Cities and counties are now being urged by housing advocates and homeowners to stop foreclosure process for homeowners who are delinquent in their property tax payments.

In the past, local governments have not been quick in foreclosing residential properties whose owners are delinquent in paying their real estate taxes. They have more consideration, giving time to homeowners to find ways to pay their arrears. Besides, they do not like seeing families being forced out of foreclosed homes.

But now that cities and counties are reeling from low revenues largely due to low tax collections, they are now forced to find ways to obtain cash to be able to continue funding essential public services and facilities such as public schools, police and fire departments.

Many local governments now are selling delinquent property tax bills to private investment firms, which have no qualms in foreclosing homes if homeowners are unable to pay their debts.

For instance, Lucas County, Ohio has sold over 3,000 unpaid tax bills to a private firm for $14.7 million. Because of the quick accumulation of interests and fees on the tax bills, many homeowners have been put into worse financial situations, with their $1,000 tax bills turning into several thousands in just a short time.

City and county officials say they are in a bind because they do not want residents to be forced out of their foreclosed houses and at the same time they want to obtain cash so they are able to continue operating. They also argue that payment of real estate taxes is a responsibility of any citizen of the country.

Community advocates however reiterate that the short-term gains from turning liens into cash are defeated by the social costs of homeless families and abandoned foreclosed properties.

Additionally, many homeowners assume that property taxes and insurance premiums are included in their monthly loan payments, according to housing advocates.

In 2008, the Federal Reserve required lenders to include real estate taxes and insurance premiums in monthly loan payments, but they imposed the rule only on subprime loans and limited it only to the first year of the home loan.

For other borrowers, the exclusion may mean flexibility in their personal budgets. But for many borrowers, the inclusion of insurance and tax bills in the monthly loan payments for at least five years can step up their ability to save their homes from tax foreclosures.