Wall Street Quietly Creates a New Way to Profit From Homeowner Distress

[sasha031]

Source: The Center for Public Integrity

Large Bank, Hedge Fund Bundle Small Tax Debts Into Private Investments
When Florida retiree Gladys Walker fell behind in paying taxes on her modest Pompano Beach home, she had no idea one of America’s biggest banks and a major Wall Street hedge fund engaged in frenzied bidding for the right to collect her debt—all $768.25 of it
“I just couldn’t come up with the money,” said Walker, 67, a former hotel worker who makes do on a monthly Social Security check.
Barely more than a year after a taxpayer bailout of major financial institutions, Bank of America and the hedge fund, Fortress Investment Group, spotted a fresh money-making opportunity – collecting the tax debts of tens of thousands of people like Walker. The bank and hedge fund can add interest charges and fees, and they bundled the debts as securities for investors.
In late May and early June, proxies for the two institutions quietly bought hundreds of millions of dollars in homeowners’ property tax debts in Florida by bidding at a series of online auctions held by county tax collectors. They didn’t use their names but donned multiple other identities, dominating the auctions and repeatedly bidding on the same parcels – in the case of Walker’s small home, more than 8,000 times.
Then, in September, Bank of America’s securities division packaged $301 million worth of the tax liens it and Fortress had acquired into bonds pitched privately to major investors. The anticipated return – estimated at between 7 to 10 percent – is possible because buyers of tax debts can assess a panoply of interest charges and other fees. When the debt goes unpaid long enough, the liens buyer can seize properties through foreclosure.


Read more: http://www.publicintegrity.org/articles/entry/2752/

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Auctions allow private investors to acquire rights to collect overdue property taxes, levy escalating fees on homeowners, and foreclose on those who do not pay. Some auctions, like this one in Washington, D.C., take place in person. Others occur online, where bidders can buy property tax liens by the thousands. Credit: Emma Schwartz

[aquart]

1. And when will this nonsense crash and take us all down?

Because this isn't worth squat unless the economy improves and the suckers can pay.

[Hell Hath No Fury]

9. My first thought, as well.

:mad:

They are going to kill our country.

[SpiralHawk]

2. "Smirk." - RepubliCorp, Inc. (R)

[yourout]

3. Leeches on society. This shit should be outlawed.

Legalized loan sharking.

[sasha031]

4. Capitalism at it's best

Some entrepreneurs, promising healthy returns and low risk, are reselling government-issued tax lien “certificates” on the Internet, adding another wrinkle to the nation’s ongoing property foreclosure debacle. Some websites suggest they are selling the home itself rather than the legal authority to collect a debt on it. People often don’t understand the difference, said Sam McClelland, deputy tax collector in Florida’s Pinellas County. “The Internet has opened all this up,” he said.
The Federal Trade Commission, which has no direct oversight of the tax lien industry, has taken action under general consumer fraud statutes. The agency is suing tax sale promoter John Beck Amazing Profits, LLC, a fixture on late-night television. More than 600,000 consumers have purchased Beck’s lessons, according to the lawsuit. The agency alleges that customers initially pay $39.95 a month, but those fees can escalate to $4,000 on average—some three times that much—for more course material and other advice in how to purchase homes for what Beck says are “pennies on the dollar.”

[Bigmack]

5. What kind of mind could even dream ...

of shit like this? What kind of warped individual could do such a thing?

I tell you, there are some sick fuckers in this country.

[Arctic Dave]

7. Worshippers of greed, that's who.

ayn rand would write shitty novels about these type of scumbags.

[Bennyboy]

6. "The Big Dogs Are Back At The Door"

Huff and puff and blow your house down...

(Canine related mixed metaphor aside)

[Doremus]

8. How many of those delinquent homeowners could have paid the discount price given to the large banks?

Municipal taxing authorities could have probably SAVED money by giving the discounts to the homeowners instead of the fucking vulture money changers.

I read crap like this and realize --again-- that America is well on its way to oblivion. Words can't convey the hatred I have for the masterminds and their mindless enablers.

[Mark D.]

13. Disgusting

While I still argue with tea baggers about 'too much government'. Reading the article tells me it's not just a loophole letting bankers and hedge funds do this, it's a wide-open door. There isn't even a single bill or effort anywhere to stem the tide of this new onslaught. Even if every loan-based mortgage foreclosure were made right / paid in full, this gives the banks a new way to profit off misery. This is clearly an area they should not be allowed into. Not restricted, it needs to be stopped cold. So what is next - hospital bills?

This must be widely broadcast, but the main stream media won't. There needs to be outrage enough to shout over the distractions (illegals, god-gays-guns, 'terra', etc.). These vultures aren't just ripping the carcass of America, they are the ones knocking that weakening animal down. They must be stopped, there is no clearer evidence that banks are not merely trying to hold people to their contracts (ie. collect mortgage payments) with foreclosures. This is clearly harming people for profit, and government is complicit.

[pattmarty]

10. This is just ONE that has come to light. Think of ALL the other fucked........

..........up "investment opportunities" these evil motherfuckers have dreamed up that we DON'T know about yet. So much for "financial reform".

[Overseas]

11. K&R. Are they going on to invest in debtors' prisons? //nt

[ladywnch]

12. I'm pretty much convinced that banks don't really want people to pay

their mortgages. I think they make more money doing this kind of shit. Good thing we got that wall street law through. Banks are becoming as out of control as cops with tasers. Even if you pay current on your mortgage or have paid off your mortgage they are still looking to put you out of your house and penalize you.

I think bankers have now become the new object of the old joke: what do you call a hundred bankers at the bottom of the ocean? A good start.