Big banks, hedge funds hide roles in foreclosure schemes

Categorized | STOP FORECLOSURE FRAUD, TAXES

Big banks, hedge funds hide roles in foreclosure schemes

Big banks, hedge funds hide roles in foreclosure schemes

By Fred Schulte
Huffington Post Investigative Fund
Posted: 10/19/2010 01:00:00 AM MDT
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Nearly a dozen major banks and hedge funds, anticipating quick profits from homeowners who fall behind on property taxes, are quietly plowing hundreds of millions of dollars into businesses that collect the debts, tack on escalating fees and threaten to foreclose on the homes of those who fail to pay.

The investors, which include Bank of America and JPMorgan Chase, have purchased from local governments the right to collect delinquent taxes on several hundred thousand properties, many in distressed housing markets, the Huffington Post Investigative Fund has found.

In many cases, banks and hedge funds created new companies to do their bidding.

In exchange for paying overdue real-estate taxes, the investors gain legal powers to collect the debts and levy fees. At first, property owners may owe little more than a few hundred dollars, only to find their bills soaring into the thousands. Some jurisdictions tack on bills, such as for water, sewer and sidewalk repair.

Some states allow the investors to bill for up to 18 percent interest and a passel of legal fees and other charges. When property owners fail to make full payment, the investors can sue to foreclose — in some states within as little as six months.

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