Baltimore will buy the liens of more than 450 owner-occupied homes that were sold this spring at the tax sale, Mayor Brandon Scott announced Thursday.
The purchases will satisfy the standing liens on the properties, removing them from the tax sale process, Scott said. The move includes only owner-occupied homes. The liens on the properties are higher than the properties’ values and were passed over by investors at the tax sale.
“We know that tax sale currently does not operate in a way that is fair to our city’s low-income homeowners,” Scott said in a news release announcing the plan.
The purchase of the liens, which will be paid for with federal grants and money from the city’s general fund, is only an interim measure, Scott said.
Scott has been under pressure to reform the city’s tax sale, a process used to collect on past-due property taxes or other delinquent charges such as water bills. Each May the city sells tax lien certificates that investors buy from the city during an online auction. Those investors can then collect the debts, with interest. If they’re not paid, the buyers eventually could foreclose on the properties.
Properties in Maryland go to tax sale if they owe more than $750 in back taxes.
Critics of the tax sale argue the process is predatory. Local advocacy groups have called for canceling the sale altogether, arguing elderly homeowners in particular have fallen behind on tax payments during the pandemic and cannot pay lump sum bills that are more common for longtime homeowners who have paid off their mortgages.
Earlier this year, Scott withdrew 2,500 of the more than 14,000 properties headed to the May 2021 sale, those deemed to be the most vulnerable owner-occupied properties and also ones that were due to be auctioned at a tax sale for the first time.
On Thursday, Scott announced he was creating a Tax Sale Work Group to discuss longer-term reforms to the tax sale system. Chaired by Baltimore’s Deputy Chief Administrator Daniel Ramos and Daniel Ellis, executive director of Neighborhood Housing Services of Baltimore, the group has been asked to work with state legislators to draft legislation to give the city more local control over the tax sale process. The group also has been tasked with making technological updates to allow for payment plans.
“We have to work together to prioritize equity, and this is why I’m taking these steps to provide relief to homeowners now while committing to doing the tough, long-term work that has to be done,” Scott said.
Ellis, who appeared at a news conference with the mayor Thursday, said he is hopeful the work group can develop solutions to a system that has long been a problem.
“In more than 20 years of working in Baltimore, tax sale is one of the most unjust systems I’ve ever encountered,” said Ellis, whose group assists home buyers and homeowners in the city.
City Council President Nick Mosby, who also spoke at the news conference, noted homeownership has fallen in Baltimore over the last decade, dipping from 51% to 47% from 2007 to 2017. Black homeownership fell to 42% during that same window, he said. Swift action to reform the tax sale is needed to help stave off further decreases, he said.
“We need to continue to find better ways to increase home ownership and that starts with supporting our legacy residents,” he said.
Councilwoman Odette Ramos, who has been a vocal opponent of the tax sale process and led her colleagues last year in calling for the cancellation of the sale, applauded the establishment of the work group.
State law outlines the process for tax sale, and many of the changes local lawmakers would like to see require serious reforms at the state level or the removal of Baltimore from the process, Ramos said.
“If you look a the composition (of the work group), these are the experts who have been working on this for a long time who have worked with people one-on-one,” Ramos said.
“This marks an real commitment from the mayor to do tax sale reform correctly and take the time to do it right,” she added.