Exclusive: Congress opens probe into D.C.'s tax bill foreclosures

• Oversight Committee Chairman Rep. James Comer alleges the policy could be in "unconstitutional territory."

How it works: D.C. currently levies a 10% annual interest on unpaid property taxes.

• The law allows the city to sell property tax liens to third-party investors, who can charge 18% annual interest on the debt — and after six months, move to foreclose on the home.
• Comer argues D.C. and the investor can pocket the profits from the property's sale, while the original homeowner gets nothing.

Context: In 2023, the Supreme Court ruled that local governments run afoul of the Constitution when they keep proceeds of the home's sale that exceed taxes owed.

• Other states have amended their laws since.
• "The District continues the practice of taking generational wealth accrued through home ownership from hard-working families and handing it to third-party investors," Comer wrote to D.C. Council Chairman Phil Mendelson in a letter dated Tuesday.

The D.C. Attorney General's Office didn't return Axios' request for comment.

Flashback: A Washington Post investigation in 2013 led to a tweak that exempted owner-occupied homes.

• The change came after the Post reported a 76-year-old retired Marine sergeant saw his unpaid tax bill jump from $137 to nearly $5,000, before an investor sold the house, keeping the proceeds.

Last year, a Post op-ed argued that the practice persists, citing a case in which a family lost their house after a $41,733 tax bill was sold to investors.

What's next: Comer is asking D.C. leaders to offer a briefing on the issue by the end of the month, and share data on how many tax liens sold since 2010 have led to foreclosures.