By KRISTEN GRIFFITH of The Chronicle of Philanthropy

Elizabeth Vermillera, a retired pharmaceutical technician, spends her days handing out donated clothes and food to people in Baltimore. Since 1997, she has lived with a Shih Tzu and a fox terrier in a rowhouse that her dad gave her.

In 2021, the city notified Vermillera that she might lose her home due to unpaid property taxes. She panicked. Vermillera, who is disabled and unable to work, lives on a limited income.

She says she paid $300 of the $600 in taxes she owed for 2019. Then in 2020, she paid the city another $300, intending for that to cover the 2019 balance. However, her 2020 taxes were due so the city applied part of the last $300 payment to her 2020 tax bill. The notice said the remainder of the unpaid 2019 taxes was overdue and Vermillera also owed interest and other fees.

She turned to the Maryland Volunteer Lawyers Service for help. Aja’ Mallory, a lawyer at the nonprofit, which helps people having financial difficulties, worked with Vermillera and the city to sort out the problem. She was able to keep her home.

“I almost lost my house for $1,000,” Vermillera said.

Maryland Volunteer Lawyers Service, Community Legal Services of Philadelphia, and other nonprofit groups in cities with high percentages of low-income homeowners have helped thousands at risk of losing their homes due to unpaid property taxes.

Legal nonprofits help homeowners by providing free legal assistance, helping them get tax credits to lower their taxes, and working to reduce taxes on properties that are assessed higher than they’re valued. Working with advocacy groups and governments, the legal groups also push for legislative and systemic changes to address a growing problem made worse during the Covid pandemic. Without the legal assistance, many low-income homeowners could lose their houses.

Christopher Berry, a University of Chicago professor and expert on property-tax fairness, said in a 2021 report, property taxes disproportionately burden owners of the least valuable homes. Berry found that property-tax rates are 50% higher in neighborhoods where more than 90% of the residents are Black.

Margaret Henn, director of program management at the Maryland Volunteer Lawyers Service, said in the past, people who needed foreclosure assistance were usually struggling with mortgage payments. But from 2008 to 2014, most of the nonprofit’s clients had paid off their mortgages. Instead, unpaid property taxes were causing the foreclosure threats.

Baltimore didn’t keep foreclosure data before 2020, according to the lawyers, but based on the cases the nonprofit was handling, nonpayment of property taxes led to many foreclosures. By 2020, 1,015 homeowners in Baltimore faced foreclosure due to unpaid property taxes, according to a Maryland tax office 2021 report.

To keep low-income families in their homes during the pandemic, the legal service, housing advocates, and the City of Baltimore were able to temporarily save 900 homes from possible foreclosure in 2021, according to the volunteer lawyers service.

With a 2021 budget of $3 million, a staff of 30, and 1,700 volunteer lawyers, the nonprofit handled consumer, family, housing and other cases. Its funding comes from foundations, individual donors, the government, and the Maryland Legal Services Corporation.

Much of the foreclosure work that Maryland Volunteer Lawyers Service did in 2020 and 2021 was funded by grants of $367,000 from the state Department of Housing and Community Development, Henn said. The nonprofit also used $105,000 from the legal corporation for its work to help families in foreclosure.

Maryland law states once an owner’s property taxes are overdue, the city or county can sell the debt on the property at a public tax auction. Meanwhile, the homeowner pays 12% to 18% interest and other fees to the investor who purchased the debt. The people hurt the most by tax auctions are Black homeowners and people who are older, disabled, or low-income, according to the nonprofit legal service. The tax auction may leave them little choice if they want to keep their homes even with the increased interest rates and fees, Henn said.

“People who are desperate to keep where they live, do what they have to do to be able to stay there,” she said.

Legal nonprofits and advocates are working to develop new ways to keep people in their homes. For instance, some homeowners may be eligible for tax credits to reduce their property taxes. The legal service helps owners apply to the state for property tax credits, which sets a limit on the amount of property taxes homeowners pay based on their income. When Baltimore homeowners fall behind, they may be able to turn to Fight Blight Bmore, a nonprofit advocacy housing group, which can help pay property-tax balances.

Maryland Volunteer Lawyers Service encouraged the city to raise the foreclosure debt limit for owner-occupied residences from $250 to $750. Also, after the debt on a house is sold at auction, the owner has a chance to avoid losing his or her home by paying what’s owed within nine months. Homeowners used to have only six months. The nonprofit legal service worked to get that period extended, according to Henn.

Two hours northeast of Baltimore, the Community Legal Services of Philadelphia works to save homes as a rise in gentrification has led to an increase in property taxes, according to Caitlin Nagel, the group’s director of advancement and communication.

Nagel said approximately 90% of the group’s clients are people of color, which matches the demographic of residents who live in the neighborhoods affected most by gentrification.

She describes Philadelphia as a city of homeowners even among low-income residents. But owners there face some of the same issues seen nationwide. In 2010, the city filed approximately 1,100 tax foreclosures. In 2015, lawyers noticed a spike to more than 11,000, half being owner-occupied, according to Jonathan Sgro, a Community Legal Services lawyer.

The nonprofit, which in 2021 had a $16 million budget funded by contracts, individual donors and foundation grants, has a 150-member staff that tackles a range of legal issues. For many years, help with tax-foreclosure threats was the number-one reason clients sought services at their North Philadelphia office, Sgro said. Individual donations support the nonprofit’s work on tax foreclosure cases, which cost about $250,000 a year.

In 2017, the Philadelphia legal nonprofit pushed for the Court of Common Pleas to create a tax-foreclosure prevention program. Before the program, homeowners received notice of a property-tax foreclosure by mail and by a posting on their property. If the homeowner didn’t file a written response to the notice within 15 days, the court would allow the city to list the property for tax sale without a hearing, Sgro said.

Because homeowners were not personally served with the notice, many didn’t realize what was happening, according to Sgro. Now lawyers and housing counselors are available in the courtroom as homeowners face foreclosure hearings.

The nonprofit, other legal-service organizations and City Council members worked to create the Owner-Occupied Payment Agreement, which allows homeowners to make income-based monthly payments if they have unpaid property taxes. Once enrolled, the city is prohibited from placing the property on the tax-auction list. In 2020, 11,700 homeowners were enrolled in the payment program.

In Baltimore, Vermillera summed up how she felt when she learned she was able to keep her home from being put up at tax auction.

It was an “instant relief,” and an “answer to prayer beyond expectation.”

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This article was provided to The Associated Press by the Chronicle of Philanthropy. Kristen Griffith is a staff writer at the Chronicle. Email: kristen.griffith@philanthropy.com. The AP and the Chronicle receive support from the Lilly Endowment for coverage of philanthropy and nonprofits. The AP and the Chronicle are solely responsible for all content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.