The Real Deal New York

City to sell tax liens of Sandy-hit homeowners

May 14, 2013 09:30AM

The city will sell the tax liens of hundreds of Hurricane Sandy-hit homeowners to debt collectors, the New York Daily News reported.

Tax liens – unpaid property taxes and other home-related charges – are sold by the city each year to third parties. The third parties charge steep interest payments and fees – up to 9 percent interest can be charged on a sub-$250,000 home — to homeowners, who often end up in foreclosure as they struggle to keep up with the added costs.

This year, many of the liens, 720 in all, were on Sandy-damaged homes, according to data from the Center for New York City Neighborhoods seen by the Daily News.

“The sale of debts to third parties will saddle these already struggling homeowners,” Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project, told the Daily News.

Other fees that can hurt homeowners include an upfront surcharge of 5 percent of the lien amount, and thousands of dollars in legal and other fees, Zinner added.

Local elected officials, such as City Councilman Lew Fidler from Brooklyn, are asking the city to take Sandy-hit properties off the list.

But although the city removed the worst-hit homes from the lien list, Finance Comissioner David Frankel told the Daily News that many of the properties currently on the list had been “delinquent on tax and water payments for as many as three years” before Sandy struck.

“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,” Frankel said. [NYDN]  –Hiten Samtani