WEBVTT

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>>> THAT TIME OF THE YEAR,  

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PROPERTY TAXES ARE OUT AND DO  

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AT THE END OF NEXT MONTH. FOR  

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THOSE WHO ARE DELINQUENT, THE  

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SEMI-ANSWER SEMIANNUAL COUNTY   

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TAX SALE  IS UNDERWAY, WHERE   

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PRIVATE INVESTORS SWOOPED IN TO 

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PURCHASE  TAX DEBT, LEAVING  

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HOMEOWNERS [ INAUDIBLE ]  OR  

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FACE LOSING THEIR HOMES 

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ALTOGETHER.  [ INAUDIBLE ]  

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CALLS IT A  "RACKET", CALLING  

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FOR BIG CHANGES.   

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>> Reporter: HENRY JOHNSON IS A 

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RETIRED SCHOOLTEACHER WHO HAS  

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LIVED IN THIS BUNGALOW ON NORTH 

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KENDALE FOR 42 YEARS. FOUR  

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YEARS AGO,  HIS WIFE DIED. THAT 

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SAME YEAR, JOHN FELL BEHIND ON  

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HIS PROPERTY TAX PAYMENT.   

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>>  MY WIFE  [ INAUDIBLE ]   

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EDUCATOR, ABLE TO HELP  [  

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INAUDIBLE ]  THE DIFFERENCE.   

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>> Reporter:  PER STATE LAW,  

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JOHNSON WAS CHARGED 1.5%  

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INTEREST FOR EVERY MONTH  THE  

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TAX BILLS LATE, ACCRUED 18%  

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OVER THE COURSE OF THE YEAR.  

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AFTER THAT PERIOD, THE LIQUID  

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PROPERTIES LIKE JOHNSON ARE  

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ELIGIBLE FOR THE COOK COUNTY  

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TAX SALE, HELD BY THE COOK  

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COUNTY TREASURER'S OFFICE ,  

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WHERE A PRIVATE INVESTOR BUYS  

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THE DEBT, AND CAN MAKE BIG  

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PROFITS OFF IT. BASICALLY,   

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VERY POOR PEOPLE PAYING VERY  

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RICH PEOPLE. MAC  VERY POOR  

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PEOPLE PAYING THE WEALTHIEST IN 

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THE COUNTRY.   

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>> Reporter: THE INVESTOR NOW  

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CHARGES THE HOMEOWNER 12%  

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INTEREST EVERY YEAR. THE  

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HOMEOWNER HAS THREE YEARS TO  

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PAY THIS OFF BEFORE POSSIBLY  

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LOSING THEIR PROPERTY  

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ALTOGETHER. IN THAT TIME,  THE  

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TOTAL INTEREST ACCRUES TO 54%.  

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HENRY JOHNSON  ORIGINAL TAX  

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BILL WAS LESS THAN $1800.  

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SUBSEQUENT BILLS, INTEREST, AND 

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FEES SHOT HIS TOTAL PAYMENT  UP 

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TO $8173, ALL OWED AT ONCE IF  

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HE WANTED TO KEEP HIS HOME. MAC 

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 AN ALREADY INSURMOUNTABLE  

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CHALLENGE BECOMES SOMETHING 

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OBSCENE.  [ INAUDIBLE ] IT IS  

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POSSIBLE [ INAUDIBLE ]   

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>> Reporter: TIFFANY SMITH IS  

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ASSOCIATE DIRECTOR OF  

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NEIGHBORHOOD HOUSING SERVICES  

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OF CHICAGO. SHE SAYS THE TAX  

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SALE DISPROPORTIONATELY  HITS  

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BLACK AND LATINO HOMEOWNERS,  

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ESPECIALLY SENIORS LIKE  

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JOHNSON, WHO ARE ON FIXED 

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INCOMES.   

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>> THEY ACTUALLY HAVE THEIR  

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AMERICAN DREAM.  [ INAUDIBLE ]  

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IN SOME DEGREE, THAT IS WHAT IT 

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IS, WE ARE TAKING AWAY [  

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INAUDIBLE ]  HOMES.  

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>> Reporter: [ INAUDIBLE ] SAY  

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THERE  OFFICERS GO   

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DOOR-TO-DOOR  AHEAD OF TIME,   

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TRYING TO FIND MONEY THE COUNTY 

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ACTUALLY OWES THEM.  BACK [  

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INAUDIBLE ] ASSUMPTIONS, IF  

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THEY HAVE [ INAUDIBLE ]   

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>>  CITIZENS WHO HAVE NOT GOT A 

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HOMEOWNER, HAVE NOT GOT [  

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INAUDIBLE ] WHO  [ INAUDIBLE ]  

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THAT IS $6000.   

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>> Reporter: SMITH AND PAPPAS  

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SAY AN IDEAL SCENARIO , TO  

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ELIMINATE THE TAX SALE 

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ALTOGETHER.   

