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Baltimore homeowner almost ends up in tax sale after city loses check

Tax CreditsForeclosuresFinanceLocal GovernmentAuction Service

Kristina Suson's home wasn't part of the city's tax sale Monday, but it was a close call.

Baltimore places liens on properties for unpaid property taxes, water bills and other municipal debts, then puts the liens up for auction every spring — allowing investors to buy them and either collect or move to foreclose. The city auctioned liens on about 10,600 properties on Monday, finding buyers for 6,545 of them and raising $20 million.

Suson ended up on this year's list, to her surprise, after the state retroactively reduced a property tax credit she'd received in 2009.

Her mortgage servicer sent a check for the $2,100 tab in late April, but the Finance Department still hadn't processed it as the auction date neared.

That's because the city lost the check. But no one told Suson that.

"When I would call and ask, they'd say, 'It takes two weeks, it'll be processed in two weeks, don't worry about it,'" said Suson, a pediatric urology fellow.

Her Patterson Park home was taken off the tax-sale list Thursday after she contacted City Councilman James B. Kraft's office to plead for help.

Janice J. Simmons, chief of the Finance Department's Bureau of Revenue Collections, said in an email that the office's FedEx tracking list shows the check was received, but "it is lost internally." Staffers taking calls about tax-sale payments had no way of knowing, she said, which is why they kept telling Suson that it would eventually be processed.

"The check was misplaced between departments after being logged in," Simmons said. "We are revising our internal protocol to ensure that checks remain in the original tracking envelope and that each department that handles the check has to sign for the check."

The liens that received no bids Monday will go up for sale again on Thursday. Property owners with liens purchased by investors generally have six months to pay the amount owed, plus interest and fees, before the winning bidders can start foreclosure proceedings.

Many local governments use tax sales to collect unpaid taxes. City Councilwoman Mary Pat Clarke understands that need, and she said some properties end up in tax sale because their owners abandoned them. But she's received a lot of frantic calls over the years from homeowners in a fix, occasionally because the city didn't properly account for their payments.

"Things get lost in the shuffle," Clarke said.

Some properties end up in tax sale over water bills, but not as many this year as originally expected. After the City Council pressed Mayor Stephanie Rawlings-Blake's administration not to place liens on homes if the unpaid bill was for water, city officials removed properties with estimated bills — rather than actual meter readings — and others under dispute.

Of the 2,325 properties originally on the tax-sale list over water bills, about 1,560 were removed in April under that compromise, according to Clarke's office. By Friday, just 362 properties were set to go to tax sale solely because of unpaid water bills, according to the Finance Department.

The council was concerned because a city audit released in February found that tens of thousands of Baltimore and Baltimore County households received incorrect water bills in recent years.

"The water bill is our No. 1 constituent problem," said Kraft, who represents Southeast Baltimore. "Every day we deal with water bills — every day."

In Suson's case, tax sale loomed because of a mix-up with a tax credit for renovations to historic properties. Owen C. Charles, deputy director of the state Department of Assessments and Taxation, said the credit was miscalculated in 2009, inflating its value. The city later turned up the anomaly in an audit and inquired, he said. The assessments agency reduced the credit in November.

Suson's first inkling of a problem came in mid-April, she said, after the city mailed a warning that her property was going to tax sale. Her mortgage servicer insisted it had paid all her taxes. She found her tax bill for the current year online, and it said nothing was due.

Befuddled, she called the city and learned about the reduced tax credit. She kept calling after the check was sent, waiting to hear that it had been processed and the home she bought in 2004 was safe. Over and over, staffers on the other end of the line said no, not yet, but not to worry.

"As recently as Thursday, the lady was telling me … 'You just have to relax and trust that these things are going to work themselves out, that the computers will update,'" Suson recalled. "I said, 'That's easy for you to say.'"

She had no idea the check had been lost. Simmons, the revenue collections chief, explained what had happened after The Baltimore Sun inquired. Her division asked Suson on Monday to send a second check.

Suson was glad to hear the Finance Department is changing its procedures to try to avoid misplaced payments. But she doesn't understand how it could happen even once.

"I find it incredibly unbelievable that a … check that potentially could save someone's home can just be lost," Suson said in an email.

jhopkins@baltsun.com

twitter.com/RealEstateWonk

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