WAVELAND, Miss. -- The taxman cometh.
He arrived bright and early Monday morning -- the eve of the anniversary of Hurricane Katrina -- in the form of an auction in which residents in Mississippi’s Hancock County who hadn't paid their property taxes found their land up for sale the highest bidder.
This year's auction was, predictably, mammoth.
The local Sea-Coast Echo newspaper was 58 pages on Friday, including the sports section. A full 46 of those pages were tax sale listings, printed in agate type as small as a baseball box score. There were 6,500 pieces of property listed for auction in the county, every one of them representing some kind of broken dream. At the auction, each one became someone else's new dream.
Property tax auction rules are confusing, and aside from professional bidders in attendance, it seemed very few people had a good grasp of the rules.
The auction is an annual ritual, and newcomers often get hurt because of such confusion, said county tax assessor and collector Jimmie Ladner.
Jimmie Ladner
“Year after year I try to explain it, but there's these … tales out there about how it works that just aren’t true,” he said.
Usually, the bidding takes place on the country courthouse steps. But this year, cars jammed temporary county facilities and about 200 bidders squeezed into a tiny, stuffy Quonset hut.
Misconceptions can hurt
Some bidders this year were Katrina victims who lost their former homes and were attending this year's auction in the hopes of picking up a new property for a song, hoping they could right the terrible wrong that'd been done to them. We met a threesome Sunday night who were pinning their hopes on the auction, expecting to pick up a piece of property for just the tax bill price of $500-$900 in order to get a chance at a fresh start.
Instead, they are likely to be hurt yet again.
Tax auction buyers rarely ever get their hands on the property they bid on, Ladner said. As the professionals know, buyers are really bidding on the interest payments that will inevitably be paid by the delinquent property owner. Pay too much, and a bidder is almost guaranteed to lose money.
Here’s how it works: The delinquent owner gets to stay on their property for two years past the auction date. At any point during the two years following the auction, the original owner can pay off the auction winner and retain the property rights. All it takes is the price of the original tax bill, plus 1.5 percent interest per month.
For an investor, that can be a tidy 18 percent annual interest rate. But from that return, a buyer must subtract the amount “overbid” at auction for the property. An auction winner who pays 10 percent over the tax bill can get at most an 8 percent profit. And the buyer can actually lose money if the property holder pays the bill after only a few months.
The process is repeated after a year passes, when a second auction is held on that delinquent property. If a different person wins the second auction, both can ultimately make a claim to the property, though the first winner gets first dibs. That rarely happens, however.
Very few properties eventually “mature” and roll over to the new owner, Ladner said. Only around 50 of the 5,000 properties auctioned this week are likely to change hands because almost everyone pays off their bills as the two-year deadline approaches, he said. The bills that aren’t paid almost always end up being connected to worthless property – swamps, for example.
Developer doesn't expect to get land
Vic Planetta
Real estate developer Vic Planetta spent about $20,000 on 40 properties by 11 a.m. Monday before leaving for a similar auction in Biloxi. He said he didn’t expect to end up with a single piece of land out of the deals.
“The interest is great, though,” he said. “Where else can you get 18 percent?”
In fact, after years of real estate auctions, he’s never ended up with a piece of property, he said.
So bidding on tax sale property is no way to get a new home, no way to plan for a future, and certainly no place for amateurs to take on professional auction buyers, which is what happened Monday morning,
The problem was obvious right from the start, as auction prices rose to a 10 percent premium about tax bills, and above.
One place with an outstanding $816 bill was bid up to $900, for example. A $707.47 bill went for $800. And a $41.26 bill went for $70, nearly double its price.
"I've never seen it be like this," said Nuncy Perniciaro, a bidder who has won auction properties in the past. After a few hours, he stepped outside for a breath of fresh air as he waited to bid on a single parcel – the property he had won the prior year.
Perniciaro incorrectly believed he had to win the auction for this property again this year to have rights to it. But he was hardly alone in his confusion; all the amateur bidders we spoke with believed the process of winning a property outright took three years instead of two years.
Among the amateurs were professional bidders sent into Hancock County by corporations all over the country. They come with a budget of perhaps $100,000 and instructions to bid on hundreds of properties while making sure their net winning don’t exceed 7 or 8 percent of the starting price, Ladner said. That way, any gains will easily balance any losses, and the firm is sure to make a decent profit.
