Is it Fair to Demonize Large-Scale Tax Lien Investors?
Yesterday, we reported on a new development in tax lien investing in which large lenders, including Bank of America, and private hedge funds participate on a large scale in tax lien auctions, buying up hundreds of properties at these auctions and either collecting the debts – along with legally allowable fees and interest – or foreclosing on the properties. Not surprisingly, it did not take long for a number of people to come down in harsh judgment on these tax lien buyers, perhaps because many of the banking entities like Bank of America received taxpayer-funded bailouts in the past few years and some see the purchase of tax liens as using taxpayer funds to “profit from homeowners having trouble paying their tax bills”[1]. A number of people jumped in to give their opinions, including a law professor who called the strategy “personally distasteful” and individuals who were angry that many of the properties purchased by BofA were “low-income” properties and those owned by nonprofit public interest groups.
While it may not have been strategically wise from a PR standpoint for BofA to buy liens on wildlife rescue group shelters, Salvation Army shelters or preschools, the real issue seems to be the “sneakiness” of the process. Bank of America, Fannie Mae and JP Morgan all invest funds in tax lien properties, but usually under colorfully-named aliases with P.O. box business addresses that help maintain anonymity.
Do you think it is reasonable to criticize big banks that purchase tax liens? Should their doing so be publicly available information and should it be regulated?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://www.timesunion.com/default/article/Leaning-on-the-at-risk-709912.php