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2014 The University of Florida Award for Investigative Data Journalism, Large Newsroom finalist

Homes for the Taking: Liens, loss and profiteers

 

About the Project

The story that struck down one of the nation’s oldest systems of debt collection started with a duplex on a forlorn corner of Washington, D.C. and an ex-Marine named Bennie Coleman.

Suffering from dementia, Coleman was forced from his home when a tax lien investor evicted him over an unpaid debt of $134. The courts approved it. So did the city. U.S. marshals even padlocked the door as the 76-year-old wept from across the street. Coleman lost everything: He had owned the $197,000 home free and clear.

For more than 100 years, the District of Columbia has placed liens on properties when owners fell behind on their taxes, and then sold the liens at auction to investors. It’s not a novel idea: half the counties in the country recoup taxes this way.

But in the nation’s capital, the program had morphed into a predatory system of debt collection for aggressive investors who took hundreds of homes over tax debts as small as $44, then flipped them for millions.

In a series of investigative stories that probed every aspect of this under-the-radar industry, The Washington Post in 2013 revealed how investors turned $500 delinquencies into $5,000 debts and made it impossible for families to save their homes. A 95-year-old church choir leader lost her house while she was in a nursing home with Alzheimer’s. A flower shop owner lost his house while he was in a coma.

“Homes for the Taking” outraged the District like few scandals in recent years, with residents packing public hearings and calling for reforms. Within days, the articles—with interactive maps, graphics, videos and photo galleries—had generated more than 4.5 million page views online.

“Absolutely unconscionable,” Mayor Vincent Gray said.

The mayor announced he was cancelling all liens sold on homes in 2013. The City Council passed legislation that would prevent the taking of a house over a small tax debt and ban investors from targeting the elderly, veterans and the disabled. An investigation is underway into whether families who lost their homes should be compensated.

A dozen U.S. senators have called for the first federal investigation of the industry. A class action lawsuit has been filed in Coleman’s name.

The Post’s stories were built from the ground up: Reporters tracked the sale of 12,000 liens and sorted through 120,000 government records. In addition to revealing the loss of homes, The Post uncovered highly unusual bidding patterns that pointed to years of collusion among investors at tax auctions, the first analysis of its kind by a newspaper.

Reporters also tracked hundreds of mistakes by the D.C. tax office that forced families to fight for their homes even after they had paid their bills. All told, 1,900 liens were sold in error, stunning property owners across the city.

The Post found that owners often had no idea their homes were in danger: Using the tax office’s address book, reporters sent mailings to 1,800 families who had liens sold at auction. One quarter bounced back as undeliverable.

Reporters delved deeper, chronicling the business practices of one of the most obscure tax lien firms in town, traveling to Chicago to find offices that turned out to be mail drops and to a lavish estate in Colorado, where the company’s leader had escaped scrutiny.

That company and others will be banned from buying liens under a sweeping law that permanently protects D.C. homeowners who have fallen on hard times.

“These stories remind me why it’s so important to have a thriving press to keep watch over these occasions where the unsuspecting public is fleeced,” reader David Miller wrote.