Councilman calls for splitting city foreclosure sale

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BUFFALO, N.Y. (WIVB)

City officials seem to be stirring up a hornet’s nest with plans to change Buffalo’s long-standing tax foreclosure policy, which critics say could end up leaving some low-income homeowners homeless.

Under the existing policy, when a tax delinquent property goes to auction, the city takes out the back taxes and the surplus funds that can amount to thousands, or even tens of thousands of dollars, is returned to the displaced homeowner.

The new plan which city attorneys outlined to the Common Council, last week, would have the city take the back taxes, fees, and the surplus funds.

Lovejoy Councilman Richard Fontana said without the surplus funds, a displaced homeowner might not even have the money for a security deposit on an apartment.

“Because we are auctioning off these properties to a lot of LLC’s, to a lot of out-of-state buyers, and that further exacerbates our rental problem and lowers our home ownership rate in the city of Buffalo.”

Fontana would like to split the tax auction into two parts, first allowing would-be homeowners to bid on pre-approved residential property, rather than bidding against an out-of-town corporation.

“To set aside those homes so we can increase our home ownership rate by having people who would inhabit the house own the house.”

A second tax sale would be held for the limited liability corporations (LLC’s), investment groups, and out-of-town financial concerns to bid on foreclosed properties.

Sam Dolce, an attorney with the Western New York Law Center likes Fontana’s plan, “This would keep homes modestly priced, also it would guarantee that the house, after the auction, would be owned by a city resident.”

But Dolce said there are some serious flaws in the new overall foreclosure policy. By the city holding on to the surplus funds, a low-income family could lose their biggest asset over unpaid user fees, which could be as little as $200.

“You could have owned a home in your family for generations and lose it over a user fee for $200. That should not happen in the city of Buffalo,” and Dolce believes the city should set a threshhold of $2,500 for taking a home for back taxes.

Attorneys for the city and watchdog groups are working on a foreclosure plan that would be fair to city homeowners, and sources have said the negotiations are intense. A city spokesperson said, “the resolution is under review.”

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