The committee is investigating the city’s practice of selling tax liens to third-party investors, who can charge up to 18% annual interest on the property tax debt and file a foreclosure complaint on the home after just six months.If the property gets foreclosed and ultimately resold, the D.C. government and the third-party investor can pocket the equity or profits from the sale in excess of the property’s outstanding tax debt and interest, while the homeowner pockets none of that money, according to the House oversight committee.
Oversight committee chairman Rep. James Comer (R-KY) argues in his letter to D.C. Council Chairman Phil Mendelson that “the District’s practices appear out of step with Supreme Court legal precedent and disproportionately impact elderly and minority homeowners.”
Comer said the investigation will center on whether the district is out of compliance with the Supreme Court’s unanimous 2023 decision in Tyler v. Hennepin County, in which the court held that the government cannot keep the excess profit of a property’s foreclosure sale beyond the owner’s tax debt.
“While many states have amended their laws to abide by the Court’s ruling in Tyler, the District continues the practice of taking generational wealth accrued through home ownership from hard-working families and handing it to third-party investors,” Comer wrote in the letter. “Washington, D.C., our nation’s capital, is depriving Americans of their property through punitive tax law that results in home equity theft.”
