What: Nearly a dozen major banks and hedge funds — including Bank of America and JPMorgan Chase & Co. — are quietly setting up high-powered collection agencies to go after homeowners who fall behind on property taxes.
How: The Wall Street firms buy local-government rights to collect delinquent taxes. Some states allow private collectors to take as much as 18 percent interest, along with escalating legal fees. They can foreclose for nonpayment too.
Why it’s outrageous: Five big banks that rushed into the “tax-lien investing” industry received a total of more than $106 billion in TARP bailout money.
