Property Auctions And Property History Reports: Investigating Prior Ownership And Use – About 41,000 properties went for foreclosure in the city in 2016, a Baltimore Banner investigation found, threatening home ownership and widening homelessness in many black neighborhoods. number.
In Baltimore, the sales tax system is costing thousands of dollars to homeowners who don’t keep their homes on their bills. (Laila Milevski/The Baltimore Flag. Photo by Justin Fenton/The Baltimore Flag)
Property Auctions And Property History Reports: Investigating Prior Ownership And Use
Arnita Owens-Phillips always promised herself one thing: she would keep this simple brick house in East Baltimore.
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His son Corey told him when he was little that one day he bought a big house in town. “I’m a boy,” he recalled. “I’ll take care of you.” Corey died at age 17 when he was hit by a car, but his mother always felt that he had fulfilled a promise: the proceeds from his death to buy a home in a cemetery in south Baltimore. .
“Even though I’m fighting, I’m not going to move,” Owens-Phillips said. “I feel like this is the house my son bought me and wanted me to have.”
Then came the pandemic. He was forced to close his butcher shop, and his bankruptcy check was not enough to pay the bills, especially the $2,000 annual city tax bill. He hoped he would be caught in time.
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But in January 2022, he knew it was time to run: he received a letter from the Investment Fund Stonefield IV, LLC, informing him that he had bought the mortgage on his house at a Baltimore city tax sale – an auction an annual practice that allows the city. the seller bids on the tax credit. Since August, the company has been targeted for looting.
A letter from Investment Fund IV of Stonefield, LLC, informs him that he purchased a mortgage on his home at a Baltimore tax sale.
He could still keep his house, but it wouldn’t be easy: In a little more than a year after the company bought the sales tax bill, the amount owed dropped from $8,000 — tax money some years. up to about $16,000, including interest, fees, property taxes, and past due water bills.
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Feeling alone in his situation, Owens-Phillips, living far from the city alone, ordered himself to contribute to such a tax.
Shootings have escalated in recent years as fines and death rates have increased, forcing homeowners, often small and elderly, to shell out thousands of dollars to pay off strangers or lose their homes. When property owners are taxed on the sale of an investor or vacant home, critics say the process keeps the property in limbo. Interest is increasing rapidly for the benefit of foreigners, who often do not take possession of the property.
The property may be subject to sales tax if the property tax is not paid by July 1 of the following spring. The leases are sold at auction usually held in mid-May, with interest of 12% per annum for owners and 18% for non-owners immediately, plus fees- business. Property taxes can count up to $750 in taxes owed for city-owned homes and $250 for non-owner-occupied homes. Most homes that end up in tax sales are classified as non-homeowners.
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The system, which has been governed by state law for decades, works statewide in some form, but Baltimore’s property tax drop — the highest in Maryland — makes the Homeowners will be the most vulnerable.
“One payment goes missing and you can lose a house that you’ve owned for 35 years and you have the full amount. And if you lose it, you get nothing,” said Allison Harris, attorney at Pro Bono Resource. Center in Maryland. . “He’s gone—that’s it.” Owens-Phillips is one of the lucky ones, receiving epidemic relief to pay off the mortgage on a house she considers a gift from her son.
The Standard’s analysis found that the cost of this structure is disparate: In the city’s black tracts, such as the East Baltimore neighborhood where the Owens-Phillips home is located, homes are owned and sold at the price is higher. death rate than in minority areas-Black cents.
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In some predominantly black neighborhoods, nearly everyone is in foreclosure: 46% of all buildings in Southwest Baltimore and 42% of all buildings in Sandtown-Winston are for sale. taxes starting in 2016. each of the 1,763 buildings throughout Baltimore known as Flagships changed hands through the sale of fees in the Major-Black neighborhood.
While these filters served some of the city’s poorest, The Banner’s statistical analysis of foreclosure and property transfer rates across the city shows that even after he cited other factors including average income, poverty rate, population and sales prices, the rate of . Home loan and home transfer rates in the tract decreased as the percentage of white residents in the tract increased.
Between the pandemic and a renewed push by Baltimore Mayor Brandon Scott’s administration to occupy vacant properties, the sales process has undergone some revisions, but remains largely intact. By 2021, Scott ordered the Department of Finance to remove all owner-occupied homes for sale for the first time from the list and to create a sales tax task force, as he charged ‘the development of a proposal for a “full” reform. In 2022, Scott delayed the sales tax from April to June and exempted all owner-occupied homes — about 2,900 homes — from the city’s sales tax. Scott’s office did not respond to questions about whether such a move would be reviewed this year.
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Maryland lawmakers in Annapolis this session are considering long-term changes, bringing up the issue of conflict. Supporters say the sales tax is a necessary mechanism for states struggling with revenue shortfalls. Critics will come at a price too high to bring these taxes to already disadvantaged neighborhoods and the city as a whole.
“The more money you make from this store,” said Nneka N’namdi, founder of the community group Fight Blight Bmore, referring to a recent report by researchers at Johns Hopkins University that found that the city. Baltimore $200 million a year in lost money and maintenance. “He’s making money, but not for this damn city.”
Carla Nealy, head of the city’s Office of Revenue, defended the system, noting that the sales tax generates $10 million to $20 million annually, which is 0, 5% to 1% of the city budget. By 2022, the sales tax will generate $12 million for the city, most of which will come from housing.
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“State funding depends on property taxes and there is no collection system,” Nealy told The Banner. “And unfortunately, this is the collection machine we have right now.”
Scott Morse, an attorney representing the tenants, said situations like Owens-Phillips, in which the landlord nearly lost their home, are rare and could have been avoided with more effort to contact the landlord. resources and other innovations. He said the sales tax is an increasingly useful tool to generate revenue from absentee homes and property owners.
“You don’t want to throw out this structure that’s good for housing and a good collection of these things,” he said, “good for revenue, good for the community, good for everyone’s.”
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Between the diversion of proceeds from tax sales and the collection of interest on unlimited tax payments, investors have made millions of dollars from the tax sale system since 2016. .
“One payment is missed and you could lose the house you’ve owned for 35 years and have a full deposit. And if you lose that, you get nothing.” – Allison Harris, attorney with the Pro Bono Resource Center of Maryland
The Standard investigation found that about $10 million of those benefits came in the form of user payments from landlords. Based on a review of taxpayer property prices at auctions and subsequent sales, the Standard estimates that bill buyers spent $27 million buying and flipping properties in Baltimore. since 2016. He said this estimate does not include any buyers. done with his property.
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However, the analysis of sales tax on real estate for sale raises questions about the true extent of the investment in these real estates. The majority of homes acquired through tax sales – 62% – went up again within two months. Almost 30% were sold within a week. Likewise, most properties have seen a slight increase in their pre-tax sales values for subsequent sales by property owners.
And only in rare cases did the owner get the property himself: the owner got the property.
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