Have towns been profiting from abandoned properties?

One of the things that I have always wondered about was why cities, towns, counties and states did not take a far more aggressive attitude toward Wall Street banks in the mortgage meltdown. In particular why they didn’t attack false claims in foreclosures that were based upon fabricated, forged, backdated, and false documentation.

Like in Arizona in 2008-9 where I was personally instrumental in developing a plan that had approval from all levels of government and that could have resulted in recovery of huge sums of money that were due for taxes, fees, stamps and everything else. I always assumed someone was actually making money on the deal but I could not figure out who that was until I read this article.

You see, I thought it was axiomatically true that the excess money received over the amount due was supposed to be turned over to the homeowner. That is true in mortgage foreclosures. But it turns out that there are at least some instances where towns profit from the sale of properties sold to satisfy tax liens.

So if the foreclosure of the tax lien is completed the town sells the property to a third party. Usually the reason for the sale is that the property has been abandoned because the property is worth less than the lien.  So the usual thing that would happen is that the town would sell the property for less than the amount owed on the tax lien.

But that isn’t what is happening. the sales of some properties acquired through foreclosure of tax liens is sometimes vastly higher than the amount due on the lien. And I think by shifting the unopposed foreclosure to an unopposed tax lien case there might be a sizable amount of money being made by towns, cities and counties — and maybe some intermediaries and insiders.

In New Hampshire at least that is not the law and I wondering about other places. And I am wondering about whether people have formed illicit alliances that weaponized the tax lien foreclosure process. Inquiring minds want to know.

In this article the town made a hefty profit and kept the money, as it had been permitted to do under state law. But the New Hampshire state court declared that law as authorizing an illegal taking without compensation — violating both state and federal constitutions.

see https://www.unionleader.com/news/courts/supreme-court-rules-that-towns-cant-profit-off-sales-of-tax-deeded-properties/article_ae3b6df7-c510-5dee-9a69-31b798741529.html

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