Real Estate Journal Online

One of the most appealing aspects of investing in property tax liens is that they are quite secure – most are paid with interest, and the ones that are not are backed by property that can be foreclosed on with the full power and blessing of the law – the media constantly debates the ethics of this type of investment. As more and more professional tax lien investment companies enter the market due to the attractiveness of this type of investment in today’s market, the issue becomes increasingly volatile. Homeowners insist that the interest rates and foreclosures are “unfair,” while county tax commissioners cite their cities’ need for funding and the homeowners’ ultimate responsibility to pay their property taxes or face foreclosure.

Perhaps the issue is particularly starkly portrayed in Atlanta, Georgia. Many Georgia counties do not sell tax liens because they believe that “putting the process in private hands flips the creditor’s incentive at the property owner’s expense” and “is an abdication of a county’s tax collection responsibility”[1]. However, proponents of the process say that it lowers counties collection costs and generates efficient, quick revenue essential to the public works of any city or county. As a result of these stark differences of opinion – particularly when it comes to the ethics of tax sales, many tax lien foreclosures face hot debate and widely divergent media coverage in the state. For example: one woman who had her property reassessed several years ago and ultimately owed $220 more on her tax bill than she paid now faces over $8,000 in charges, “a profit of 2700 percent” for the investors foreclosing on her rental property. She claims that she never was notified of the debt owed and that her mortgage company did not know about it either. The tax commissioner’s office who ultimately sold the lien claims to have gone “beyond its legal duty” in trying to notify her, and blames the mortgage holder for the failure in payment. Now, then entire case is in court, but the foreclosure is still on while the entire process gets trashed in the media.

Georgia’s association of tax officials has a negative view on the entire process, with the president stating that “while the tactic can benefit a county that has difficulty collecting taxes, it generally does not serve taxpayers and is an unpleasant experience.” Would you invest in tax liens in Georgia, or do you prefer “friendlier” states?

Thank you for reading! Your comments and questions are welcomed below.

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[1] http://www.ajc.com/news/tax-lien-sales-shock-787746.html

Nearly half of the lawyers working in Florida’s largest “foreclosure firms” have been practicing law for less than three years, making the entire foreclosure process – already highly suspect thanks to the robo-signing fiasco back in October – even more susceptible to lawsuits and counter-claims from borrowers who do not believe that their foreclosures were justified[1]. According to Florida bar records gathered by the Palm Beach Post, not only are a large portion of these lawyers lacking in experience, but they have also been laid off since the foreclosure debacle began and many are facing Florida Bar investigations that “could end their careers.”

In the probe initiated by all 50 attorneys general in the country, testimony has come to light indicating that former employees of foreclosure firm David J. Stern believed that the firm itself was involved in deception at many levels, including “hiding problem files from federal auditors, forging signatures and making up documents when necessary.” However, St. Petersburg foreclosure defense attorney Matt Weidner believes that many of the younger lawyers may have been unaware they may have been committing an offense when they were following their employer’s lead. “I know the younger attorneys had no idea what they were doing,” he said.

Even if this is the case, do you think that less than three years’ experience is an adequate excuse for “not knowing” that forgery and fraud are wrong?

We love to hear from you! Please leave your comments, insights and questions below.

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[1] http://www.palmbeachpost.com/money/real-estate/novice-florida-lawyers-draw-suspicion-in-foreclosure-mess-1146402.html

Real estate investment trusts (REITs) are starting to find it necessary to “branch out” from their target trophy properties (commercial properties that are full of paying tenants) in order to get the deals and returns that their member investors want[1]. This is good news for the owners of troubled commercial properties and those that are just not quite “golden,” as the commercial market continues to make headway toward healing. With $17 billion in cash on hand for real estate investing (estimated by Jones Lang LaSalle), REITs have to start buying more commercial properties, which is good news for those “less-than-toney addresses [that] have gone begging” in 2010.

Thanks to some serious competition for trophy properties that is driving their prices up to the point where they are no longer viable investment deals, REITs are reporting that they are “more willing to branch out into bargain secondary locations, Class B properties and value-added Class A buildings,” in addition to “getting more comfortable with taking on slightly more risk.” According to analysts, these sentiments indicate that investors are likely feeling less concern about a double-dip recession or a double-dip in the commercial market. Hopefully those who predict that “the plunge in real estate may have bottomed out” are on target for their 2011 outlook.

What types of risk are you currently taking in your real estate investing?

We love to hear from you! Leave your comments and questions below.

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[1] http://www.startribune.com/business/112403594.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiU