Brookline Rep. Tommy Vitolo Working To Ban ‘Home Equity Theft'

BROOKLINE, MA — Pacific Legal Foundation filed a lawsuit against the State of Massachusetts Tuesday over a law that allows local governments to keep the full selling price of a home when seizing and selling property for unpaid debts.

A bill filed by Representatives Tommy Vitolo and Jeff Roy would eliminate this practice of “home equity theft,” which happens when the remaining equity in a property after taxes is not returned to the original owner and instead kept by a municipality or private company.

“I remind my fellow politicians and civil servants that every person within our jurisdiction is a constituent, and we have an obligation to treat them with kindness and fairness,” said Vitolo at a press conference outside of Boston’s Supreme Judicial Court Tuesday. “All organizations and individuals, including the government, are entitled to collect what they’re owed, but not beyond what is owed. In this context, homeowners must be obligated to make good on their tax bills, no less, no more.”

A total of 254 Massachusetts homeowners lost a collective $60 million in home equity over a six-and-a-half-year period when municipalities foreclosed and sold their homes over tax debts as small as two thousand dollars. Homeowners of another 154 homes lost $37 million after municipalities sold their tax liens to private investment group Tallage, which foreclosed and sold the homes while keeping the proceeds in excess of what was owed.

Deborah Foss, the New Bedford resident who is being represented by Pacific Legal Foundation, is one of these homeowners who was left homeless after her home was foreclosed upon in February.

“For many people like Deborah Foss, the equity in their home is their life savings,” said Pacific Legal Foundation attorney Joshua Polk in a statement. “Governments can foreclose on homes to settle back taxes, but they cannot collect more than they are owed. Doing so is home equity theft—it’s devastating, unfair, and unconstitutional.”

The new legislation would require municipalities to provide clear notice to homeowners who homes are at risk of foreclosure. The bill would also require the municipality to disperse the proceeds of the home in a manner consistent with traditional mortgage foreclosures, including returning the remaining home equity to the resident.