What NYC’s tax lien sale means for affordable homeownership

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We are pleased to join with our fellow members of the Coalition for Affordable Homes in releasing a new report that analyzes the unequal impact of New York City’s tax lien sale on homeowners.

The report, “Compounding Debt: Race, Affordability, and NYC’s Tax Lien Sale,” finds that the City is six times more likely to sell a lien on a home in a majority African American neighborhood than in a majority white neighborhood. Latino homeowners were two times more likely to have a lien sold on their home.

The report also documents how the tax lien sale feeds speculation and displacement.

Each year, thousands of homeowners who fall behind on their tax or water bills get placed on the City’s annual lien sale list. The City sells the outstanding debts to private investors who then turn around and add steep interest and fees. The initial debt can double in as little as a year, and failure to pay can lead to foreclosure.

Fortunately, this year the law authorizing the lien sale is up for renewal, which gives City Council and Mayor Bill de Blasio an opportunity to make much-needed reforms to the lien sale and reorient the City’s tax collection policies toward affordable homeownership and housing preservation.

“We meet many older homeowners who are facing foreclosure because they cannot afford to pay the fees and interest that add up after a tax lien is sold,” said Samira Rajan, Executive Director of Grow Brooklyn.

“It is often too late to help our clients prevent the sale of liens by New York City to investors,” said Patricia Kerr, Director of Programs at Neighborhood Housing Services of Jamaica, Inc. “The fact is, when customers come to our offices they are usually in the late stages of their liens being sold by the City.”

Analyzing data between 2009 and 2016, the report found that homeowners who have their liens sold to private investors quickly find themselves saddled with ballooning debts, which can lead to foreclosure. Eastern Brooklyn and Southeast Queens — low-rise, predominantly black and Hispanic areas that contain some of the city’s last affordable neighborhoods — have been acutely affected by the sale.

These same neighborhoods were subject to immense wealth loss during the foreclosure crisis and have recently been targeted by speculators.

You can read the full report.

To see where liens were sold in 2016, go to our tracker.

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