Many Americans follow the advice of financial advisors who say not to include your property taxes in your mortgage. They recommend that you put so much back every month into some kind of savings account and then when your property taxes are due, you pay them out of that account. This way, you are earning a little money for yourself on that savings account instead of letting the mortgage company or bank use your money for their purposes.
This is sound financial advice, but in too many instances, families find themselves tapping into those accounts and then coming up short when it’s time to pay the property tax. Before they know it, their property tax goes into arrears and began to accumulate penalties and late fees.
In other cases, some people manage to pay off their mortgages and forget that it is up to them to now pay their property taxes. When the bill comes due, they can’t pay it and again, it goes into arrears and starts accumulating penalties and fees.
A number of people have been making a lucrative living out of buying up past due property taxes. By doing so, they become the owner of the property and house free and clear. They often turn around and sell it back to the people living there for less than what the property is worth, making tens of thousands of dollars on the deal. Others sell the property to whomever, again for less than the property is worth and the family is forced to move.
I had actually looked into this a few years ago and attended a seminar on how to do it. I saw example after example of people getting complete ownership of $250,000 homes by paying off a $1500 tax lien. They then turned around and sold the home for $150,000 and walked away with a huge profit. But I decided I just didn’t have the heart to steal peoples’ homes out from under them.
Now, a number of big banks are getting in on the scheme and buying up past due property taxes, assuming ownership of the home and the foreclosing on the homeowner if they can’t pay the bank back for the taxes, penalties and fees.
Case in point is what happened to 76 year old former Marine Bennie Coleman. He had purchased his house for cash. Before he knew it, there was a $134 property tax bill that went delinquent. A big bank paid off his overdue property tax which had already accumulated penalty fees. The bank tacked on interest and legal fees, all adding up to several thousand dollars. When Coleman couldn’t pay the banks extortion price, they foreclosed and had armed marshals escort him off the property. Seventy-six year old Bennie sat across the street and watched as all of his worldly possessions were drug out of the house and placed on the curb.
The bottom line is to make sure that your property taxes get paid on time. The financial buzzards are circling just waiting for someone to let their property tax go delinquent so they can swoop in and steal your home right out from under you.