Delinquent taxes draw investors

Except for the occasional thump of fingers pounding keyboards with simultaneous bids, rows of investors Tuesday were silent, intent and on task.

Participants in Lake County's annual tax sale had done their homework and sat for hours at a stretch, for money-making deals. They had about four seconds to decide, as the electronic offerings of properties with delinquent property taxes scrolled continuously on monitors and on an overhead screen.

And in what may be a sign of the times, there were a lot more choices. This year, 5,259 delinquent tax liens - 863 more than last year - were for sale Monday and Tuesday.

In some cases, the bills are associated with slivers of land or undesirable properties considered of little value. Others evoke pictures of new subdivisions, where home buyers found themselves in too deep.

"It's the economy, definitely," says Lake County Treasurer Robert Skidmore. "I've had a lot of people call me who have never been in this position before."

Some may be foreclosed down the road, he added, but in those cases a mortgage company or other entity would likely redeem the taxes rather than lose the property.

For perspective, delinquent taxes this year amount to about $24 million, or 4 percent of the total bills sent.

"It's not an epidemic level, this is nothing more than a little up and down," said Wes Drone, a representative with Real-Time Auction Management System, which runs computerized tax sales throughout the state, including Lake County.

Typically, about 90 percent of the taxes are paid before a court hearing is held to transfer the title to the buyer, Skidmore said. But this year may be different.

"I don't know what's going to happen in this economy. I really don't," he said.

Circumstances were no deterrent to the 63 registered buyers who filled the main room at Greenbelt Cultural Center for two days. The interests are as varied as the wardrobes, which ranged from flannel shirts to business suits.

Buyers in the highly organized and competitive ritual include real estate groups, holding companies, lawyers, and investment firms. Some have been involved for years, follow a strategy and have a team on hand to bid.

Individuals, like Jim Hajny of Lake Zurich, are less intense but still looking to make a buck.

A painter of interior faux finishes, Hajny went through the process once before in 1990 and made a profit. This year, a friend wanted to give it a try and asked Hajny to go along. The friend missed the registration deadline but Hajny decided to follow through .

"I'm just a little guy. There are people here buying hundreds of pieces," he said. "It's just an alternative to the low interest rates at banks, I think."

Investors are bidding to buy delinquent property tax bills and collect interest on outstanding amounts until they are repaid. They are seeking to have the lowest bid on an interest rate - between 18 percent to zero - they would be paid every six months until the delinquent tax bill is settled. If no bids are received, the county buys the bill and assigns an 18 percent rate.

Delinquent taxpayers have 21/2 years to redeem the taxes, and stand to lose the property to the buyer if they don't.