State lawmakers are considering a moratorium on foreclosures stemming from unpaid water bills, a move that faces stiff opposition from Baltimore City officials who say that many property owners would not pay without the threat of losing their homes.
Sen. James Brochin called Baltimore's tax-sale system under which homeowners face foreclosure over unpaid water and sewer bills "absolutely obscene." He said the city should rely on other means of leaning on residents who don't pay their bills, such as shutting off service or assessing late charges and liens that must be paid when a property is sold or refinanced.
"There is right and wrong, and in this legislature there are a lot of gray areas on issues," Brochin said during a hearing yesterday. "But to me, on this issue, this is dead wrong."
Increased scrutiny of tax-sale cases began after an investigation by The Sun last year showed that homeowners who owe just a few hundred dollars in municipal debts - including Baltimore City water bills - often are hit with thousands of dollars in fees from private debt collectors and can lose their homes if they don't pay.
At least 400 city homes were lost over debts other than property taxes over a recent three-year period, an analysis of city tax records and court filings by The Sun found. Most stemmed from unpaid water and sewer bills, though some also included alley re-paving charges, sidewalk repairs and even fees to register rental property.
Lawmakers have introduced other measures aimed at reducing costs or lessening the risk of foreclosure, and city officials say they are overhauling their collection efforts.
Stanley J. Milesky, chief of the city's bureau of treasury management, told lawmakers that 85 percent of homeowners with delinquent water bills pay them when threatened with a tax sale and possible foreclosure. He said a moratorium could jeopardize collection of at least $13 million a year, costs that could be passed on to all customers.
The legislative debate comes at a time of rising foreclosure rates in general. Yesterday, the Senate Judicial Proceedings Committee also considered a six-month ban on foreclosures on "deceptive" subprime loans. The banking industry opposes the bill, and lobbyists told lawmakers they are working with Gov. Martin O'Malley on another package of legislation to address that issue.
