Feb. 28, 2022
Today, activists and elected advocates gathered on the steps of City Hall to celebrate the end of the Rudy Giuliani-created Lien Sale program. Since 1996, New York City has been selling the right to collect delinquent property tax and water debt at a discount to a privately administered hedge fund-backed Lien Trust.
Investors in the trust and private debt collection agencies made millions of dollars every year since then collecting New Yorker’s debts.
Investors in the trust and private debt collection agencies made millions of dollars every year since then collecting New Yorker’s debts.
As of today, the City can no longer continue this practice unless the City Council passes a bill to reauthorize it. The lien sale was conducted in December 2021 was the last sale the City Council had authorized.
Under the expired system, the City transferred all the debt that New York property owners owed to it to a third party Lien Trust not invested in the future of our neighborhoods.
The Trust in turn hired debt servicing firms that would make millions every year just from fees charged to homeowners and landlords who have their tax, water, sewer, and emergency repair bills sold as liens to the Trust.
The servicing firms … were private companies with little transparency, patchy pasts, and a history of lobbying for laws and policies that will directly benefit their bottom line.
The servicing firms used by Lien Trusts formed in recent years (MTAG Services, LLC and Tower Capital Management, LLC) were private companies with little transparency, patchy pasts, and a history of lobbying for laws and policies that will directly benefit their bottom line.
To raise money to buy the City’s collectible debt at a deep discount – approximately 72% of the face value of the bills sold – the Lien Trust sold private bonds to investors who were repaid with interest through interest and additional fees added directly to individual liens, and through post-foreclosure sales of the buildings themselves.
Because bond sales are done through a private placement, the identity of those investors has never been revealed and will never need to be.
In general, the industry is dominated by large-scale investors and hedge funds that have no stake in our communities.
“We are so glad to stand together with our elected advocates today to celebrate the end of the Lien Sale, which has lined debt collection firms’ and investors’ pockets with money and property taken from low-income New Yorkers for far too long,” said Debra Ack, East New York Community Land Trust. “Tenants and homeowners should have the option to stay in their communities even when they fall behind on payments to the City. Community land trusts in all five boroughs are ready to work with City agencies and property owners in arrears to the city to secure affordable housing for the long term and stabilize our communities.”
“The old system enabled debt collectors and hedge funds to make millions at the expense of New York families and neighborhoods,” said Paula Segal, Senior Staff Attorney at TakeRoot Justice. “The future of our neighborhoods is bright as we stand together with Council Members and other elected advocates who prioritize stability and affordability instead of a quick up-front payment and a cash cow for finance. What is lost when longtime residents are pushed out by the Lien Trust and its debt collectors is worth so much more than the partial bill payments that the City gets from the Trust when liens are sold. With Lien Sales behind us, New York will benefit from neighborhood stability and the resilience of communities that have emerged together through the recent pandemic and the crises of investment of the last century.”
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