OR IMMEDIATE RELEASE: Nov. 21, 2016
Cristian Salazar, 646-786-0898, Center for NYC Neighborhoods, [email protected]
The Coalition for Affordable Homes Releases Report on Impact of New York City’s Tax Lien Sale on Small Homeowners
Coalition of 28 organizations finds lien sale disproportionately affects communities of color, leads to onerous fees and interest payments that enrich investors and lawyers, and jeopardizes homeownership
NEW YORK, N.Y. – The Coalition for Affordable Homes released a new report today that analyzes the unequal impact of New York City’s tax lien sale on small homeowners. “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.
“This report shows that the tax lien sale adds to the instability of predominantly black and Hispanic neighborhoods still struggling from the foreclosure crisis,” said Christie Peale, Executive Director of the Center for NYC Neighborhoods. “The City has a tremendous opportunity to institute policies that will create a more equitable and fair process for dealing with debt collection for homeowners, such as expanding payment options and expediting exemptions.”
Each year, thousands of homeowners who fall behind on their tax or water bills get listed on the City’s annual lien sale. 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. The law authorizing the lien sale expires this year, giving the City Council and Mayor Bill de Blasio an opportunity to reorient the City’s tax collection policies toward affordable homeownership and housing preservation.
Analyzing data between 2009 and 2016, the Coalition 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.
“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.”
“Brooklyn Legal Services Corporation A has seen first-hand how the confusion surrounding the lien sale process and the quick accrual of interest on sold liens puts otherwise debt-free homeowners at serious risk of losing their homes,” said Andrew Malozemoff, Staff Attorney in the Consumer and Economic Advocacy Unit of Brooklyn Legal Services Corporation A. “We believe that even small changes to the way the lien sales are conducted and how tax liens are handled post-sale can have a major impact in educating homeowners about their options and maintaining the stability of these communities.”
“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. “We commend the Coalition for Affordable Homes for this report and encourage the City to adopt its recommendations.”
About the Coalition
The Coalition for Affordable Homes is made up of 28 housing non-profits, community associations, local development corporations, and legal services agencies that have seen the struggles communities face firsthand. Neighborhoods from Jamaica, Queens, to Wakefield in the Bronx — long-time bastions of middle- and working-class homeowners — have faced continued challenges over the past decade: predatory lending, speculators and investors, and skyrocketing housing costs that displace families from neighborhoods they’ve called home for decades. Read more about the Coalition’s platform at http://coalitionforaffordablehomes.org/