Vulture Capitalism Hits Maplewood (NYTimes front-page story)

mtierney said:

We bought our first Maplewood house in 1962, leaving our very nice 2 bedroom apartment in Ivy Hill on the 14th floor — all the big windows faced the Short Hills by Ivy Hill park. The rent was $85 a month.

In 1852 my great, great, great, great, Grandfather Butler bought a 63 acre farm for $75. Things in the distant past cost less.  Incomes were also much lower.  Without context, data points like these are meaningless.


everything is relative to the circumstances in which they occur — catastrophic illnesses, job loss, divorce, etc etc. Probably no one reading this can relate to 1853 events, but my Irish ancestors were thinking of fleeing the potato famine in Ireland around that time.  We make plans, decisions, think we have our house in order, but the unsuspected happens.

Whatever the reasons, this disconnected family fell through the existing safe guards supposedly in place, social agencies, medical professionals, banking, our township civic sources, the tax department, etc We don’t know how this family slip thru safeguards — perhaps pride, or very bad financial guidance.

My feeling is that not the only local  family “underwater.”

Sad, too, that things got ugly here before attention switched to the victims of modern day debtors “prisons.”


I knew Eve only in passing, but know others who certainly know her better than I do.

Yes, she is intelligent and articulate but also must be very troubled, which she was able to hide well. She did have neighbors who tried to help her, including a lawyer, but she wouldn't take their advice.

She owed taxes for years.

She should have sold the house and would have been able to walk away with a sizeable amount of money from the equity. From the story it seems she had many troubled relationships including with her sister, two divorces, other problems. It's a sad story all the way around. 


NoraCharles said:

I knew Eve only in passing, but know others who certainly know her better than I do.

Yes, she is intelligent and articulate but also must be very troubled, which she was able to hide well. She did have neighbors who tried to help her, including a lawyer, but she wouldn't take their advice.

She owed taxes for years.

She should have sold the house and would have been able to walk away with a sizeable amount of money from the equity. From the story it seems she had many troubled relationships including with her sister, two divorces, other problems. It's a sad story all the way around. 

I mean, it all comes down to this.  She should have sold the house.  Taxes are taxes, you have to pay them if you want to have streets, parks, fire service, etc.  That's called citizenship.

That said, the practice of foreclosing for debt and not returning any remaining equity is utterly despicable.


I'm not sure where all the Gofundme links that Jaytee provided come from.  Facebook?  I couldn't find any of them on the GoFundMe site, but I did find Eve's own GoFundMe page, and I read her lengthy descriptions of her story with her updates.  She expresses her thoughts in an organized way, and while she's clearly distressed, she sounds rational. 

She says that she was approached repeatedly by realtors who offered to buy her house for a fraction of its worth.  Her updates end in 2020, so the question becomes what happened in the ensuing two years. 

She seems to have raised less than $8000 despite her efforts to publicize her plight on Facebook.  As for not having paid her taxes for years, Nora Charles, do you mean she didn't pay them after the original $12,000 tax lien was purchased by the speculator?  At that point, as I understand it, her debt ballooned because of the 18% interest rate the speculator charged her on top of the original tax debt, as she was challenging the unjust debt in court.*

This type of Job-like misfortune, accumulating incident by incident, happens to certain human beings.  Some people get terribly unlucky.  She certainly miscalculated her options at various points throughout the crisis, but she encountered a number of state officials who were unwilling to give her an ounce of help.  Her final act of desperation can't be justified, but it is understandable. 

* Edited to reflect a better understanding of what happened -- I think.  



Elle_Cee said:

She says that she was approached repeatedly by realtors who offered to buy her house for a fraction of its worth.  Her updates end in 2020, so the question becomes what happened in the ensuing two years. 

The lien sale list is public record. The vultures start circling when the house goes on the list. There's no reason she couldn't have sold for full market value in spite of the low-ball offers she was getting from the vultures, and paid off the debt using the proceeds of the sale. 


