TIGTA questions handling of foreclosures
Nearly 4 million new foreclosures were filed in 2009, an increase of 21 percent over 2008. In 2008, foreclosures catapulted 120 percent over the prior year. Foreclosure filings, now at historic highs, include: default notices, scheduled foreclosure auctions, and bank repossessions.
- The advisory unit must follow up to determine if the USAO filed a proper and timely claim which would make it possible for the government to collect surplus proceeds. TIGTA found this step often is not done.
- The advisory unit also did not always check to see if their recommendation to release the right of redemption was followed. The right of redemption refers to a period of time after the foreclosure during which the homeowner can redeem the property. The right of redemption is not available in all states.
- Finally, the advisory unit did not always provide the sale information necessary to consider the potential redemption of the property after a foreclosure sale.
- Information the IRS provides to the public for submitting a timely notice of sale to the advisory unit is not consistent with the Internal Revenue Code. That is, the advisory unit judges the timeliness of a notice by the postmark date. But information provided to the public specifies that timeliness is determined by the receipt date.
- The advisory unit does not screen the notice of sale or provide sufficient documentation as to why a notice is rejected.
- The advisory unit does not act consistently in answering requests to release the right of redemption.
- Timely information regarding the application of surplus proceeds is provided by the advisory unit.
- The advisory unit supplies timely recommendations regarding the value of releases of rights of redemption.
- The advisory unit receives adequate information to consider the possible redemption of foreclosed properties.
- Communications between the public and the advisory unit, and between the public and the USAO, are consistent with tax law in the future.
- Foreclosure files include supporting evidence when notices of sale are rejected.
- Release of rights of redemption are timely and appropriate.
Voice of the Editor
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