Does Pace Morby Still Do the Following – I’m Not Sure – I’m Researching to Find Out!
Pace Morby’s approach to saving homes from tax foreclosure centers on a strategy he calls Property Tax Lien Arbitrage or Equity Extraction via Tax Lien Purchase. Here’s how it generally works, based on his public talks and the model he promotes:
Three Years ago this is one of His Videos…
The Core Idea
- Identify Distressed Properties: Homes where the owner is behind on property taxes, but the home still has significant equity (often 50–70% or more).
- Purchase the Tax Lien: Instead of waiting for the county to foreclose and sell the home at a sheriff’s auction, Pace’s model involves buying the tax lien (or sometimes the deed, depending on state laws) from the county at a public auction.
- In many states, the county sells tax liens to investors for pennies on the dollar compared to the property’s market value.
- Negotiate a Repayment Plan: Once Pace’s entity holds the lien, they contact the homeowner and offer to pay off the back taxes (and sometimes other liens) in exchange for a repayment agreement.
- The homeowner doesn’t need to come up with a lump sum. Instead, they make monthly payments to Pace’s entity (often including interest/fees).
- Protect the Home: As long as the homeowner keeps up with payments, the home is saved from foreclosure. In some cases, Pace’s entities have been known to forgive portions of the debt if the homeowner gets caught up.
Why It Works for Homeowners
- No Upfront Cash Needed: Homeowners avoid coming up with thousands in back taxes.
- Avoid Foreclosure: The home stays in their name, and they avoid the credit damage of foreclosure.
- Leverages Equity: The homeowner’s equity becomes collateral for the repayment plan, but they don’t lose the home if they comply.
Why It Works for Pace’s Entities
- High Returns: They buy liens cheaply and collect interest/fees (often 12–36% annually, depending on state law).
- Potential Foreclosure Rights: If the homeowner defaults on the repayment plan, Pace’s entity can foreclose and take ownership of the property (often worth far more than the lien cost).
- Bulk Deals: They target counties with high tax delinquency, creating a scalable business model.
Key Legal & Ethical Considerations
- State Laws Vary: Some states allow immediate foreclosure on tax liens; others require a long redemption period (1–3 years).
- Consumer Protection Concerns: Critics argue the model preys on vulnerable homeowners, though Pace defends it as a “win-win” solution.
- Transparency: Homeowners must understand the terms of the repayment agreement (interest rates, default consequences).
Real-World Example
A home worth $300,000 has $50,000 in back taxes. The county auctions the lien for $50,000. Pace buys it, pays the county, and negotiates a 5-year repayment plan with the homeowner at 15% interest. The homeowner pays ~$10,000/year instead of facing foreclosure.