In 12/19, this is what Eve wrote in her GoFundMe:

"11:10pm I don't have a voice left, so hoarse...I have been following every lead I can find and you have offered, as well as returning calls from the recognized and allegedly reputable realtors and contractors who a b s o l u t e l y want to "help" me by paying off the lien, as long as they can have the house. For peanuts. Oh, but I can stay for 3-6 months while they work on/in before flipping. O this makes me so angry."

Was she naive or credulous to take the word of the realtors and contractors who sought her out, rather than look for someone who would deal with her more fairly?  Did she just assume she would get the same answer wherever she looked?  Or was this just an excuse not to sell.  I do not know.

The NYT published a story about the writing of the story:

https://www.nytimes.com/2023/02/05/insider/a-house-fire-ignites-a-journalists-curiosity.html?searchResultPosition=3




This is a warning to all of us.  Under current conditions, the time to take action is BEFORE the tax lien is sold.  


Moral of story: i.) tax liens have no redemption period after the foreclosure is complete; ii.) owner who is foreclosed under tax lien does NOT receive equity representing FMV of house in excess of lien; iii.)  tax lien foreclosure negates any and all superior security interests# such as a mortgage company (my best understanding); and iv.) In contrast, a NJ mortgage foreclosure has a brief redemption period* after the foreclosure has been accomplished.

*- a brief period when homeowner can payoff the foreclosed mortgage, interest and fees so that they can redeem the house from the foreclosing mortgage company (my best understanding).

#- security interests that were recorded prior to the tax lien.


RealityForAll said:

iii.)  tax lien foreclosure negates any and all superior security interests such as a mortgage company (my best understanding)

To clarify one point ... a mortgage company will not allow tax payments to fall far enough behind that a lien is possible. Mortgage companies keep tabs on the status. If a homeowner becomes delinquent on taxes, the mortgage company will send stern reminders to the homeowner and then pay the taxes itself so its position is not at risk.

Eve's house was paid off, so there was no mortgage company watching.


This issue has been added to the agenda for a meeting of the Maplewood Seniors Advisory Committee where a member of the township committee will be in attendance.  Any ideas as to how the town can act to reduce the likelihood of someone losing their home due to a tax lien sale may be posted to this thread for follow up.  Hopefully, we can come up with a solution.  While it is obvious that the primary problem rests with State legislation, there should be things we can do at the municipal level to help.   


I spoke with someone in the NJ Dept. of Community of Affairs who is knowledgeable about tax lien auctions, and she said that while the auction must be conducted in the year that follows the tax delinquency, the exact timing of the auction is at the tax collector's discretion and can be postponed as late as December of that year.  Given Eve's insolvency, a delay of multiple months might not have done her much good.  On the other hand, maybe it would have helped. 

Joan, I'm glad the Seniors Advisory Committee will be taking up the tax lien issue and especially glad that a township committee member will attend the meeting.  I hope you'll be able to share some of the outcome of the discussion here. 

I do think the law should be changed.  People should not lose all of their equity in their house because they fail to pay their property tax.  Obviously, a law like this has its most harsh impact on the economically disadvantaged, and our society should support people in straitened circumstances, not penalize them in Dickensian fashion.  


Just a reminder here.

State Senator Richard Codey's phone number is  (973) 535-5017

Assemblywoman Mila Jasey's phone number is  (973) 762-1886

Assemblyman  John McKeon's phone number is (973) 377-1606

Please take a moment to give each of them a call and do let their staffers know how you feel about this matter.


joan_crystal said:

This issue has been added to the agenda for a meeting of the Maplewood Seniors Advisory Committee where a member of the township committee will be in attendance.  Any ideas as to how the town can act to reduce the likelihood of someone losing their home due to a tax lien sale may be posted to this thread for follow up.  Hopefully, we can come up with a solution.  While it is obvious that the primary problem rests with State legislation, there should be things we can do at the municipal level to help.   

It may take a long time for meaningful changes to be made at the state level.  In the meantime, maybe the Township could provide counseling services to seniors who are in similar situations.  No-strings attached advice on how to manage a situation where they are equity-rich but cash-poor.


