A property in Park View with a hefty tax lien.
A property in Park View with a hefty tax lien.

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Responding to a Washington Post investigation that found that a small handful of investors have been gaming the tax lien system and foreclosing on D.C. homeowners, Mayor Vince Gray has called for a moratorium on the practice.

“The Mayor found out about [the Office of the Chief Financial Officer’s] policy on tax-lien sales by reading about it in the Post article yesterday, and he was shocked and outraged by the revelations,” Gray spokesman Pedro Ribeiro just said in an email statement. “He is calling for an immediate moratorium on OCFO’s sales of liens and foreclosures, and will transmit emergency legislation addressing the situation to the Council for them to consider when they come back from recess. The legislation will put in place needed protections for homeowners – and particularly seniors, who appear to have been the group most frequently affected by this practice.”

The Post investigation, published this weekend, found that nearly 200 D.C. homeowners have lost their properties in tax lien sales, in which the city sells a property owner’s outstanding tax debt to a private investor. These investors have tacked exorbitant interest and fees on the homes and then foreclosed on them when the homeowner was unable to pay. These sales have occurred predominantly in wards 7 and 8. One in three involved an initial debt of less than $1,000.

A second Post story found that six firms have dominated the tax lien purchases. Unusual bidding patterns imply that these firms may have colluded to split the properties and their profits.

Photo by Darrow Montgomery