Tax lien sale list available.
Owners must pay in full by the close of business on Friday, June 12th to get their property out of the sale. Once included in the sale, the property can face eventual foreclosure by the lienholder if the owner does not keep up with future payments.
The Dept. of Finance mailed and published a 60-day notice on April 13th. A 30-day letter will go out on Monday, May 11th, and then a 10-day notice will be sent on June 1st, with the sale expected on or about Monday, June 15th.
All notices are also mailed to third parties that have indicated an interest in the property, such as mortgage holders.
The liens, and the inherent right to foreclose, are still not being sold to individual investors or the general public, but only in bulk to institutional-type investors who make their money by issuing bonds against the future income from the property owner's payments.
The lienholders bill the property owner directly for past due amounts, and can add a 5 percent surcharge and other charges to the total due.
To avoid foreclosure, owners will have to keep up future payments to the city, as well as the payments to the lienholders.
But some of the properties in this sale may never be redeemed, as many have a high lien-to-value ratio because the taxes have built up with interest due over many years. The January budget estimated proceeds of merely $10 million to city from this lien sale, but the Finance Department expects to garner closer to $125 million. Owners have up to the day of the sale to pay-off all outstanding charges, and be aware, no in rem agreements will be negotiated, said Richard Loconte, a spokesperson for Dept. of Finance.
In order to qualify for the sale, a property must have some kind of outstanding property tax charge. While items like water bills, charges from the Dept. of Buildings, Housing Preservation and Development, the Environmental Control Board, and anything related to the maintenance of the property will be added up for purposes of the sale, no lien can be sold unless there is a property tax lien as well.
For Class One and residential co-ops and condos, any outstanding city charges have to be at least three years old. For commercial properties and Class Two rental properties, the oldest charge can be merely a year old for the property to be grouped into the sale.
If you are up-to-date on an in rem agreement, and all current charges are paid as they become due, "you are okay," adds Loconte, and your property should not be listed.
Because there have been several previous lien sales, some housing experts are worried that communities will be destroyed should mass foreclosures begin. The city has not filed in rem actions since 1995, and has virtually not foreclosed on any properties since 1993.
Because of early intervention programs, last week, Housing Preservation and Development officials were culling the final lists for residential properties with which they have been working. Also ineligible for the sale are the Housing Development Finance Corp. co-ops formed when tenants took over buildings.
The tax liens sold last year included many small buildings in southeast Queens, central Brooklyn and the South Bronx, in largely low and moderate income neighborhoods.
John Broderick, director of government and community relations for Neighborhood Housing Services of New York City, a nonprofit organization which provides assistance to small property owners, is worried foreclosures will change the character of the areas.
"We fear that many of these properties will eventually be sold at foreclosure auctions - a forum in which the average first-time homebuyer may not be able to compete with real estate investors," he said. "This could lead to a wave of absentee ownership of small homes, which often has a destabilizing effect on such neighborhoods."
His group encourages owners to enter into payment arrangements with the lienholders, and provides counseling for senior citizens, for whom, he says, reverse equity mortgages may provide an answer to both lien and future property tax payment problems.
"Seniors who have substantial equity may qualify for reverse mortgages and use the proceeds to pay these liens," said Broderick.
Once homeowner mortgages are paid off and the owners do not pay the monthly mortgage that included in it the collection of city property taxes, many families do not have the discipline to save up the money to pay an entire quarter year of taxes all at once.
Unlike banks, the city does not bill on a monthly basis, as the cost and manpower needed to send out nearly 700,000 statements is prohibitive. But an optional program may be what is needed to keep homeowners from falling behind on their taxes and losing their homes.
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|Publication:||Real Estate Weekly|
|Date:||Apr 15, 1998|
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