Baltimore under the wrecking ball: III Housing crisis: Schmoke administration must change failed lien and tax sale policies.

April 14, 1997

MAYOR KURT L. Schmoke's responsiveness to the year-long investigation of the city's housing crisis by Sun reporters John B. O'Donnell and Jim Haner is encouraging. The whole system of liens on abandoned and deteriorating houses has to be rethought and overhauled.

The Sun's series demonstrated how the current lien process ends up bankrupting impoverished homeowners and small investors. Worse yet, communication among the various branches of city government is so haphazard that the right hand does not know what the left hand is doing. The city has demolished houses by mistake -- or while the owner appeared to be making an honest effort to bring the property up to code.

The Housing Department ought to accelerate its computerization plans so various housing and public works records are readily accessible. Authorities also should lower the usurious 24 percent-a-year interest rate on overdue city real estate taxes. This penalty is too severe for financially strapped homeowners and increases the likelihood of non-payment. (Baltimore County charges only 12 percent a year in interest on overdue taxes.)

The city's annual tax sale process also cries for a thorough overhaul.

Syndicates of speculators are the main beneficiaries of the present set-up. They engage in bidding wars over desirable properties -- not to acquire them but for the 2 percent-a-month interest that property owners must pay until the properties are reclaimed. Meanwhile, marginal city housing saddled with huge liens -- the subject of The Sun's investigation -- seldom receives any bids.

We have the following recommendations:

The city should lower the exorbitant interest rate on houses snatched up at tax sales. It harms homeowners in financial difficulties. The 1 percent-a-month rate in effect in Baltimore County is far more reasonable -- and practical.

Since there are no takers for marginal properties with gigantic liens, the city must be pragmatic. It should acquire clear title to the properties it already controls, develop a land bank and conduct a fire sale.

Once that is done, the remaining property -- whether empty land or houses -- should be listed on an Internet web site so individuals and firms can offer to buy and redevelop them. The city should aggressively market these properties. Sky-high liens could either be lowered or forgiven altogether.

As the mayor has indicated, now is the time for quick corrective action.

Pub Date: 4/14/97

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