Foreclosures Rise As Home Owners Falter On Tax Payments

September 4th, 2009 | Tags: Foreclosure Crisis

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The US economy is on a tailspin what with unemployment being at the peak and people faltering on mortgage payments. Subsequently foreclosures have become common. What is worse, the mounting tax bills are pushing a few homeowners to the teetering edge. Many of them have fallen behind on payment of property taxes.

In many cities, the duty of tax collection has been entrusted to private agencies. These agencies are more aggressive than the local bodies. These private companies also charge a very high interest and steep service charges. It may be noted that as the economy suffers because of the steep recession, local bodies are not being able to collect taxes. Hence, they have handed over the responsibility to private agencies. The local authorities felt that they would gain by handing over the duty to private agencies. The money earned this way will be invested in schools or other public institutions.

However, housing experts say the crisis has aggravated because of this. They observe that the foreclosure has worsened as the private bodies are pushing out the homeowners more aggressively than the government bodies would have. As a result, many regions are degenerating into wasteland faster than one can ever imagine.
The auditor of Lucas County, Ohio, Anita Lopez said that initially the cash is enticing. But in the long run when one takes into account the number of abandoned and foreclosed properties, the cost seems quite high. It is not good in the long run.

Investors, however, are upbeat saying that everyone gets benefited because of this arrangement. The cash flow means that schools, parks and even fire departments can be maintained. Governments, too, charge interest and penalties but the interest charged by the government is half of what the private agencies take.

Take, for instance, Toledo, which is one of the major areas to be hit hard by the Recession. There are property owners like Richard Fix who are on the about to lose homes because they have not paid taxes. Fix was employed with Chrysler but lost his job early last year. Now he has a job which pays him much less and as struggles to pay the mortgage and credit card bills, he has fallen behind on taxes. It’s a no-win situation for him at present.
Private investors are having a field day at a time when home values are plummeting. They are charging 18 per cent on unpaid taxes.

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