The elderly at risk
Without safeguards from city, housekeeper, 86, loses family’s legacy
It wasn’t much of a house, shrouded by overgrown trees and low-slung power lines on a dead-end street in Southeast Washington.
Eugene Dorsett bought the three-bedroom duplex in 1971, a gift for his mother, Hattie, who had spent decades cleaning other people’s rooms at the Washington Hilton.
Hattie filled her tidy home with dogs and cats, her kitchen with the smells of chicken and collard greens. Her son and grandson, Eric, moved in upstairs, and three generations melded into the working-class neighborhood along the Anacostia Freeway.
Above: Hattie Dorsett lost her Southeast Washington duplex.
HOMES FOR THE TAKING
LIENS, LOSS AND PROFITEERS
Back to part 1: The District’s tax lien program has turned into an often predatory system of debt collection for well-financed, out-of-town investors who have turned $500 delinquencies into $5,000 debts — allowing them to take homes from struggling property owners.
Hattie was 86 years old when a tax lien purchaser filed a civil case to take her home.
In some other cities, it wouldn’t have happened: Laws are in place to protect the elderly from losing their houses in tax lien foreclosures. Not so in the District, where dozens of older homeowners – often sick, impoverished or mentally incapacitated — have been forced out, some for just a few hundred dollars in back taxes.
“There needs to be an element of compassion,” said Dorsett’s grandson, Eric, now 51, who used to read Scripture with his grandmother in the living room and learned to ride his bike on the neighborhood’s narrow streets. “You’re taking their legacy away.”
A tale of two properties
People living in the District and Fairfax County face different scenarios if they fall behind on real estate property taxes. A process similar to the District's is used in about half of U.S. counties to collect delinquent taxes. Here’s a comparison with an alternative used in Virginia.
In the District
In Fairfax, Va.
Who collects the debt?
Delinquent debts are sold as tax liens to investors.
Delinquent debts are collected by local government.
Is owner offered a payment plan?
What happens if owner can’t pay?
Buyer of tax lien can file for foreclosure in court, usually after six months.
Collection efforts can include alternatives to property sales such as seizure of bank funds, wages or assets.
What are the additional costs to keep the property?*
Court cases lead to high legal fees and expenses that can significantly increase the debt.
Collection fees are 20 percent of the delinquency.
How many foreclosure or tax sales went to court in 2012?
19 *Property is sold for taxes only as a last resort.
How many tax lien foreclosures or tax sales were completed in 2012?
*In addition to taxes, penalties and interest.
Sources: D.C. Office of Tax and Revenue, D.C. Superior Court, Fairfax County Department of Tax Administration, Taxing Authority Consulting Services.
Sick with diabetes, Hattie Dorsett moved to an assisted-living facility in South Carolina in 2004, closer to family. She had been living alone in the District: Her son had died years earlier, and her grandson was living in Hawaii.
On a housekeeper’s salary, she had paid her property taxes — about $150 a year — made affordable by homestead, senior citizen and tax-cap benefits.guid="http://www.washingtonpost.com/sf/investigative/2013/09/08/the-elderly-at-risk/"
But the city determined that the benefits should be removed in 2007 and applied the higher tax rate not only to that year, but also to the two previous years. The city also declared her house vacant, which raised her tax bill even more.
Suddenly, Dorsett faced an $8,000 debt — nearly 50 times her yearly bill.
Deputy Chief Financial Officer Stephen Cordi said the law required that the exemptions be removed. “She wasn’t living in the District and had no claim to those benefits,” he said.
Her grandson said the bill ultimately cost the lifelong District resident her home.
“She was very disciplined as it relates to personal responsibility, making sure bills were paid,” Eric Dorsett said. “It’s not like you have $8,000 lying around.”
When the family couldn’t pay, the tax office placed a lien on the house, then sold the lien at auction in 2008 to the highest bidder. The company was owned by Steven Berman, who had recently pleaded guilty to rigging tax lien auctions in Maryland.
The company filed to foreclose in D.C. Superior Court in 2009.
Eric Dorsett said he spent months trying to save the house, which his grandmother owned free and clear. It wasn’t just a matter of sentimentality: The house represented the family’s financial security. It was everything they had, equity they planned to pass down.
“This was my childhood home,” he said.
Through his attorney, Berman declined to comment about the case. The law firm that represented his company said it was willing to reduce its legal fees and costs but that Dorsett told the company that he no longer wanted the property.
Dorsett denied that, saying, “I wasn’t in the position to come out of pocket for the ridiculous number that they had on the table, and they knew that.”
Other cities and states that sell tax liens have introduced a host of protections to prevent the elderly from losing their homes.
Rhode Island, where an 81-year-old woman lost her home just before Christmas, passed a law that empowers the state’s housing agency to buy liens, then work with homeowners to clear up their tax debts.
In Michigan, many counties have foreclosure specialists and offer payment plans for struggling homeowners.
Cordi said the tax office takes steps to assist older people, including tax breaks to help them manage their bills. “The District provides all these protections up front,” he said.
But Joanne Savage, a lawyer with AARP’s Legal Counsel for the Elderly, said those benefits don’t help elderly or sick homeowners who have fallen behind.
“At a time when they may be particularly vulnerable, they also have the most to lose,” she said.
In 2010, Eric Dorsett learned that a judge had approved the foreclosure on his grandmother’s house. In 2011, Berman’s company sold the property for $177,000.
Hattie Dorsett died that year. Her grandson said he never told her what happened.
Jennifer Jenkins contributed to this report.