The tax sharks are back and they’re coming for your home
I'm touring my new, nationally bestselling novel The Bezzle! Catch me TODAY (Apr 27) in MARIN COUNTY, then Winnipeg (May 2), Calgary (May 3), Vancouver (May 4), and beyond!
One of my weirder and more rewarding hobbies is collecting definitions of "conservativism," and one of the jewels of that collection comes from Corey Robin's must-read book The Reactionary Mind:
Robin's definition of conservativism has enormous explanatory power and I'm always finding fresh ways in which it clarifies my understand of events in the world: a conservative is someone who believes that a minority of people were born to rule, and that everyone else was born to follow their rules, and that the world is in harmony when the born rulers are in charge.
This definition unifies the otherwise very odd grab-bag of ideologies that we identify with conservativism: a Christian Dominionist believes in the rule of Christians over others; a "men's rights advocate" thinks men should rule over women; a US imperialist thinks America should rule over the world; a white nationalist thinks white people should rule over racialized people; a libertarian believes in bosses dominating workers and a Hindu nationalist believes in Hindu domination over Muslims.
These people all disagree about who should be in charge, but they all agree that some people are ordained to rule, and that any "artificial" attempt to overturn the "natural" order throws society into chaos. This is the entire basis of the panic over DEI, and the brainless reflex to blame the Francis Scott Key bridge disaster on the possibility that someone had been unjustly promoted to ship's captain due to their membership in a disfavored racial group or gender.
This definition is also useful because it cleanly cleaves progressives from conservatives. If conservatives think there's a natural order in which the few dominate the many, progressivism is a belief in pluralism and inclusion, the idea that disparate perspectives and experiences all have something to contribute to society. Progressives see a world in which only a small number of people rise to public life, rarified professions, and cultural prominence and assume that this is terrible waste of the talents and contributions of people whose accidents of birth keep them from participating in the same way.
This is why progressives are committed to class mobility, broad access to education, and active programs to bring traditionally underrepresented groups into arenas that once excluded them. The "some are born to rule, and most to be ruled over" conservative credo rejects this as not just wrong, but dangerous, the kind of thing that leads to bridges being demolished by cargo ships.
The progressive reforms from the New Deal until the Reagan revolution were a series of efforts to broaden participation in every part of society by successively broader groups of people. A movement that started with inclusive housing and education for white men and votes for white women grew to encompass universal suffrage, racial struggles for equality, workplace protections for a widening group of people, rights for people with disabilities, truth and reconciliation with indigenous people and so on.
The conservative project of the past 40 years has been to reverse this: to return the great majority of us to the status of desperate, forelock-tugging plebs who know our places. Hence the return of child labor, the tradwife movement, and of course the attacks on labor unions and voting rights:
Arguably the most potent symbol of this struggle is the fight over homes. The New Deal offered (some) working people a twofold path to prosperity: subsidized home-ownership and strong labor protections. This insulated (mostly white) workers from the two most potent threats to working peoples' lives and wellbeing: the cruel boss and the greedy landlord.
But the neoliberal era dispensed with labor rights, leaving the descendants of those lucky workers with just one tool for securing their American dream: home-ownership. As wages stagnated, your home – so essential to your ability to simply live – became your most important asset first, and a home second. So long as property values rose – and property taxes didn't – your home could be the backstop for debt-fueled consumption that filled the gap left by stagnating wages. Liquidating your family home might someday provide for your retirement, your kids' college loans and your emergency medical bills.
For conservatives who want to restore Gilded Age class rule, this was a very canny move. It pitted lucky workers with homes against their unlucky brethren – the more housing supply there was, the less your house was worth. The more protections tenants had, the less your house was worth. The more equitably municipal services (like schools) were distributed, the less your house was worth:
And now that the long game is over, they're coming for your house. It started with the foreclosure epidemic after the 2008 financial crisis, first under GW Bush, but then in earnest under Obama, who accepted the advice of his Treasury Secretary Timothy Geithner, who insisted that homeowners should be liquidated to "foam the runways" for the crashing banks:
Then there are scams like "We Buy Ugly Houses," a nationwide mass-fraud outfit that steals houses out from under elderly, vulnerable and desperate people:
The more we lose our houses, the more single-family homes Wall Street gets to snap up and convert into slum properties, aslosh with a toxic stew of black mold, junk fees and eviction threats:
Now there's a new way for finance barons the steal our houses out from under us – or rather, a very old way that had lain dormant since the last time child labor was legal – "tax lien investing."
