Pay Your Water Bill

HuffPo tells us about Vicki Valentine losing her home to foreclosure for an unpaid water bill.

The original unpaid bill amounted to $362.

However, the city had outsourced its bill collection to private companies by selling tax liens.

You'll never guess who's in the tax lien business (emphasis added):

Buyers range from behemoths such as JPMorgan Chase & Co, and some regional banks and law firms, to small-fry investors lured by late-night television commercials promising quick riches. Investors generally bid in an auction for the right to collect delinquent taxes and other municipal debts on property owners, sometimes by paying only a few hundred dollars. When owners can’t pay, investors can pick up property at bargain prices.

Doesn't sound that bad... I mean the city gets its money saves on labor - and this woman did owe almost $400.

But why did she lose her home?

Investors...can rake in hefty profits. That’s because they can tack on fees and steep interest rates, which can amount to 18 percent annually in Baltimore.

In Valentine’s case, legal fees and other charges climbed past $3,600 – nearly 10 times her original bill.

Valentine was unemployed - so would have had trouble paying the original amount - but the added fees certainly didn't help.

Here's the kicker:

Though Valentine had no way of knowing it, some investors rigged the 2006 Baltimore tax sale auction that led to her eviction, federal prosecutors alleged in court.

The roots of that conspiracy run deep, prosecutors said. For years, a handful of Baltimore real estate lawyers and their investment partners quietly dominated Maryland tax sale auctions, with few questions asked about their bidding tactics or collection policies.

That changed after The Baltimore Sun used city records and court filings to report in March 2007 that hundreds of mainly low-income city residents had been kicked out of their homes over small unpaid bills, ranging from water and sewer charges to minor environmental citations. Some people were driven from family property because they couldn’t afford to pay thousands of dollars demanded by lien holders.

The Baltimore newspaper also documented for the first time that while dozens of parties bid in Baltimore tax auctions in 2006 and 2007, just three investment groups had won about two-thirds of the liens.

Quite the racket they've got going there.

You wonder it was designed before the value of real estate plummeted. Valentine's $46,000 home is currently valued at less than 20K.

Regardless of the motivation - this is government handing its job over to the unscrupulous, because its easier than doing their job.