Tish James, Council ask mayor to delay lien sale that he just OK’d

Delinquent payers should get chance to apply for mortgage relief, AG says

Attorney General Letitia James and Mayor Bill de Blasio (Getty)
Attorney General Letitia James and Mayor Bill de Blasio (Getty)

UPDATED Oct. 27, 2021, 10:33 a.m.: A month after Mayor Bill de Blasio promised to hold the long-delayed tax lien sale at the end of the year, when he will leave office, Attorney General Letitia James and City Council members are asking that he reverse course.

In an email Monday to the mayor, James said she found it “alarming” that the city would move forward with the lien sale, subjecting owners to foreclosure and possibly homelessness during the pandemic, and just as millions of dollars in homeowner relief is about to hit New York.

The attorney general asked the mayor to delay it to allow more time for the city’s economy to recover.

A letter sent Tuesday by 17 City Council members to the mayor and Department of Finance Commissioner Sherif Soliman echoed James’ call.

The city’s Department of Finance said it would hold the sale Dec. 17, but not for properties with water and sewer arrears.

The sale, which offloads tax liens to third-party collection agencies, can add fees and interest of up to 18 percent that compounds daily to homeowners’ debt, according to the Center for New York City Neighborhoods. The mounting debt can force property owners into foreclosure and out of their homes.

The city repeatedly sends warning letters to owners with unpaid bills, but some are ignored, unnoticed or unread until it is too late.

The state has applied for $540 million in federal mortgage relief, a chunk of the $10 billion Homeowner Assistance Fund available nationally through the American Rescue Plan Act. The funds are awaiting Treasury approval; however, James estimated they would roll in within the next month.

“It does not make sense to move forward with a lien sale before homeowners are able to even apply for these funds,” James wrote.

Read more

James added that her office had learned that 90-day notices sent to homeowners to inform them of their liens did not include a form that allows those who experienced Covid-related hardship to opt out of the sale.

State law mandates that landlords and mortgage services send tenants or homeowners a copy of the form before beginning an eviction or foreclosure. James said the city should hold itself to the same standard.

Sign Up for the undefined Newsletter

By signing up, you agree to TheRealDeal Terms of Use and acknowledge the data practices in our Privacy Policy.

James added that she had heard of no in-person outreach event by the Department of Finance to educate homeowners on how to avoid the sale.

“For these reasons, I urge you to delay the lien sale until the city’s economy stabilizes and to use that time to assist homeowners at risk of foreclosure to obtain federal foreclosure prevention funding and apply for state-level foreclosure relief,” she continued.

De Blasio has acknowledged problems with past lien sales but said it is an effective way to get property owners to pay the city what they owe, and for those who don’t, to convert their debts into revenue for the city.

A City Hall spokesperson said the city has “greatly reformed the lien sale to help more homeowners” and is working with the task force on further reforms.

Homeowners have a number of options to avoid the sale, including entering into a payment plan, submitting a declaration form, qualifying for an exemption and claiming hardship as a result of Hurricane Ida.

The mayor’s office confirmed that the sale is still planned for December and said that the pool of homeowners at risk of lien sale is 40 percent smaller than in previous years and should decline further as the city sends warning letters.

The spokesperson said that there is a “simple online form” to claim hardship and that the city will be distributing hard copies of it with the 30-day notice that at-risk owners receive.

Throughout the pandemic, the attorney general has called for amendments to the lien sale, urging the mayor in August 2020 to postpone it. In December, she asked him to reform the process by using community land trusts and land banks instead of an auction so residents could stay in their homes.

A task force was established last year to make the process more fair, but James said its recommendations are not ready.

“I would like to reiterate my previous position that New York City needs more than a short-term fix for the tax lien sale,” James wrote. “2021 will not be the only year when the lien sale causes significant harm to our families and communities.”

This story has been updated with a response and information from the mayor’s office.