Across the country, counties and cities have programs that allow investment funds to buy up overdue tax-bills from homeowners in financial hardship. These "investors" are entitled to be paid the missing property taxes, and if the homeowner can't afford to make that payment, the "investor" gets to kick them out of their homes and take possession of them, for a tiny fraction of their value.
As Andrew Kahrl writes for The American Prospect, tax lien investing was common in the 19th century, until the fundamental ugliness of the business made it unattractive even to the robber barons of the day:
The "tax sharks" of Chicago and New York were deemed "too merciless" by their peers. One exec who got out of the business compared it to "picking pennies off a dead man’s eyes." The very idea of outsourcing municipal tax collection to merciless debt-hounds fell aroused public ire.
Today – as the conservative project to restore the "natural" order of the ruled and the ruled-over builds momentum – tax lien investing is attracting some of America's most rapacious investors – and they're making a killing. In Chicago, Alden Capital just spent a measly $1.75m to acquire the tax liens on 600 family homes in Cook County. They now get to charge escalating fees and penalties and usurious interest to those unlucky homeowners. Any homeowner that can't pay loses their home.
The first targets for tax-lien investing are the people who were the last people to benefit from the New Deal and its successors: Black and Latino families, elderly and disabled people and others who got the smallest share of America's experiment in shared prosperity are the first to lose the small slice of the American dream that they were grudgingly given.
This is the very definition of "structural racism." Redlining meant that families of color were shut out of the federal loan guarantees that benefited white workers. Rather than building intergenerational wealth, these families were forced to rent (building some other family's intergenerational wealth), and had a harder time saving for downpayments. That meant that they went into homeownership with "nontraditional" or "nonconforming" mortgages with higher interest rates and penalties, which made them more vulnerable to economic volatility, and thus more likely to fall behind on their taxes. Now that they're delinquent on their property taxes, they're in hock to a private equity fund that's charging them even more to live in their family home, and the second they fail to pay, they'll be evicted, rendered homeless and dispossessed of all the equity they built in their (former) home.
It's very on-brand for Alden Capital to be destroying the lives of Chicagoans. Alden is most notorious for buying up and destroying America's most beloved newspapers. It was Alden who bought up the Chicago Tribune, gutted its workforce, sold off its iconic downtown tower, and moved its few remaining reporters to an outer suburban, windowless brick building "the size of a Chipotle":
Before the ghastly hotel baroness Leona Helmsley went to prison for tax evasion, she famously said, "We don't pay taxes; only the little people pay taxes." Helmsley wasn't wrong – she was just a little ahead of schedule. As Propublica's IRS Files taught us, America's 400 richest people pay less tax than you do:
When billionaires don't pay their taxes, they get to buy sports franchises. When poor people don't pay their taxes, billionaires get to steal their houses after paying the local government an insultingly small amount of money.
It's all going according to plan. We weren't meant to have houses, or job security, or retirement funds. We weren't meant to go to university, or even high school, and our kids were always supposed to be in harness at a local meat-packer or fast food kitchen, not wasting time with their high school chess club or sports team. They don't need high school: that's for the people who were born to rule. They – we – were meant to be ruled over.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Buy now pay later apps: an old predatory lending tactic by a new name, luring Gen Z into debt they can't afford and trashing credit scores.
Buy Now Pay Later Apps: That Old Predatory Lending by a Crappy New Name
Whether or not you’ve heard of BNPL, you’re probably wondering where I’m going with this. Why the vitriol? The utter contempt?
I listened to a lot of interviews with buy now pay later customers in my research for this article. And when asked how their personal problems with BNPL started, these customers all said the same thing: “It all started with the pandemic.” And those personal problems ranged from debt spiraling out of control, to plummeting credit scores, to unexpected overdraft fees, to not even wanting what they’d paid for after their final payment.
There we all were, stuck alone in our homes, unable to shop or go out to events or restaurants. We were bored! Lonely! Fucking stressed out and afraid! A lot of us were tightening the budgetary belt because—and I am living proof—job security got a whole lot less secure.
Enter retail therapy with a fun new twist. Suddenly, us lonely, locked-down, stressed-out motherfuckers looking for a cheap pick-me-up were seeing ads for awesome new stuff on an interest-free payment plan. That sounds downright affordable!
And who cares if no one will see me in these shmancy new boots any time soon? I will wear them for me, and I will clomp around in my fourth-floor walkup so my downstairs neighbors know I can afford nice things! They say “QUIET DOWN UP THERE,” but they mean “We are consumed with jealousy at your good fortune!”
Of course, the thing about deals that look too good to be true is they probably absolutely are, 100% of the time.
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Higher total interest: You will pay substantially more in total interest over the life of the loan compared to a 15- or 30-year mortgage.