Amateurs at risk
In that environment, individuals bidding on one or two properties can easily get burned.
The idea behind the tax auction, Ladner said, is to raise necessary funds for schools, roads and other government projects. The newspaper listings also get the attention of delinquent property owners -- nearly 1,000 paid their taxes at the last minute to avoid being subject to the tax sale, Ladner said.
Those properties that are auctioned get the county immediate cash instead of unpaid bills, and even yields an immediate 5 to 10 percent premium.
This year’s tax sale is expected to raise about $1.2 million. Selling off 5,000 property tax bills will take so long, that bidders and auctioneers will be yelling until at least Thursday, and maybe into Friday, before all the properties are sold, Ladner said.
No one knows for sure, but county officials believe about 20 percent of the unpaid tax bills are Katrina-related, given that there’s about a 20 percent jump in the number of properties at auction from last year. Some owners died in the storm; others left the region and have yet to return. The county’s population is still down at least a third from before Hurricane Katrina.
And in the more ravaged areas, like Waveland’s beach area, it’s nearly impossible for country officials to find the right taxpayer. Nearly 10,000 property tax bills – or about 20 percent, Ladner said -- came back to the county marked “Return to Sender” and address unknown.
Other residents who’ve received insurance settlements or grants that paid off their property mortgage don’t realize they must now pay property taxes directly to the county.
“Most people just pay their taxes through their mortgage payment, they know they have to pay their taxes directly this year,” Ladner said.
Of course, there are those who just can’t pay their taxes this year because their lives have been so disrupted by Hurricane Katrina., but even speculators bidding on those properties don’t necessarily have a great investment. Many owners are simply waiting for Small Business Administration Loans or state grants to come through. When they do, the tax bill will likely be paid, and an investor who paid a 10 percent premium will likely lose money.
Still, there are those who were simply aghast at the massive listing of tax delinquencies in Friday’s edition of the paper – and at the entire auction process.
“I had an elderly woman who came into my office very upset and said, ‘How can you do this after all we’ve been through,’ ” Ladner said. She had paid her tax bill, but she was worried about her neighbors. “I just told her, ‘Because the county needs the money.’"
A year later, volunteers shine
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do they realize that the more they can help the victims of Katrina with taxes or homes, the more loyal and very grateful tax paying citizens they will
have. Need money? They help and receive.
Barbara Jackson (Sent Aug 28, 2006 4:26:07 PM)
This is sad in general.
People have lost their possessions, lives, jobs, health, etc...& now, have to be in fear of having absolutely no place to potentially rebuild, at least for those who are attempting to stay.
Two years, at yearly intervals is nothing compared to how much had gone into what these people had &/or tried to have prior to Katrina.....this is like adding salt to a wound, insult to injury, & I would like to know what logically & realistically can be done to help those in this situation & others in any similar situation...
Debbie Hejka-Westmont, IL (Sent Aug 28, 2006 4:30:22 PM)
I can not believe that this is happening to these people. Does the county not have a heart?
Heather Birmingham, AL (Sent Aug 28, 2006 4:37:23 PM)
The problem is the fact that in America, you NEVER own your home. Dont pay taxes and they will sell it for a song and a dance to somone else. I would like to see a persons primary residence (say below 500,000 or below in value)immune from seizure. Its all about the money though.
Wayne Matter, New York (Sent Aug 28, 2006 5:15:56 PM)
This is just unbelieveable. The government should step in and stop this. Where is the help for these poor people? How is this allowed? The greed is disgusting.
Jade Tucson ,Az
jade, tucson,az (Sent Aug 28, 2006 5:33:46 PM)
The county has a budget to meet, and those people should have had insurance. I for one am tired of picking up the bill on all the bad things that happen in the world. I'd rather keep the money in my pocket to pay for my kids education, and the insurance I have on my house to prevent me from suffering the same fate.
