one of her favorite statues out of her front yard while she was watching…

It’s mostly petty crime that neighbors are sick and tired of:  stolen lawn ornaments, vandalism.  But for neighbors like Tolonen, a breast-cancer survivor, that’s enough: “I will defend myself — and my home,” she told KOIN 6 News.

Tolonen recently had a beloved statue she calls “Lilly Rose” stolen off her front porch. She said she even saw the man who stole it and tried to chase him down — but he got away.

This was the last straw for Tolonen, who decided to take a class to get her concealed carry permit.

We are seeing similar things happen in other areas of the nation.  As I wrote about yesterday, the size of the police force has been cut in half in the city of Detroit over the past ten years.  Meanwhile, crime rates have skyrocketed.  So frustrated citizens are now teaming up with the police to patrol their own neighborhoods…

Volunteers given radios and matching T-shirts help officers protect neighborhoods where burglaries, thefts and thugs drive away people who can’t rely on a police force that lost a quarter of its strength since 2009. With 25 patrols on the streets, the city hopes to add three each year. Meanwhile, the homicide rate continues rising.

In some wealthier neighborhoods around the country, citizens are pooling their resources and are hiring private security firms to ward off criminals.  Just check out what is happening in Oakland…

After people in Oakland’s wealthy enclaves like Oakmore or Piedmont Pines head to work, security companies take over, cruising the quiet streets to ward off burglars looking to take advantage of unattended homes.

“With less law enforcement on the streets and more home crime or perception of home crime, people are wanting something to replace that need,” says Chris de Guzman, chief operating officer of First Alarm, a company that provides security to about 100 homes in Oakland. “That’s why they’re calling us and bringing companies like us aboard to provide that deterrent.”

According to Steve Amitay, the executive director of the National Association of Security Companies, this is also happening in other high crime cities such as Atlanta and Detroit.  In fact, it is being projected that the “private cop” business is going to absolutely boom in the years ahead.

But not everyone can afford to hire private cops.  Those with more limited resources are trying to cope with rising crime any way that they can.

In Chicago, firefighters are actually being enlisted to provide security for public school students walking to and from school…

The city of Chicago has ordered its firefighters to provide security for public school students walking to and from class through the city’s gang turf, according to an official memo from the Chicago Fire Department that WND obtained.

The memo, signed by Chicago Fire Commissioner Jose Santiago, states that the fire department will have “a strong physical presence” along student walking routes for three weeks at the beginning of the school year in the fall.

Sadly, this is just the beginning.  As the U.S. economy continues to get even worse, so will crime, gang activity and social decay.

But that doesn’t mean that everyone will be bad.

The truth is that there are still some decent people out there.

Today, someone sent me a story about human decency that made me smile.  In Laguna Niguel, California a man accidentally sold a wooden watch box for $10 that contained his wife’s $23,000 wedding ring.  When his wife found out about it, she was absolutely crushed…

Racquel Cloutier was distraught after her husband, Eric, told her he had sold the wooden watch box in which she had hidden the ring before going to hospital to have their fifth child. “I immediately started crying,” said Mrs. Cloutier, 31, of Laguna Niguel, California. “I just wanted the ring to be in a safe place and out of reach from my two-year-old twins.”

Fortunately, the box had ended up with a very honest couple…

A dozen kilometres away, in Mission Viejo, Alyssa and Andrew Lossau were frantically searching for a set of keys. They looked inside a box that Mrs. Lossau’s mother, Chaundel Holladay, had bought at a garage sale and given them as a gift.

Inside, they discovered the three-carat diamond ring. Mrs. Lossau found an email address for Mrs Cloutier and contacted her. “It is giving me faith in people again,” said Mr. Cloutier, 38. “By the grace of God it ended up with the most honest people,” said his wife.

So that story had a very happy ending.

There are still people out there that are ready and willing to do the right thing.

But not everyone is that way.  It has been said that desperate people do desperate things, and when the next major wave of the economic collapse strikes there are going to be millions of very desperate people out there on the streets of America.

Now is the time to get prepared for that.