City approves lien sale plan

TRD New York /
Mar.March 04, 2011 07:56 AM

A new program to aid struggling homeowners with their property taxes and water and sewer bills is also expected to generate additional revenue for the city, according to the Wall Street Journal. The Lien Sale Reform and Authorization Act, approved by the City Council this week, allows the city to sell liens on two- and three-family homes with up to $2,000 in unpaid bills. The city has been making around $40 million per year off of lien sales since it began selling liens to investors in the 1990s, but until now, it has only been able to sell liens on debts of up to $1,000, and only on single-family homes. Under the program, homeowners are given a 90-day grace period to pay off their bills before the lien is sold, and the vast majority fork over the money to avoid a slew of fees and steep interest rates from debt servicers. The city has recovered more than $5 billion in unpaid bills since 1996 by adding properties to the lien program’s list. Advocates have cautioned that the program may be saddling the city’s poorest and most foreclosure-prone residents with high-cost debt, though the revised measure caps the interest rates that participating debt servicing companies can charge and allows some exemptions for senior citizens and veterans. [WSJ]

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