The town has a part-time social worker, shared with SO, who works exclusively with the senior community in both towns,  I will ask her if she is aware of counseling services that could help someone whose property ends up on the tax lien sale list. Thank you for the suggestion.


I'm pretty sure reverse mortgages are something of a scam. But wouldn't taking out such a mortgage be preferable to losing one's home?


ml1 said:

I'm pretty sure reverse mortgages are something of a scam. But wouldn't taking out such a mortgage be preferable to losing one's home?

I know someone in maplewood who ended up losing their home after doing the reverse mortgage. 
The best option if you really can’t pay the taxes on your home is to sell it, take the money and either rent an apartment in town or move to a state where the property taxes are less. 
In Eve’s case she had no steady income, so renting could have been tricky. But losing it all plus looking at jail time was the worst thing that could have happened. Sad.


ml1 said:

I'm pretty sure reverse mortgages are something of a scam. But wouldn't taking out such a mortgage be preferable to losing one's home?

Failure to pay real property taxes could result in foreclosure by the reverse mortgage holder.  Possibly not a great alternative in this case.  


RealityForAll said:

Moral of story: i.) tax liens have no redemption period after the foreclosure is complete; ii.) owner who is foreclosed under tax lien does NOT receive equity representing FMV of house in excess of lien; iii.)  tax lien foreclosure negates any and all superior security interests such as a mortgage company (my best understanding); and iv.) In contrast, a NJ mortgage foreclosure has a brief redemption period* after the foreclosure has been accomplished.

*- a brief period when homeowner can payoff the foreclosed mortgage, interest and fees so that they can redeem the house from the foreclosing mortgage company (my best understanding).

(My emphasis).

It's been a while since I had reason to look at such matters, but, I don't think that the lien sale negates a security interest. As a tax lien interest, I think it would subordinate the prior security interests.

But now you got me wondering what happens to a prior federal income tax lien? A subsequent?

Just thinking out loud.

TomR


With regard to reverse mortgages:

I got mail one day offering me a "firm" $$$$ offer. It was about 18% of the taxable assessed value.

Being of a curious nature, I solicited a few more "bids".

They all came in at about 20% of assessed value.

If you're a widow/widower with no cognizable heirs, and you don't much care for alma mater, and there are WAY sufficient assets upon which to live, I could see somebody taking the plunge for: the car they always wanted; the vacation they never took; the extravagance of what ever nature.

Otherwise, a person would have to be way desperate and still have some reasoned degree of hope that the next corner will end their financial problems, before they go the reverse mortgage route.

The Star Ledger ran a piece within the last four years about a local woman (I forget which town) who did the reverse mortgage thing so she would have cash in the bank to make taxes as they came due.

The story ran after she was evicted.

Just in case anybody was wondering what a RM can yield.

TomR

P.s., Not-fer-nutin, but the Star Ledger piece painted a more sympathetic subject than the Times piece.


joan_crystal said:

ml1 said:

I'm pretty sure reverse mortgages are something of a scam. But wouldn't taking out such a mortgage be preferable to losing one's home?

Failure to pay real property taxes could result in foreclosure by the reverse mortgage holder.  Possibly not a great alternative in this case.  

of course. The person with the reverse mortgage should use some of that money to pay taxes. 

Best case in these circumstances is to sell the house and take the equity. Next would be to find another source of income and pay the taxes going forward. 


joan_crystal said:

This issue has been added to the agenda for a meeting of the Maplewood Seniors Advisory Committee where a member of the township committee will be in attendance.  Any ideas as to how the town can act to reduce the likelihood of someone losing their home due to a tax lien sale may be posted to this thread for follow up.  Hopefully, we can come up with a solution.  While it is obvious that the primary problem rests with State legislation, there should be things we can do at the municipal level to help.   

Ask the town committee for a resolution to the N.J. Assembly and Senate to revise the statues to prohibit predatory tax liens that result in complete loss of equity after the debt and interest have been paid.

