NELF Equity Theft Amicus Brief Gets Attention in North Shore Media

State criticized for allowing ‘equity theft’ from homeowners

BOSTON — Massachusetts is among a handful of states that allow local governments and private investors to “steal” equity from homeowners who are late in their property taxes, according to a new report.

The report by the nonprofit Pacific Legal Foundation found that Massachusetts and 11 other states, plus Washington, D.C., have laws on the books that allow local governments or private investors to take dramatically more than what is owed from homeowners who are behind.

The report also highlighted that the states — which include Massachusetts, Maine, New York, New Jersey and Alabama — protect home equity in the foreclosure process, but also provide loopholes to allow governments or private entities to seize excess equity value that should belong to the homeowner.

Angela Erickson, the group’s strategic research director and co-author of the report, said the laws have allowed local government officials to take homes that “have been in families for generations” and “leave some people homeless over tax debts that amount to less than one percent of their property’s value.”

“Home equity theft is robbing thousands of people of their homes and all the equity they’ve built,” she said. “A system that allows governments and private investors to take more than what is owed creates a perverse incentive to work against the homeowner — not with the homeowner — to get the tax debt paid.”

The report estimated that homeowners in those states collectively lost more than $777 million in savings on more than 5,600 homes based on their market value, above what they owed in tax debt. On average, homeowners lost 86% of their equity.

Local governments, which often sell properties for a fraction of market value, collected an about $26 million more than they were owed on about 1,300 homes, the report noted.

Meanwhile, private investors collected an estimated $250 million more than they were owed on about 2,600 homes, the report’s authors said.

In Massachusetts, the report identifies about 315 homes in the state —  including several in Lawrence — that have been impacted by home ‘equity theft’ totaling more than $48 million.

Under state law, cities and towns can sell or keep tax liens on delinquent properties. The lienholder — whether it’s a local government or investor — can file for foreclosure once the debt is six months old. Upon foreclosure, the lienholder gets a deed to the property and can keep or sell it. A lienholder can keep profits from the sale, under the law.

The group has filed several petitions with the U.S. Supreme Court on behalf of clients who they claim have suffered from “unjust” home equity theft.

The Boston-based New England Legal Foundation filed a brief in support of the litigation, arguing that if the government seizes home to collect overdue taxes the homeowner should be allowed to collect the surplus revenue from the sale.

Dan Winslow, the group’s president, said while ‘equity theft’ is rare, even in Massachusetts, there have been several legal challenges in recent years, including one by a New Bedford woman who claims she lost more than $210,000 in home equity after she fell behind on property taxes.

On Beacon Hill, a group of lawmakers filed a bill early this year that would abolish the practice of taking equity from homes as part of the tax lien sale process.

But the bill languished for months in the Legislature’s Revenue Committee before it was relegated to a study in October, spelling its demise for the session.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at



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