‘Home equity theft’ bill passed by House
Published: 06-28-2024 4:00 PM
Modified: 07-03-2024 1:12 PM |
BOSTON — The House of Representatives voted unanimously Wednesday to pass a bill that, if signed into law, would prohibit a practice commonly known as “home equity theft,” or the governmental taking and reselling of tax-foreclosed property without compensating the owner for the excess profit.
Originally filed by state Reps. Tommy Vitolo, D-Brookline, Jeff Roy, D-Franklin, John Mahoney, D-Worcester, and Tram Nguyen, D-Andover, the legislation prohibits municipalities and private companies from keeping excess home equity in the event of a tax lien foreclosure. The unanimous vote came roughly a month after the state Senate passed an amendment to its spending package in May that also prohibits the practice.
“One of the words that I heard often as we were considering this legislation in the House was the idea of fairness. We heard on the floor yesterday that this process was inherently unfair to property owners here in Massachusetts, and we needed to protect the rights of those property owners throughout the tax lien foreclosure process,” Rep. Natalie Blais, D-Deerfield, said in an interview Thursday.
Although both pieces of legislation address the same issue, the Senate’s bill caps the interest rate for delinquent property taxes at 8%, whereas the House set the interest rate at 16%. Additionally, the House’s recently passed bill sets a statue of limitations on previous equity takings at one year — a limit that some, such as Greenfield resident Al Norman, believe is too narrow.
“The home equity bill adopted in the House today closes the door on people who have had their equity stolen by a city or town before the day the SCOTUS ruled it’s unconstitutional,” Norman, who has previously joined fellow Greenfield residents Joan Marie Jackson and Mitchell Speight in testifying on home equity theft legislation, wrote in a statement. The U.S. Supreme Court ruled that the practice was unconstitutional last year in the Tyler v. Hennepin County, Minn. case.
“It’s only a one-year statute of limitations,” Norman continued. “That’s like telling a bank robber, ‘You robbed that bank, but since it was more than a year ago, you can keep the money.’”
Rep. Aaron Saunders, D-Belchertown, in an interview Thursday, said he expects both the legislation’s statue of limitations and tax interest rate will be reconsidered during future conference committee meetings.
“In the commission that’s going to be established to continue to investigate the issue, one of the issues, among the ones that will be examined is the interest rate to understand what the right rate is to provide the necessary incentive for homeowners to make the tax payments a priority, and effectively, to not disincentivize the payments because of the market rates,” Saunders said. “We need homeowners to have all of their property rights at their disposal. Especially for folks who may be facing a tax title taking, ensuring that the clock doesn’t run out on them to be able to exercise the rights they would have after one year, that they can still exercise those same rights up to 70 years, is as important as ensuring that those rights are available to homeowners.”
Article continues after...
Yesterday's Most Read Articles
Adoption of either the Senate or House’s home equity theft legislation would put the state in compliance with the U.S. Supreme Court’s ruling in the Tyler v. Hennepin County, Minn. case. Additionally, Hampden County Superior Court Judge Michael Callan ruled on April 18 that takings of excess equity under Massachusetts state law violated Article 10 of the Massachusetts Constitution’s Declaration of Rights and the Fifth Amendment to the U.S. Constitution.
Anthony Cammalleri can be reached at acammalleri@recorder.com or 413-930-4429.