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Passages

(172 posts)
Fri Apr 26, 2024, 04:56 PM Apr 26

Investing in Distress

Tax lien investing allows hedge funds and private equity firms to exploit mostly poor, elderly Black and Latino homeowners, leveraging the machinery of local tax enforcement.

BY ANDREW W. KAHRL APRIL 26, 2024

Earlier this year, the hedge fund Alden Global Capital cut a check for $1.75 million to Cook County, Illinois, for the right to prey on some of its poorest and most disadvantaged residents. The hedge fund—notorious for acquiring and gutting local newspapers across the country, and more recently gobbling up mobile-home parks while summarily raising rents, cutting maintenance, and laying off staff—purchased tax liens on over 600 tax-delinquent properties in the nation’s second-largest county. In exchange for paying these properties’ outstanding taxes, Alden Global Capital can charge an escalating rate of interest and attach fees to those debts. If the delinquent taxpayer fails to pay it all back within two years, they can claim ownership of the property.

Tax lien investing is a multibillion-dollar industry in America today, increasingly dominated by hedge funds and private equity firms. It is also a fundamentally predatory enterprise. It utilizes the machinery of local tax enforcement to exploit the hardships and misfortunes of struggling homeowners, and extract their wealth and property. Its chief victims, both the homeowners whose tax liens are purchased and those in the surrounding neighborhoods who suffer collateral damage, are poor, elderly, and disproportionately Black and Latino. Any attempts to promote greater access, affordability, and equity in U.S. housing markets—and undo the damage from racist and exploitative practices in the past—must first attack the financial forces that profit from and exacerbate those inequities today, and the laws that let them do it.

Illinois is one of 27 states that permit or even require local governments to sell tax lien certificates (equivalent to the amount of taxes a property owes) at public auctions once property taxes are past due. Through these tax sales, local governments get the taxes they are owed. The bidders get much more: a high-yield, virtually guaranteed return on their investment, either from interest (in many states, 18 percent or higher) and fees (in some states, virtually unlimited) that a homeowner must pay to remove the lien, or from taking ownership of the property when they cannot.

https://prospect.org/economy/2024-04-26-investing-in-distress-tax-liens/
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erronis

(15,371 posts)
1. Wow. Thanks for this posting.
Fri Apr 26, 2024, 05:29 PM
Apr 26

Need to finish reading but from what I've seen in my little neck of the woods, this is happening.

Passages

(172 posts)
2. You're welcome. I was shocked when I read how pervasive it is.
Fri Apr 26, 2024, 06:26 PM
Apr 26

It is a process one would hope would be illegal, such scamming should be.

slightlv

(2,844 posts)
3. This and losing house insurance are two of the main
Fri Apr 26, 2024, 07:44 PM
Apr 26

things that keep me awake at night. It's hard to do it with both going up... and property taxes and insurance due at the same times of the year. On a SS check, it's worrisome.

I was streaming "Librarians" on Vizio Free+ last night and caught an ad a few times that left my mouth hanging open. Some corp was actually recommending you to sell your house to them, with the promise of living there at least 6 months, as long as you pay rent. It's some sell/lease program that sounds like an excellent way to get some older people kicked out of their homes and into the streets. I know there's a lot of buying homes on the down low here, and then remodeling them some and selling them for hundreds of thousands of dollars -- when the corp bought the home for less than 30k. My daughter just bought one of those homes.

But the sell/lease back is a new one on me... and guaranteed for only 6 months!

erronis

(15,371 posts)
5. Preying on desperation.
Fri Apr 26, 2024, 07:49 PM
Apr 26

I have a friend who is desperate to find a smaller, more affordable place to live. But there's nothing at all in that neighborhood to rent or buy at a reasonable price.

These vulture capitalists are ruining the fabric of our country in any way they can. Wonder if they have connections to (r)epuglicons and outside RW fascists.

slightlv

(2,844 posts)
6. You know they're all Repugs or "Libertarians"...! n/t
Fri Apr 26, 2024, 07:54 PM
Apr 26

It's hard enough to keep ahead of the scam emails and calls, and now they're doing this crap! Hubby nearly has a heart attack believing everything that comes through his email. I try to keep him up to date on what to watch for, but it's hard for him to remember it all.

There are just so many ways this money grubbers can rip your life right out from under you... before you even know what's happening. There should be a lot more protections built in for all of us... but especially for those who are hanging on by their fingernails.

erronis

(15,371 posts)
7. I'm not sure where to post this in DU, there should be a forum to help these concerns
Fri Apr 26, 2024, 08:04 PM
Apr 26

Many of us are aging or helping others and the technical world is changing in some very dangerous ways.

I'd love to contribute to a space at DU that talks about these types of scams. But the General Discussion forum seems to come and disappear way too quickly.

slightlv

(2,844 posts)
8. I agree with you... it doesn't really fall under "technology" either
Fri Apr 26, 2024, 08:29 PM
Apr 26

There's a Seniors group, but I'm afraid discussion along these lines would get lost in all the Medicare, MA, Nursing Homes, Meds, and other things that surround us.

Wonder if the sysops would be amenable to adding a "Scams" forum. I'd hate to limit it just to people like me and hubby... getting up there in years. These are getting bad enough, one almost roped me in on a Remote Work position! Took me all evening to research it and discover it was both a sham AND a scam. Unfortunately, "Monster" didn't seem to care enough to email me back when I informed them on what they had on their listings. Understand, I've been working on computers in all fields from the time of the old WANG systems - hardware, software, Web, and cloud. I'm not easy to pull one over on!

If we could get a forum like this, I'd moderate it with you, if that makes a difference! I don't know how to go about asking... if you do, go for it. If you're as clueless as I am right now, I'll get back on later this evening and see who to mail. Maybe Earl could tell us if there's a forum already created that would fit.

Right now, I've got a weather "safe room" to clean out and outfit for me, hubby, 9 cats, and a huge dog to herd into should any of the tornado watches around here start acting up tonight or in the next few days. Gotta take care of the babies! (LOL)

erronis

(15,371 posts)
9. Also hoping there is a good place for these discussions. DU might not be it, but other sites have become unusable.
Fri Apr 26, 2024, 08:42 PM
Apr 26

I read hundreds of different sites in the course of a week and comment on many.

Almost all that offer technical assistance have been taken over by a "supply your personal information and we'll let you ask." Many of these also include "premium" subscriptions where you may get some curated answers.

I trust very few that rely on paid subscriptions.

I doubt DU has a way to vet advice other than our wonderful MRT and jury system. But it might be worth asking for a forum for "Fraud Advice" or some such.

slightlv

(2,844 posts)
10. Being an old time techie...
Fri Apr 26, 2024, 10:51 PM
Apr 26

I'm still of the "information is to be shared" view... I read a few sites, including some tech sites, but I rarely comment anywhere but here. Despite my loud mouth at times, I feel safe here. And I think a forum like we're talking about could be of use to more than a few. And as much support as I've gotten... especially over the last few months... I'd like to be able to do something to give back to the community.

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