Companies foreclosing on Jefferson County residents

Companies foreclosing on Jefferson County residents

Lending companies that initially contact property owners offering “relief” to those delinquent on taxes are foreclosing on homes all over Jefferson County, with more than 40 lawsuits filed against local residents over the past four years and millions of dollars in assets on the line.

They monitor public records and target those already behind on their taxes with phone calls and direct mail, offering them loans to help pay their tax bills. But many of the borrowers, already desperate, have no way to pay, especially once the lenders raise interest rates or tack on penalty fees for late payments and other contractual costs, leaving some in the community wondering if companies are taking advantage of people by playing on their fear of losing their property.

And in the end, that’s often what happens.

Jefferson County Tax Assessor-Collector Allison Nathan Getz says she is disturbed by the many foreclosure lawsuits filed by tax lending companies. She wants taxpayers to know there are remedies available to them to pay delinquent property taxes other than taking out high-interest loans and risking foreclosure.

She said, “My concern is, what’s going to happen when all these foreclosures occur taking away people’s homes? I’m very worried about it. It’s a huge issue that all of the community should be aware of.”

According to public records, Venise Viltz and James Polk already lost their Port Arthur property to foreclosure. They took out a loan for $5,044.62 with Propel Funding National 1 LLC on July 26, 2014, to pay outstanding property taxes for 2009 through 2013 on property at 3330 17th St. in Port Arthur. Propel Financial Services is the lending company’s agent and attorney in the case against Viltz and Polk. The couple executed a deed of trust and a tax lien contract in Jefferson County, putting up their property, valued at $30,590, as collateral for the loan.

Viltz and Polk initially made payments on the loan, reducing the amount of their principal balance to $4,782.95. However, they ultimately fell into default, according to Propel. Propel filed suit against the couple in 2016, alleging they owed the company the remaining principal balance plus $1,130.41 in accrued interest, $517 in late fees and other charges, and $4,093.09 in attorney’s fees, totaling $10,523.45. The county’s interest in the property totaled $2,216.68 for taxes from 2014-16.

Jan. 26, 2017, a judge ruled to foreclose on the property. In effect, the couple gave up their $30,000 property in exchange for $5,044.62, the amount of the original loan.

Marilyn Roach is another one of the local property owners who have found themselves in a legal battle with a lending company. Ovation Services LLC is currently attempting to foreclose on her Beaumont home.

Court documents indicate Roach took out a loan with FGMS Holdings LLC for $13,496.29 on May 28, 2014. She executed a deed of trust and a tax lien contract in Jefferson County, putting up her property as collateral for the loan. Ovation, the plaintiff in the case, is designated as FGMS’s mortgage servicer. The appraised value of Roach’s property at 3815 Bryan Drive in Beaumont is $54,290.

Per her agreement with the lending company, Roach was to pay monthly installments to the company to pay off her debt. She paid the notes for a while, but Roach soon got behind.

Young Collections sent her a letter in January 2015, less than a year after the loan was made, demanding payment and giving notice of the lending company’s intent to accelerate. Cornell Law defines acceleration clauses as “terms in loan agreements that require the borrower to pay off the loan immediately if certain conditions are met. For example, most home mortgages have an acceleration clause that is triggered if the borrower misses too many payments.” At the time the letter was sent, the company put the amount for Roach to get out of default at $943.33.

But on May 20, 2016, Young Collections sent another letter on behalf of Ovation demanding Roach pay the full amount of the principal loan and interest. In court documents submitted in foreclosure proceedings, Ovation lists the total owed for payments made by the company for tax years 2004-2007 and 2013 as $15,940.89 plus $2,199.09 in attorney’s fees as of January 2017, totaling $18,139.89. That’s approximately $4,500 more than the initial loan. Dewey Day of Creel Law Group submitted an affidavit of attorney’s fees June 12 that indicated those fees had increased and were actually $3,700 plus expenses of $1,408.91, totaling $5,108.91. The same day, Ovation printed a payoff statement indicating the payoff amount had increased to $22,287.16. If successful in foreclosing on the property, the property will go up for sale through the sheriff’s office and could be sold at much less than its actual value. Lending companies generally demand properties be auctioned for enough to cover their loan, and the county also has an interest in the sale for any taxes owed at the time of the auction. If the county has no current tax lien, Roach’s $54,000 property could be sold for the $22,000-plus owed to Ovation, less than half its actual value.

