Bulk Lien Sale

Home ownership should be a positive thing.   Property owners contribute positively to a community.  In Jersey City, owning property is a nightmare. 

The bulk lien sale was another way for Schundler to hand profits to his money men.  This time his scheme backfired.

Schundler sold the liens to Banker's Trust and Breen Capital Services entered into sub-servicing agreement with Banker's Trust to perform the day-to-day management of the tax sales certificates.

In 1993 the city sold approximately 2,523 tax liens for $43,717,753.00 and in 1994 the city sold approximately 1,222 liens for $16,249,628.00.  Jersey City never received the full value of the liens because the bank gave the Jersey City a subordinate note.  The city received approximately 50% on the dollar. 

A lawsuit was filed on the method that Breen Capital handled repayment methods and the court agreed that the method was wrong.   Breen Capital used the compound interest adding accrued interest at 18% per annum from date of assignment to the effective date  plus penalties and fees.

The courts used the calculation of Ruth J. Fails's monthly payments which were first applied to the reduction interest.  Only after all interest charges are paid in full does the taxpayer realize any reduction in the principal balance.

Ms. Fails made a payment of $1,700.00, representing down payment of $1,000.00 and $700.00 installment.  This installment payment was applied to outstanding interest, it was never assigned to the principal.

Ms. Fails was unable to keep up with her installment payment obligations.  Therefore, Breen instituted foreclosure proceedings.  Ms. Fails paid Breen a total of $3,740.00.  She did not receive any credit for these payments in the foreclosure actions.

The court rule that:

1) Under the provisions of Tax Sale Law, N.J.SA. 54:5-et seq., the holder of a tax sale certificate cannot enter into a private installment payment agreement directly with the delinquent tax payer to pay off the outstanding tax obligation.  (This matter belongs to the tax collector.)

2) The defendants violated Tax Sale Law involved knowing conduct, triggering the forfeiture provisions of N.J.S.A. 54:5-63.1.

3) The court find the defendants violated the provisions of N.J.S.A. 54:5-61 and N.J.S.A 54:5-62, triggering the forfeiture provisions of N.J.S.A. 54:5-63.1, constitute a per se violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.

Plaintiffs' motion for partial Summary Judgment is granted.  Defendants' motion for partial Summary Judgment is denied.

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