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(HomeGarden247.com, July 13, 2012 ) Wilmington, NC -- Banks and home flipping experts have been making huge profits due to the misfortune of homeowners for years. The high rate of foreclosure over the past few years has brought that to the forefront of many minds. What many people do not realize is that they can lose their home for as little as a few hundred dollars in back taxes.
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Local governments can seize and sell a home if the owner falls behind on property taxes and fees. The process helps governments make ends meet and they are using these laws more often now that low property values and our weak economy are squeezing tax revenue coffers. Tax debts as small as a few hundred dollars can cause people to lose their homes because of arcane laws and misinformation among consumers, says John Rao an attorney with the National Consumer Law Center.
The tragedy plays out like this. First, the government agency files a tax lien, which gives them the ability to seize the property unless the taxes are paid. If the owner doesn't pay the taxes, the government auctions the tax lien to speculators like JPMorgan Chase, Bank of America, or individual investors. After the auction, the homeowner has a short time to re-buy the home if they pay the investor the purchase price of the lien, plus interest, fees and any other costs that are tacked on. Since the homeowner was struggling to pay the back taxes, it is impossible for most of them to come up with even more money, so the investors take control of the home and sell it for a large profit. In some cases the original homeowner is an elderly person who becomes homeless.
While the moral of the story could be that consumers better keep up on their taxes, it is still a shame that people have to fear the government legally stealing their homes.
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