Speculator can buy up debts on properties delinquent on their taxes and gain a lien on those properties. View Full Caption DNAinfo/Patty Wetli

DOWNTOWN — Homeowners behind on paying property taxes face the prospect of having their debts sold to speculators next month — the first step in a process that could lead to the loss of their homes.

The Cook County Treasurer's Office "Scavenger Sale" from July 12-25 is part of a system where the debt of those who don't pay their taxes can be sold to the highest bidder, who then can turn around and charge high rates of interest to the debtor who pays it back.

This year, homeowners who fail to pay their August property tax bill could see their debt "sold" to tax buyers as soon as December in a second scavenger sale — the quickest deadline ever.

Cook County Commissioner Bridget Gainer said the tax sales encourage speculators and discourage redevelopment. View Full Caption DNAinfo/Ted Cox

During the last two scavenger sales, some 88,000 property tax bills were sold to scavengers.

The little-publicized change in the law this year led some Chicago residents to sound an alarm.

"I don't know how many homeowners realize this, that they no longer have a longer absolute deadline of getting the property taxes caught up after the Aug. 1 bill this year is due," Jefferson Park resident Jolene Jones said. "Folks just don't have the money to pay it on time. They need those extra months into the new year to catch up. We should be granted those extra months. They keep raising the property taxes without giving us more time to pay."

Local politicians said the interest paid to speculators instead of the county represents tens of millions of dollars in lost revenue.

"We're basically allowing a third party to collect $26 million in property taxes in Cook County, and none of that goes back into developing the neighborhoods or anything of value," Cook County Commissioner Bridget Gainer (D-Chicago) said. "And why we do that is a mystery to me."

"It's basically a tax on poor people and working-class people, because they're the ones who are paying this," she added

Next month's "Scavenger Sale" is part of a process that takes place every other year, in which all properties with long-term back taxes — now through the 2015 tax year — have their debts offered for sale. Buyers who pay the county the tax debt claim a lien on the property, and can charge as much as 18 percent in interest to the property owner over the next two or three years.

"This is arbitrage, borrow at a low rate, have a high rate of interest," Gainer said.

Some of the properties in the long-term "Scavenger Sale" are 20 years in arrears on their taxes and undesirable. The more lucrative tax debts, Gainer said, are the annual sales, which she said generate the $26 million a year just in interest paid on the debts bought.

"They're buying the taxes in, like, Chatham, Belmont Cragin and Chicago Heights, in places they know that people are going to be able to pull together the money and eventually pay them," Gainer said. "Most of these [speculators], the vast majority, don't want the property. They wouldn't have anything to do with it."

Even after two years — when a tax buyer can go to court and try to take possession of a home — they're more likely to extend the deal and simply have the homeowner keep paying the interest.

The system, however, is attracting more attention in the wake of changes slipped through the Illinois General Assembly in 2014 to speed payments to cash-strapped Cook County. They called for the grace period for paying delinquent property taxes to be cut from what was routinely a year in the past to eight months last year and now just 90 days from when the August bill is due.

Because it involves property taxes, changes have to be made at the state level, and local authorities can't adjust it.

"The county has no control over the process," Gainer said, "and neither does Maria Pappas," the Cook County treasurer whose office conducts the sales, but who has to observe state mandates on the timing.

Cook County Clerk David Orr called attention to the situation earlier this year, when properties that failed to pay their second-installment bills last August were suddenly subject to having their debts sold on April 3.

Orr said that caused "thousands of homeowners to panic at the prospect of losing their homes."

He added, "This accelerated schedule comes at the expense of property owners while benefiting tax buyers the most. Such benefits must not be borne by homeowners."

The short turnaround, Jones said, could hurt the most vulnerable homeowners.

"What I am really concerned about is the seniors who will be forced out of their homes," Jones said. "They can't keep taking increase after increase ... not to mention the families. And right at the holidays? Really? Seems like our elected officials are nothing but a bunch of Scrooges and have forgotten that we the people pay their salaries and elected them to office to speak and act on our behalf."

Orr issued a clarion call for the General Assembly to pass a new reform bill setting back the annual sale earlier this year, and it cleared both houses in May. According to Orr spokesman James Scalzitti, it would push back the annual tax sale on delinquent properties this year to May 2018.

Gov. Bruce Rauner, however, has not signed it into law. Rauner spokeswoman Eleni Demertzis said Wednesday it "is currently under review."

"I would expect Rauner to sign it," Gainer said. "I can't imagine why he wouldn't want to sign it."

If not, homeowners who fail to pay their August installment would get thrown to the scavengers in December, following in the footsteps of more long-term delinquent properties slated to have their tax debts offered for sale next month.