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>> THERE ARE 30 STATES IN  

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AMERICA THAT HAVE ANNUAL TAX  

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SALES. THIS IS NOT NEW. THIS  

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HAS BEEN GOING ON FOR HUNDREDS  

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OF YEARS.  

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>> Reporter:  [ INAUDIBLE ]  

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WESTOVER IS PRESIDENT OF THE  

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NATIONAL TAX LIEN ASSOCIATION,  

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A GROUP THAT REPRESENTS TAX  

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BUYERS. HE SAID THE TAX SALE IS 

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NECESSARY BECAUSE,  WITHOUT THE 

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PENALTY, HOMEOWNERS WOULD NOT  

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HAVE INCENTIVE TO PAY TAXES ON  

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TIME. THUS, THE PRIVATE BUYER  

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PROVIDES MISSING REVENUE TO THE 

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GOVERNMENT.   

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>> SOMETIMES, THEY HAVE A  

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BUDGET SHORTFALL BECAUSE OF  

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NONPAYMENT OF PROPERTY TAXES.  

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THIS PROCESS IS A MEANS BY 

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WHICH  EVERYBODY PAYS THEIR  

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FAIR SHARE.  

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>> Reporter:  [ INAUDIBLE ]  

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SAYS THE TAX SALE THE PIZZA   

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PURPOSE IT WAS  INVENTED FOR.   

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>>  [ INAUDIBLE ] SOLD  TO  

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VACANT PROPERTY  [ INAUDIBLE ]  

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BLIGHT ON THE COMMUNITY  [  

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INAUDIBLE ]   

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>> Reporter: TO MAKE MATTERS 

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WORSE,  THE INVESTOR RARELY [  

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INAUDIBLE ] THE PROPERTY WHEN  

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IT COMES TO [ INAUDIBLE ]. IN  

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FACT,  [ INAUDIBLE ] GET THEIR  

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INITIAL INVESTMENT BACK.  A  

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RECENT STUDY FROM THE COOK  

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COUNTY TAX OFFICE FOUND  MANY  

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TAX BUYERS USE A LOOPHOLE IN  

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STATE LAWS TO GET A FULL REFUND 

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ON PROPERTY TAXES THEY PAID.  

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THAT IS BECAUSE THEY EXPLOIT  

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WHAT IS CALLED THE SALE ERROR  

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LOG, TO GET OUT OF A CONTRACT  

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IF ANYTHING ABOUT THE PROPERTY  

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DOES NOT MATCH UP WITH WHAT WAS 

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ADVERTISED.  

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>> THE WEBSITE OF THE ASSESSOR  

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SAYS THERE IS [ INAUDIBLE ]  

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CONDITION [ INAUDIBLE ] CONTROL 

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IT AND THERE IS  [ INAUDIBLE ]  

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 I THOUGHT THERE WAS A  

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BASEMENT, THERE IS NO BASEMENT, 

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HERE, TAKE IT BACK.  

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>> Reporter:  THE STUDY FOUND  

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LOCAL TAXING BODIES PAID OUT  

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$280 MILLION OVER THE LAST  

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EIGHT YEARS TO TAX  BUYERS AS A 

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RESULT OF THE SALE IN ERROR 

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LOOPHOLE.   

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>> THIS IS A LEGALIZED RACKET  

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WE NEED TO BREAK UP.   

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>> Reporter: TREASURER PAPPAS  

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SAYS SHE IS PREPARING  

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LEGISLATION IN SPRINGFIELD TO 

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MAKE  BIG CHANGES TO TAX SALE  

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THAT WOULD ELIMINATE THE SALE  

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IN ERROR LAW, CUT THE FIRST 

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YEAR  DELINQUENT TAX INTEREST  

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IN HALF, EXEMPT THOSE OWING  

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$1000 OR LESS,  AND PROVIDE  

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PAYMENT PLANS TO THOSE THAT  

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REMAIN. WESTOVER ADMITS THE   

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SALE IN ERROR LOOPHOLE HAS BEEN 

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EXPLOITED,  [ INAUDIBLE ]  

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INDUSTRY IS OPEN TO ALL THESE  

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CHANGES.   

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>> IF THEY DO NOT HAVE THE  

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FUNDS [ INAUDIBLE ] IN FULL,   

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THEN COLLECTING PARTIAL PAYMENT 

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OVER TIME IT MAKES PERFECT 

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SENSE.   

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>> Reporter: JOHNSON RECENTLY  

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PAID OFF HIS DEBT BY  

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REARRANGING BILLS , AND HE GOT  

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A MATCHING GRANT FROM  

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NEIGHBORHOOD HOUSING SERVICES.  

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 [ INAUDIBLE ] BENEFIT  FROM  

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THESE PROPOSED CHANGES.   

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>>  [ INAUDIBLE ]  BACK OF MY  

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MIND, THERE WAS GOING TO BE  

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SOMEWAY, SOMEHOW [ INAUDIBLE ].