Tax Lien Securitization

In 1996 New York City put into place a new method for collecting real estate taxes. The 1996 legislation allowed for the sale of residential tax liens and at the same time identified buildings with both tax liens and housing problems that would be better preserved through transfer to new ownership with the appropriate rehabilitation finance and subsidies to ensure its financial viability.

At the time the approach was innovative and ambitious as it sought to improve real estate tax collection, derive value from tax liens rather simply foreclose on them, and at the same time apply the extensive experience in housing preservation and rehabilitation to save the most at risk buildings and ensure their long term survival.

CHPC’s report, The Invisible Transformation, details the extent to which the combination of tax lien securitization and third party transfer through in rem foreclosure have combined for a uniquely effective program.

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Council Considers Changes to Tax Lien Statute

At a hearing held on February 18, 2011, the New York City Council Committees on Finance and Community Development considered a law to extend the City’s authority to securitize tax liens. The existing authority needs to be periodically renewed. The proposed statute would extend the securitization of tax liens to liens imposed under HPD’s Emergency Repair Program and to single family homes with unpaid water and sewer liens. CHPC submitted testimony in support of renewal and extension, but expressed concern over notice requirements that might be impracticable.…

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