Thomas, Salt Lake CIty, UT (Sent Aug 28, 2006 6:00:20 PM)
Only in America. The rich or Corp. Screw the rest " AS ALWAYS" And the local "GOV CO" Kisses the A__! of the ones that take advantage! The very ones that are to protect and can change the system. Screw the ones that need a break!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
RR Johns (Sent Aug 28, 2006 6:04:30 PM)
This is surely sad. These people have worked for years to secure their property and belongings and our government has failed them because of a natural disaster. I was in Bay St. Louis as a FEMA contractor for nearly 5 months...as of today, my company still has not been paid for the right-of-way clean-up that we performed. I gave over $2,000.00 to people out of my own pocket that were stranded and homeless. Please send me an email if you know of someone who needs help. Thank You.
Mark W. Cahntilly, Virginia (Sent Aug 28, 2006 7:08:19 PM)
I sent this too "Thomas in Salt Lake". Maybe you would be interested.
The insurance companies have refused to pay for their losses! They have hung
their hat on loopholes and crooked "appraisers" who have blamed everything
on "water damage" when the wind was the real culprit. I will bet you, you
don't have flood insurance on your house? If you do you are very wealthy.
Flood ins. is very expensive and in most states the government underwrites
it. So you "taxpayer" loose either way.
Why do we have a government if it doesn't help people? What do your taxes
pay for? Police? Welfare? what?
Governments are supposed to "promote the general welfare and provide for the
common defense of the people". I didn't make this up. It is part of the
preamble to our constitution.
Well, what do you think now? Still feel the same after I have acquainted you
with the real facts? I hope not.
sincerely,
Bob
Bob D. Edmond, Oklahoma (Sent Aug 28, 2006 7:44:04 PM)
If you read the whole article you will notice that the majority will not lose their homes they still get to live in their homes and have 2 years to pay their taxes, in the mean time the county gets the money they need to rebuild and improve on the county these people live in.
RT former resident of Biloxi MS (Sent Aug 28, 2006 8:10:37 PM)
People potentially losing their homes due to tax liens...meanwhile, of some $110 billion allocated for Katrina relief, only $44 billion has been distributed.
What did that story say? Hancock country expects to gain a measly $1.2 million?
C'mon, feds...for crying out loud. You can't cut a check to Hancock county to spare those people more heartache?
I mean, that is like 0.0019% of the missing $66 billion...some bank somewhere is probably earning that much interest in a day off of Katrina funds they are "temporarily" holding...
Stephen, Greenville, Pa. (Sent Aug 28, 2006 8:42:59 PM)
Why is it so easy to spend money on whim for war, and other third world countries when we're allowing this to happen on American soil? If the gulf states were a forein country that we bombed, they would already have more money and assistance from the US government to pay for the rebuild!!
Steve V Phoenix, AZ (Sent Aug 28, 2006 8:58:03 PM)
Almost time to toss the tea into the bay again isn't it?
Marvin Blalock, Adairsville Ga. (Sent Aug 28, 2006 9:21:33 PM)
TO Thomas in Salt Lake City - Most of these people HAD insurance. My daughter, who lives in Waveland, had a hurricane policy, a homeowners policy and an extra wind policy. She was told by her mortgage company and her insurance broker that getting flood coverage would be a waste of money because in the past 100 years her neighborhood had never suffered any water damage unless it was from a roof blowing off. The Federal Flood Maps have been redrawn since Katrina and her house STILL IS NOT IN THE FLOOD PLAIN!
None of her insurance has paid off on anything. They gutted their entire house, threw out all of their belongings and used loans from parents and grandparents to rebuild to the point where they can at least live inside the unfinished house.
Please, before you condemn people try to educate yourself. You might read the segment on this site called "Schools Study Subtraction" in case you're still upset that your tax money is going for worthless causes. Our President has recently promised hundreds of millions of dollars to rebuild schools in Lebanon while our own children suffer and are given pep talks about how things have improved. Just because there aren't dead bodies in their street anymore doesn't mean that life is rosy.
Cathy Long, Mapleton UT (Sent Aug 28, 2006 9:38:59 PM)
Ahhh.... Good ole' America, land of the free*...
* Section 4.273(1) of the U.S. gibberish code defines "free" as running a rat-wheel for the rest of your life. Should you not respond to each and every piece of gov't mail (regardless of whether you actually received it or not), Uncle Sam hereby reserves the right to take any possessions that you may have worked your entire life for.
Should you contest any notice or amount owed, pay the amount anyways, regardless of whether you have it, even though it's most likely wrong, and fill out form 82.a98.28b and wait 6-12 months for a response. If you don't receive a response, assume your request was denied. Should you receive a response, you have 5 business days to respond or your case will be dismissed, and an additional $500 fine will be levied against you for wasting our form-generating computer's time.
