Foreclosures have cost Massachusetts homeowners nearly $ 100 million in equity since 2014

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Updated Jan. 4 at 8:57 p.m.

Homeowners in more than 30 towns and villages in Massachusetts have collectively lost an estimated $ 97 million in equity through foreclosures over a six-year period, according to a new study from the libertarian Pacific Legal Foundation.

The losses are in part the result of an unusual policy that allows homeowners to lose everything, including any remaining equity in their home, in tax lien foreclosures in Massachusetts Land Court. Massachusetts is one of 12 states that allow this type of locking system.

The California-based legal organization calls the policy unconstitutional, citing a clause in the United States Constitution that prohibits the government from taking private property for public use without fair compensation. The group’s report reflects criticism from local housing advocates and some lawmakers, who have tried for years to reform state laws.

“The government should protect private property, not allow state-authorized theft,” the Pacific Legal Foundation report said. “When governments (or their agents) take a property, sell it, and hold onto all the proceeds – beyond what is owed on a debt related to that property – they are stealing money from some of the most vulnerable residents. of the Commonwealth. “

Several state lawmakers have proposed bills to overhaul tax lien laws, including better notice to landowners of their debt and explicit language on how the process can lead to equity participation in the land. both by municipal tax collectors and by private companies that buy back debts. then sue the foreclosure against the owners.

Forcelosures are not just the result of non-payment of a mortgage. Property owners can also be forced to default due to unpaid property taxes or even water or sewer bills.

The Massachusetts Collectors and Treasurers Association has always resisted reform bills, arguing that they would be expensive and complex for municipalities to implement.

Christopher Sweet, city of North Attleboro treasurer and collector and chairman of the state association, told GBH News he was open to talking about changes in state law, but said the Pacific Legal Foundation had exaggerated the scale of the problem.

“It sounds dramatic and it’s terrible – people are losing their homes and being foreclosed – but it’s not as widespread a problem as they describe in the report,” Sweet said. He said only a small fraction of the state’s millions of homeowners lost property to six-year tax lien foreclosures.

But local critics and the foundation argued that vulnerable homeowners are most likely to lose in such cases.

“It almost exclusively affects low-income people and the elderly who are housing rich and money poor,” said Todd Kaplan, consumer and housing lawyer at Greater Boston Legal Services. “When we see the number of people who have actually lost their homes, these are vulnerable people… and that’s why they lost their homes. ”

The Pacific Legal Foundation is based in Sacramento, California, but has challenged similar laws in other states. The organization’s Massachusetts report primarily focused on 31 towns and cities that used tax liens to pursue foreclosures in the Massachusetts Land Court between 2014 and 2020.

According to the report, these towns and villages seized and then sold 254 properties, causing the owners to lose an estimated $ 60 million in equity over and above what the owners owed in back taxes or in water and water bills. ‘unpaid sewer.

One private investment firm in particular, Tallage LLC, has successfully foreclosed and subsequently resold 154 properties in Massachusetts since 2014, according to the report. The company buys back tax lien debts from towns and villages, assuming the role of debt collector. He currently has 68 pending foreclosure cases in the land court, according to state court records.

The report states that the owners of the properties seized by Tallage collectively lost $ 37 million in equity based on the full market value of the properties that were resold.

Dan Hill, Tallage’s attorney, disputed the report’s findings, saying his calculations on the loss of equity were inaccurate and that many foreclosures from the company were of land, not houses.

“Tallage has always operated within the law,” Hill wrote in an email to GBH News. “Each foreclosure case is administered by the land court and reviewed by a judge before the foreclosure decree goes into effect, to ensure that everyone who had the right to redeem the property had full notice and opportunity. and fair. “

This story has been updated to include specific information about Boston-based private investment firm Tallage and its response to the GBH News survey.


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