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The Disaster of Tax Liens on Low-Income Homeowners

During the Giuliani reign, the mayor created a tax lien program in which homeowners and landlords could easily lose their homes and apartment buildings. If a homeowner fell behind in his tax payments, the finance department would notify the homeowner and after waiting a short period of time, the finance department would sell the tax lien to a private corporation created by the mayor that would charge additional fees and 18 percent interest and attempt to collect the long, overdue taxes. If unsuccessful, the corporation would foreclose on the homeowner. The city would have one more homeless family or families.

There is another consequence to foreclosure. Homes are often bought by developers and renovated into market rate housing. This means that such homes are no longer available to low-income families.

Of course, it is isn't just homeowners who find they can no longer pay their property taxes but it is landlords of large buildings. the consequence of foreclosure for tenants in this buildings is often disastrous since no one is in charge of maintaining the building.

One city agency, the Department of Finance, is pleased because money is collected for the general fund and when the home is sold, hopefully the new owners will pay their taxes. However, other agencies are not pleased, Department of the Homeless and the Department of Housing Preservation and Development, because it means that more people have now lost their homes and are homeless, and that the home is probably lost to the low-income market. Very few people wish to return to the days when the city foreclosed and thus held numerous houses that it could not maintain. But there ought to be a better solution.

Letitia James, the Public Advocate, has just introduced new legislation to stop homeowners and landlords from losing their homes and to keep homes available to the low-income market. She has asked the city council to create a preservation trust that would purchase the tax debt and sell the buildings to nonprofits that would preserve the housing as affordable. Although her model needs to be examined, it clearly makes more sense than the disastrous program established by former Mayor Giuliani.


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