Slower equity growth: Your payments will build equity much more slowly.
Longer debt period: You will be in debt for a much longer time, potentially into retirement.
Regulatory hurdles: Lenders would need to navigate or change existing regulations, such as the Qualified Mortgage (QM) rule, to offer 50-year mortgages widely.
Former TitleMax store managers told ProPublica and The Current about how they were trained to keep customers unaware of the true costs of th
Title lending is a predatory money lending practice that targets low income workers and those with bad credit. Customers are set up with loan repayment plans that fail to payoff the principal and charge annual interest rates as high as 170% according to loan records reviewed by ProPublica. TitleMax has continued their illegal practices despite being fined millions of dollars by federal regulators for past violations.
Outstanding student loan debt in the U.S. has tripled over the last decade and now stands at almost $1.5 trillion — in part because many peo
“Loans doubling, tripling, quadrupling, it really does happen all the time,” said Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, a nonprofit advocacy group.
“There are ways these loans are structured that encourage this ballooning,” Yu said.
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Payments are applied to the interest instead of the principal so the loan amount just keeps going up.
Almost half of students who borrow money to attend a private, for-profit school default on their loans.
At the beginning of this year, Navient, an offshoot of Sallie Mae’s SLM Corp which was focused on federal and private student loans, was served legal consequences for selling something that was too good to be true.
Pennsylvania Attorney General Josh Shapiro stated how Navient was putting profits ahead of borrowers and targeting students who probably couldn’t pay back their loans in a repeated and deliberate manner. They pushed “struggling borrowers further into debt by steering them into long-term forbearance programs that actually added more in interest to the overall loan balance,” as well as “lent predatory subprime loans to students attending for-profit and low-graduation-rate colleges where it knew these borrowers could likely not repay the loans.”
This isn’t a new problem. Back in 2014, Parent PLUS, the fastest growing and most profitable student loan program from the federal government of its time, became entangled in scandal since they would offer borrowers as much money as they wanted to attend whichever school they wanted. The debt trap they created was easy to fall into, as some borrowers lamented, “You feel so guilty that you haven’t done enough for your kid, and they make it so easy to get the loans.”
Also in 2014, ITT Educational Services was sued for predatory loan practices. Not only was ITT one of the most expensive for-profit schools a student could attend at the time, but it was also the largest with schools in over 40 states. The suit claimed that “ITT used high-pressure tactics to push many students into high-cost private loans it knew they couldn’t repay.”
They sold students on “temporary credit” which had to be quickly repaid, had exceptionally high interest rates and origination fees, and rushed students through the loan process without providing proper education on what they were getting themselves into. One of the worst parts? ITT knew that 64% of students would default on their loans and have to drop out of college.
In another recent case, Yale, Georgetown, Northwestern, and 13 other major universities here in the states were found to have been working together to “determine financial-aid awards for students” in alleged illegal collusion.
What if colleges had to compete on their prices instead of colluding and getting away with breaking antitrust laws? Would they then feel incentivized to cut their costs? Or what if colleges didn’t insist on being the arbiters for government-funded financial aid and student loan programs, instead letting students apply for loans through their banks?
By and large, your average student isn’t stuck in a predatory practice. Although they may have the best intentions and feel pressured by society to do so, a student taking out a loan shouldn’t be absolved of responsibility. That doesn’t mean, however, that the lenders and colleges should be able to profit so much from those choices.
An Afro-indigenous family’s fight against systematic displacement in Portland, OR
I don’t know if any of you all have money these days, but if you do, consider sending some the way of this family.
They’re getting screwed by the banks, shockingly enough. But they’re fighting, and bringing much-needed attention to a slew of issues that badly need to be addressed.
CURRENT STATUS
A writ of execution for eviction of 4406 N Mississippi Ave was signed on Sunday, September 27, 2020. The Multnomah County Sheriff's Office now has 30 days to execute a forced eviction of the residence.
Tala and other companies are bringing quickie loans wrapped in the language of “financial inclusion” to developing countries.
'Pretty much everyone I meet on a visit to Kenya has a story. A print shop owner can’t pay back a loan taken out to buy a goat to cook for a Christmas party. A policeman I ask for directions pulls out his phone and admits to defaulting on a loan himself. A cab driver says that, four months after he borrowed to buy a new battery, he’s no closer to repaying the debt. Several people get text messages from debt collectors as we speak.
'Most borrowers felt the terms of their loans were unfair but took them out anyway. “It’s as if they know an African has no options,” says Stephen Omondi Juma, an electrician with a small office in Nairobi’s Kibera slum, where he also sells hats.'
