NY Daily News
By Phyllis Furman
Talk about kicking someone when they’re down.
Hundreds of New York City homeowners hurt by Hurricane Sandy are about to get hit by another blow — the sale of their tax liens to debt collectors, the Daily News has learned.
Tax liens — unpaid property taxes, water bills and other property-related charges — are sold annually by the city to third parties who charge hefty interest payments and fees.
Often, homeowners whose liens are sold end up in foreclosure because they can’t keep up with the added cost.
This year, many of the liens belong to homes damaged in Brooklyn and Queens. As of a month ago, 720 homes were caught up in this mess, according to data compiled by the Center for New York City Neighborhoods.
“The sale of debts to third parties will saddle these already struggling homeowners,” said Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Proje, which promotes economic justice.
The interest alone that can be charged by a debt collector on a home valued at less than $250,000 can be as high as 9%; it can be higher for more expensive homes.
Other fees include an upfront surcharge of 5% of the lien amount, and thousands of dollars in legal and other fees, Zinner said.
Judy, a homeowner in Canarsie, said her basement was flooded in the storm and damage to her home was not covered by insurance. On top of that, she owes $8,000 in water and sewer bills to the city.
In January, she learned that her tax liens would be sold to third-party debt collectors after seeing her home listed in the newspaper.
“We are already stressed financially,” Judy said. “We’re trying to get back up from the devastation.”
City Councilman Lew Fidler, who represents Brooklyn neighborhoods badly afflicted by Sandy, including Canarsie, is calling on the city to take properties hurt by Sandy off the list of tax lien sales for a year.
“We are asking the city to give these folks another year, to help get them back on their feet,” said Fidler, a Democrat.
The city had previously removed some households that have faced extreme damage from the list, but shows no sign of going further.
“Some properties were delinquent on tax and water payments for as many as three years before the storm,” said city Finance Commissioner David Frankel.
“It would be unfair for property owners who did the right thing and paid their bills on time to allow others to skate by without action.”