Unpaid Water Bills Leading to Foreclosed Homes

Nov. 12, 2012— -- Actor and musician Richard Burton is facing foreclosure on his Baltimore home, but not because he didn't pay his mortgage on time. In his case, he says it all began with an overdue $1,037.42 water bill.

Burton lost his job playing "Shamrock" McGinty on HBO's "The Wire" when the show went off the air. He couldn't afford the bill and claims it was incorrectly inflated to begin with.

However, the cash-strapped city of Baltimore turned to a controversial way to collect. The city sold his unpaid debt to a private company that also inherited a lien on Burton's home. Then, the company tacked on 18 percent interest and more than $2,000 in legal charges.

"You have no choice but to pay or you lose your home, that can't be right," Burton said.

See the 'World News' report on this story.

A Colorado Springs-based company called LienLogic is trying to foreclose on Burton's home if he doesn't pay.

The National Consumer Law Center (NCLC) says thousands of homeowners all over the U.S. are threatened with foreclosure every year because of unpaid utility bills.

"Someone could actually lose their home for the failure to pay a $200 or $300 water bill or sewer bill," said John Rao, an attorney with the NCLC.

The NCLC released a report this year citing a Rhode Island senior citizen who fell behind on a $474 sewer bill. A private company took possession of the home she had lived in for 40 years, only to turn around and sell it for $85,000.

Back in Baltimore, Vicki Valentine lost her home over a partially paid water bill. Her family had the home for 33 years. She took possession after her father passed away. Valentine sank into a serious depression following that death and paid the wrong amount on her bill. When she tried to make payments to catch up, they were not enough, and the city sold her debt off as well.

Eventually, Valentine lost the home and says she ended up on the streets.

"And that's not a fun place to be," she said.

LienLogic, the company that bought Richard Burton's debt, makes $100 million a year from its lien business, which it operates in multiple states.

The company initially declined an interview with ABC News, forwarding us to the National Tax Lien Association for comment. The executive director of that organization agreed to an interview, and then backed out.

So ABC News flew to Colorado and tracked down one of LienLogic's co-founders, Erik Carlson. When approached by an ABC News reporter, Carlson would only say: "Like I said, I declined the interview."

ABC News followed up, but Carlson declined to answer our questions about people his company tries to take homes from following the non-payment of small water or sewer bills.

Not all cities sell unpaid debts to private companies. In Houston if you don't pay your water bill, the city will shut your water off and try to get you help. Officials there would never give someone the potential right to take your home away if you don't pay.

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