D.C. to pay $1 million to settle families’ claims for homes taken by tax-lien program

By Spencer S. Hsu

@hsu_spencer

January 10 at 7:18 PM 

The District government has agreed to pay about $1 million to settle a federal class-action lawsuit brought by homeowners to stop tax-lien investors from taking homes in the city through foreclosure, attorneys for both sides said. ... In a proposed settlement made public in court Tuesday, the District agreed to pay up to 65 percent of a property’s assessed value to homeowners or surviving relatives whose residences were taken by an often-abusive tax-collection system in which even small tax debts triggered property sales, said class attorney Bill Isaacson of the Boies, Schiller & Flexner law firm.

{The Washington Post 2013 series: Homes for the taking}

The agreement calls for average payments of tens of thousands of dollars each to 21 known class members, 13 of whom have been found, Isaacson said, including lead plaintiff Bennie Coleman, an 81-year-old veteran who lost his home over a $134 bill. Owners of blighted properties who did not reside in the homes that were sold would receive 35 percent of assessed value.
....

The lawsuit was brought after a 2013 Washington Post investigation identified problems in a city program that imposed liens on properties when homeowners failed to pay their tax bills. The liens then were sold at public auctions to private investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.

The Post found that some investors also demanded thousands in fees from homeowners that far exceeded the owner’s original tax debts and then took homes when owners couldn’t pay. About 500 properties were lost since 2005, The Post found, most in the city’s poorest neighborhoods and about one-third from owners who owed less than $1,000.

{Left with nothing: How you could lose your home}