Then have them issue a press release about the resolution.


The laws with regard to tax liens may not be ideal, but the real tragedy here is that efforts by a lot of people to help a woman spiraling into ruin all came to naught.  


tjohn said:

The laws with regard to tax liens may not be ideal, but the real tragedy here is that efforts by a lot of people to help a woman spiraling into ruin all came to naught.  

The “real tragedy” here was that well-intentioned fellow Maplewoodians tried to keep this sad, tale quiet. It is not the real Maplewood PR we hear about. If you think I am exaggerating, read the response about the fire back in December — or, wait, that was deleted! I was reported by two posters for expressing concern for the unnamed homeowner who had self-inflicted chest stab wounds and was taken away to the hospital. Who knew how bad things were, and when did they know it?

For starters, I learned today, for instance, that Maplewood shares a social worker with South Orange. What is the total number of vulnerable long time elderly residents in our two communities?

Since then, I am pleased to see that many residents have discussed the real predatory threats to homeowners who, for multiple reasons, may be drowning in debt, and face the loss of their homes. Knowledge is power, as the saying goes. Our township and  civic organizations need to reach out and educate — long time residents and the elderly especially — what the rules in real estate and finance are — so folks can make safe and sound decisions based on sound advice regarding the roofs over their heads. 


Short of changing the law so that homeowners cannot be evicted for non-payment of taxes, what can you do for a person determined to stay in the home where they have spent their entire life?

From what I can tell, plenty of good people new the situation was difficult and were trying to help.  I can hardly fault them for not making all the details public.


need to be at least 62 to qualify for a reverse mortgage.  article said she is 60.  despite that, there’s myriad lenders and/or ibuyers that would have stepped in here to capitalize this person and assume the house, let alone going through the traditional sale process.  Some ibuyers even have programs to fund he purchase price and turn the homeowner into a renter for up to two years so they can stay in the home.  Google searches could have helped and/or a simple conversation with a finance professional.

This did not have to happen.


tjohn said:

Short of changing the law so that homeowners cannot be evicted for non-payment of taxes, what can you do for a person determined to stay in the home where they have spent their entire life?

From what I can tell, plenty of good people new the situation was difficult and were trying to help.  I can hardly fault them for not making all the details public.

Changing the law is a discussion item on the agenda for the 2/21 TC meeting.  Here is hoping something can be done to prevent more homeowners from losing their equity as a result of a tax lien sale.


joan_crystal said:

tjohn said:

Short of changing the law so that homeowners cannot be evicted for non-payment of taxes, what can you do for a person determined to stay in the home where they have spent their entire life?

From what I can tell, plenty of good people new the situation was difficult and were trying to help.  I can hardly fault them for not making all the details public.

Changing the law is a discussion item on the agenda for the 2/21 TC meeting.  Here is hoping something can be done to prevent more homeowners from losing their equity as a result of a tax lien sale.

Changing the law is fine, but the issue in this specific case is of a person who could not handle being evicted from the home where she had spent most of her life.


She would not have faced eviction with loss of all equity if the law had been different.  There are other changes needed too.  Quarterly notification of real property tax due date, early notification of property being placed on the tax lien list, and in the case of the subject of the article, making people in danger of being in this situation aware of available financial counseling and mental health services as a package might help prevent future tragedies. Changing the law is going to be the most difficult of these to achieve.  The others are relatively easy and within the town’s control.


joan_crystal said:

She would not have faced eviction with loss of all equity if the law had been different.  There are other changes needed too.  Quarterly notification of real property tax due date, early notification of property being placed on the tax lien list, and in the case of the subject of the article, making people in danger of being in this situation aware of available financial counseling and mental health services as a package might help prevent future tragedies. Changing the law is going to be the most difficult of these to achieve.  The others are relatively easy and within the town’s control.

Exactly, if the law had been different she would have walked away with some money even if evicted.  To be evicted and lose all the accumulated equity in the home is cruel.


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