---
Just a note, I'm not affected by Katrina (directly anyway), but it's ridiculous. Why in the world can the gov't take your family's *paid off* home? If I'm not correct, our DMV fees pay for the roads to it, I certainly paid for every square inch of my property, and I pay monthly to cover electricity, water, sewage, etc, etc, etc. Man, I'd love to own the business (agency, bureau, etc, etc.) reaping those revenues... Wait... I can! Simply brown-nose my way up the political ladder!
Mark Baxter, Thousand Oaks, CA (Sent Aug 28, 2006 10:14:29 PM)
It's just a shame that people have to go through this. The Gov. and Bush keeps saying we are going to do this and do that and still nothing happens. All all that money they say tey have spent has only gone to the rich corps of the U.S.
Hancock and Harrison does not mention how much money they have received for the counties. So why go after these people. But are the article says most of the bidders were from Corp. America. Like someone else said, "The Rich Get Richer off the backs of the poor". I also was effected by Katrina but not like the coast was. And the person who spoke about forms. I did have that problem. Trying to get my disability. Social Sec. office which was in Gulfport said they sent my notice out 3 days before Katrina, I did not received it and we did not received any mail until the middle of October. The appeal time past 5 days before I got the notice. I askd them to reconsider and even though their building was severely damaged by the storm, they took the stand the my appeal time has pasted and I would have to start the process all over again. That means the 9 months of dealing with them is gone and will have to wait now after starting over again by their letter 90 - 120 days before I came even get a appointmnet to finish the application process.
As yes se spend too much money of other countries and not enought at home. I think Mississippi and Louisiana should declair themself independent countries and then we can start receiving all that foreign aid they we so generously give to other countires.
Jhon Doe (Sent Aug 28, 2006 11:35:40 PM)
Most definitely those victimized by Katrina deserve our help and ongoing support. As Americans I think we sometimes expect too much of our government. The tax burden which would be created if govenment was large enough to respond immediately to each and every humanitarian need is more than most Americans would be willing to pay. It is the govenment's responsibility to verify the claims submitted for payment and invoices for services performed as protection against fraud. Unfortunately in a disaster the magnitude of Katrina doing so is time consuming, yet still necessary. Pleas for more government isn't the answer.
The answer lies with each American individually. Each of us must do what we can to help. And corporations have the same responsibility to the populations of the affected communities where their customers have been so tragically hurt. Working together through donations of time, money or other resources is the most efficient answer to helping those affected by Katrina rebuild their lives.
Expecting our govenment to carry the entire burden is to abbrogate our responsibility to help our fellow man, our fellow American, in their time of need. Our govenment is limited by available manpower and resources collected from taxpayers. We, the people, are limited only by our resolve and concern for our fellow man.
Roy Harper, Richmond, VA. (Sent Aug 29, 2006 2:47:07 AM)
NO HOME LEFT, NO FLOOD INSURANCE,BUSINESS GONE,NO FLOOD INSURANCE TOLD DIDNT NEED FLOOD INSURANCE.
1 YEAR LATER NO GRANT MONEY YET FOR HOME. WHILE THE RENTERS GOT FREE TRAILERS AND CRUISE SHIPS. WAS TOLD WOULD GET RENTAL ASSISTANCE SINCE A TRAILER NEVER CAME. THEY DID CALL TO CHECK ON TRAILER THAT WE NEVER GOT, THATS NICE OF THEM. NO ASSISTANCE FOR BUSINESS BECAUSE NOW IT HAS TO BE RAISED 14 FEET TRY WORKING ON CARS UP THERE. USELESS PROPERTY NOW!!! DEAL WITH THAT MR. SALT LAKE CITY.
C, ANDERSON PASCAGOULA, MS (Sent Aug 29, 2006 3:43:47 AM)
Another reader complained about how some of the federal money earmarked for rebuilding should be spent to ease the property tax burden for those in trouble. There is one problem with that: if the federal government is not distributing funds, then the county still has to get the money somewhere. How would you expect them to get the money? Civil government is expensive in the best of times, and more so in these worst of times. Although far from perfect or ideal, at least the system gives people the chance to pay off the debt. By the way, state DMVs only pay for certain roads; others are paid for by local governments who must create the cash flow somewhere. Other property taxes go towards schools and civil oversight of the very companies we pay our utility bills too. We are literally paying for the privilege of protection and oversight of inspectors and lawmakers who want to keep things running smoothly and safely. It is a hard pill to swallow, but it must be swallowed.
