A dozen U.S. Senators have asked the Consumer Financial Protection Bureau and the U.S. Justice Department to look into residential tax lien sale and foreclosure practices that they say are unfairly––and potentially illegally––causing seniors, veterans and the disabled to lose their homes.
In a letter to the the CFPB and the Justice Department, the senators cited a Washington Post series detailing how in Washington, D.C., third-party investors sometimes purchase tax liens at auctions then try to rake in profits by charging property owners exorbitant processing, legal and other fees that can significantly increase the amount owed by a property owner, sometimes buy multiples of 30 to 40 times. For some property owners, the fees are too much to bear and they are forced to vacate.
The letter noted that some states and local governments permit the elderly and the infirm to defer property tax payments and limit the permissible fees during the tax lien process. But in states and municipalities where that is not the case, the letter claims that some third-party investors are “cynically leveraging these regulatory gaps to maximize profits by imposing often unreasonable and escalating fees” that cause property owners to be squeezed out of their homes.
Regarding foreclosure abuses, the senators want the CFPB and federal prosecutors to examine New York Times accounts of third party vendors employed by banks that have used strong-arm tactics, including breaking into homes to try to evict people even when they are not behind in their mortgage payments.
“This strikes us as another area where significant additional federal oversight may be necessary to protect consumers,” the legislators said.
Eleven of the senators who signed the letter are Democrats: Jeff Merkley and Ron Wyden of Oregon; Ed Markey and Elizabeth Warren of Massachusetts; Tim Kaine and Mark Warner of Virginia; Richard Blumenthal and Christopher Murphy of Connecticut; Robert Menendez of New Jersey; Bill Nelson of Florida; and Mark Begich of Alaska. The 12th senator, Bernie Sanders of Vermont, is an independent who caucuses with the Democrats.