Working To Enhance The Quality Of Life
In Baltimore And In Maryland.

You are here

Baltimore City Sees Significant Reduction in Tax Sale Properties

The list of owner-occupied homes with delinquent tax bills that are now being auctioned dropped 40 percent from last year – from 9,411 to 5,617.

BALTIMORE (March 22, 2016) - In a major step forward for Baltimore City homeowners, the number of owner-occupied homes that are at risk of being lost through the city’s annual ‘tax sale’ dropped significantly this year, following changes in policy and concerted advocacy by housing and consumer groups. Overall, the list of owner-occupied homes with delinquent tax bills that are now being auctioned dropped 40 percent from last year – from 9,411 to 5,617 - sparing those homeowners from the lengthy and expensive legal process that could ultimately lead to the loss of a home.

A key factor was the passage of legislation by the 2015 Maryland General Assembly to increase the threshold amount owed in back taxes or other homeowner costs that would trigger a tax sale - from  $250 to $750.  The City, along with on-the-ground nonprofit organizations, also expanded efforts to help homeowners avoid having their unpaid tax liens put up for sale.

Baltimore City annually puts up for auction the unpaid bills for property taxes or other fees, such as water and sewer bills. At the annual auction, bidders purchase the tax bills and give the homeowner a period of time to repay the tax bill - but with large extra costs. To reclaim the liens, homeowners must pay the past-due tax or fee, plus 18 percent interest and hundreds of dollars in court costs, legal fees and postage. A $500 tax bill, for example, can climb to $3,000 two years after the tax sale. In many cases, homeowners cannot afford to pay the debt and lose their homes and the equity they have built in it. The Administration of Mayor Stephanie Rawlings-Blake also moved forward with local legislation to reduce the interest rate that tax sale lien purchasers can charge homeowners from 18 percent to 12 percent, which will make redemption of homes that have gone into tax sale easier and help prevent foreclosure.

"This year's tax sale numbers are a huge win for the vulnerable homeowners on fixed incomes disproportionately affected by the tax sale process and we are proud to have partnered with the City of Baltimore, the Community Law Center, the Maryland Consumer Rights Coalition and numerous advocates to increase the threshold and make it happen," said Dan Ellis, executive director of Neighborhood Housing Services, a nonprofit that works to protect and educate homeowners. "Baltimore City should be commended for supporting the necessary reform last year that ensured nearly 3,800 homeowners did not incur lengthy legal battles or costs and will be able to stay in their homes. Support from the Abell Foundation has been critical in shining a light on the tax sale system and helping to protect Baltimore's hard working residents."

In October 2014, the Abell Foundation produced a report, The Steep Price of Paying to Stay, which outlined how the tax sale process negatively affected low-income and vulnerable homeowners and made recommendations to improve the process. Recommended steps included raising the threshold amount of taxes owed that would trigger a tax sale, and helping vulnerable homeowners gain access to existing and additional assistance to keep them out of the tax sale process.

In addition, the Tax Sale Work Group founded and led by Robin Jacobs, staff attorney at the Community Law Center in Baltimore, organized around the effect of the tax sale on homeowners and on neighborhoods and advocated for changes to the process.

"Outreach to at-risk homeowners was critical to this significant reduction in homeowners subject to the tax sale this year," said Margaret Henn, foreclosure prevention manager for the Pro Bono Resource Center of Maryland (PBRC), which provides volunteer legal services. "When the PBRC started its Tax Sale Prevention Project in 2014, many Baltimore homeowners were unaware of how the tax sale process worked or how to access resources that could help them avoid it.  Since then, PBRC and Maryland Volunteer Lawyers Service have hosted a series of Tax Sale Prevention Clinics, at which hundreds of Baltimore residents have received free legal advice and learned of critical resources and tax credits. By connecting low-income homeowners with information about tax sale, legal help and other available resources, they are equipped with the necessary tools to achieve financial stability and maintain their housing, which in turn contributes to the stability of their neighborhoods and the City as a whole."

Neighborhood Housing Services, St. Ambrose Housing Aid Center and Southeast Community Development Corporation are also providing outreach to homeowners around the homeowner tax credit, a critical anti-poverty tool that helps low-income homeowners defray the full cost of property taxes. Tax sale liens are placed on properties for unpaid property taxes as well as water and sewer bills, environmental citations, minor privilege and community benefits district charges for homeowners living in those districts like Charles Village and Midtown. Last year, 2,264, or nearly one-third, of the homeowners on the list, had liens of less than $750.

In The Steep Price of Paying to Stay, which was written by Joan Jacobson for the Abell Foundation, data collected from an April 2014 clinic run by nonprofit lawyers for 82 homeowners facing tax sale shed a harsh light on the tax sale crisis. The clinic found that most homeowners affected were African Americans who live below the poverty level, nearly half were elderly, 10 percent were veterans and 32 percent reported being disabled.

More than three-quarters of the homeowners faced tax sale for unpaid water bills, while more than half had not paid property taxes - with the average lien each resident would have to pay to avoid tax sale was $2,482. Though most of the homeowners were likely eligible for discounted property tax programs and a senior citizen water discount, a proportionally low number were receiving them.

As recent data shows, the tax sale process disproportionately affects senior homeowners. With funding support by the Stulman and Hoffberger Foundations,  The Housing Upgrades to Benefit Seniors(HUBS) program is a new program to provide housing and services to seniors through five community-based organizations throughout the City.

"The significant reduction in homeowners subjected to the tax sale process is in no small part because of the nearly 20 community organizations working together to inform Baltimore City homeowners about available resources, discounts and tax programs. The results are the very best that Baltimore can do when we work together," said Robert C. Embry, Jr., president, the Abell Foundation.