Texas passed legislation in 2013 to combat predatory lending practices. The companies must now go in front of a judge for foreclosure. In the past, the companies could “streamline” the process and avoid going before a judge. That is no longer the case. The legislation allows judges to review the cases personally and look for any errors or erroneous charges, giving them the right to kick the case out of the court or request information and evidence from the plaintiff. The legislation did not put an end to foreclosures and still allows companies to charge interest and fees per their contract with the consumer.

Loan companies do not generally ask if borrowers have the means to pay back their loan as the borrower is placing their property up as collateral, and the people who aren’t able to afford to pay property taxes outright are often the same people who cannot afford the monthly payments required by the loan companies. If they get behind in their payments, the consequences can be very expensive.

Attorney Clayton Mayfield of Linebarger Goggan Blair & Sampson LLP collects delinquent taxes for the county and represents the county’s interest when foreclosure proceedings take place. He says lending companies can legally charge borrowers high interest rates and asserts the county is legally bound to allow tax lien transfers when requested for property tax loans.

“The interest rate they can charge is up to 18 percent,” Mayfield explained. “The Tax Code allows tax liens to be transferred. If a taxpayer cannot pay his taxes, he has the right to … allow a third party to pay that lien. That means (the lender) can file suit, take a judgment, foreclose their lien and sell the property for the amount that’s owed.”

A glance at a contract from a property tax lender shows that the companies do not always start off at a high interest rate. The contract may specify an 8 percent interest rate on the loan, but Getz says consumers need to take a closer look at those contracts. They could include clauses that raise rates and charge fees under a number of stipulations within the contract.

“Property tax lending companies send out mailings to anyone who is two seconds delinquent on their property taxes,” warned Getz. “They send out letters that make it sound like they have a great solution, but people aren’t reading the fine print. And once they sign a lien transfer, I’m out of the loop. The lending companies say, ‘no money down, no fees,’ and that may be true to a point. What they don’t say is people can end up paying a lot in penalties and interest. People may be able to avoid paying the attorney’s fees the tax office charges for delinquent taxes when using the lending companies, but they can usually avoid those fees anyway by entering into a payment agreement with my office.”

In the end, some of those fees the loan companies might not mention to consumers can end up being attorney’s fees, like the thousands in attorney’s fees in Viltz’s and Roach’s cases. And as Mayfield pointed out, the lending companies can legally charge borrowers up to 18 percent, not much less than the 20 percent attorney’s fees the county charges delinquent taxpayers. Considering that, borrowers often end up paying the lenders a lot more than they would pay the county under a payment agreement.

Getz allowed that Jefferson County does foreclose on properties when taxpayers are severely delinquent and showing no desire to work with the county to pay those taxes, but she would rather try to work out a payment arrangement with them.

“We don’t want their property,” she said. “We want to figure out a way to help people stay in their homes.”

She emphasized her commitment to the community and said she makes special considerations in some cases, something the lending companies can’t promise.

“We don’t ever kick elderly people or people with disabilities out of their homes,” she asserted.

Getz said dealing with the tax office rather than a lender has multiple benefits, including the fact that taxpayers are dealing with a local person who cares about the citizenry.

“They’re going to foreclose on you if you’re payments are late,” Getz said of lending companies, pointing to the numerous foreclosure suits filed in Jefferson County by loan companies over the past few years, some currently ongoing. From 2013 to the present, the district clerk’s office recorded that Propel Financial Services LLC has filed suit against 16 local property owners. In approximately the same time period, Ovation Services LLC has filed suit against 25 property owners, the most recent one having been filed July 31. That’s 41 families in jeopardy of losing their properties.

“It’s like a wave,” Mayfield observed of the foreclosure trend. “We’re seeing the first rippling, but there’s going to be a ton of them, and all of a sudden there’s going to be a lot of people out of their houses.”

Getz suggested that delinquent taxpayers contact her office to discuss options before entering into a loan agreement with a property tax lending company. Once the tax lien transfer is signed, she warned, “It’s done. I have no discretion. There’s nothing I can do.”

Before that moment comes, she said, the Jefferson County Tax Office “will do anything to help somebody not lose their house.