Rick Mencer, Wilson, NC (Sent Aug 29, 2006 3:54:12 AM)
For a Government to do this is a disgrace.
Steven Boyce (Sent Aug 29, 2006 5:22:32 AM)
There is nothing unusual about a tax lien sale. It happens every year in every community in this country. To avoid the sale all you have to do is pay your property tax on time. As the article stated only 20 percent of the sales are expected to be Katrina related. That means the other 80 percent just forgot to pay the taxes or for whatever reason just didn't pay them. The people are not losing their property. Not yet anyway. They have a full 2 years to catch up the payments before the investor who purchased the lien gains title to the land. Most will not lose anything. It's really not a big deal. I've forgotten to pay mine before and my aunt called me when she saw my name in the listing and I went down and paid the taxes and interest. No problem. This article is nothing more than alarmist and misleading. If you don't pay your taxes on your property where ever you live the same process will happen to you. It's not just a Hancock county MS thing. Just pay your taxes on time and there is no issue.
Alabama (Sent Aug 29, 2006 6:54:51 AM)
Dear Jhon Doe:
I am a social worker who does a lot of work w/ social security and other state and federal programs to advocate for older adults and people with disabilities and families. I should tell you that under Bush II, there has been a lot less persoanl compassion by federal and state employees to make the system work for those in need or those have are due entitlements, even in Massachusetts.
If our national organization NASW had formed an army of advocates to come south and help with these problems--how would we have found you to advocate for you when you needed it most to prevent all this delay?
I am curious, so we as advocates can do a better job in the aftermath of disasters.
Erica Raine, LICSW, Boston MA. (Sent Aug 29, 2006 7:04:42 AM)
A lot of folks simply left. Let the county have a slab. When insurance won't pay, you don't have enough savings, what do you do? LEAVE unfortonally. " When You Got Nothing, You Got Nothing To Lose".....very sad but true.
andy,booneville ms. (Sent Aug 29, 2006 8:11:17 AM)
I think that it is absolutely amazing how much effort and time is being invested into a losing battle..... Insurance companies are in the business of essentially gambling or gaming. They hawk their goods like a Carny "step right up and win the little lady a PRIZE!!!" when the game is really rigged no matter how good you are. I have homeowner's insurance, flood insurance, wind damage insurance, health insurance, dental insurance, life insurance, auto insurance, accidental death and dismemberment insurance, unemployment insurance, and let's see..... I used my dental insurance this year to pay the first 1/3 of my annual check up because that's all they covered! Other than that, I just "lost" my money because I didn't "win the prize" or have a need to collect (thank God). It's a losing battle, and it won't change until the completely out of touch ultra rich upper class of our society is voted out of office and the corporate/ governmental intimate relationship is broken apart. Strange bedfellows, lawyers, politicians, and CEO's but they all play by rules that don't apply to the working class. Meanwhile, don't gripe about a tax sale that you can't change, gripe about the lawmakers that make the rules and profit from other people's misfortune. BTW, how much of that $1.2 Million is used to pay their salaries and fund their pension plans? Just asking. A wise man said "you can't win every battle, pick the battles that will let you win the war." I feel the best battle is one that will install new leaders with the enthusiasm and exuberance of youthful idealism like our founding fathers demonstrated centuries ago for an infant Nation. Fight them on their own ground, support grass roots candidates, not the rich established political machine. Thanks for reading this far, and good luck on OUR future.
Jim, Charleston, SC (Sent Aug 29, 2006 9:16:54 AM)
I agree with most of what I have read above, with the exception of Tom in Utah, who may never know what it is like to truly loose everything you have ever worked for, or been given as a gift. I only hope you never have to know how it feels to first loose your house, and belongings, then find out now you may never be able to move back because you now oew back taxes on a property that you haven't been able to live in for over a year.
Gretchen Stein, Lawrenceburg, Indiana (Sent Aug 29, 2006 9:53:51 AM)
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