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Date: 5/16/2023
A bill that aims to protect equity for homeowners who are facing foreclosure saw testimony during the state’s Joint Committee on the Judiciary on May 9.
Filed by State Sen. Jo Comerford (D-Northampton), the bill would end the process of taking all equity from those facing tax foreclosures. Instead, the bill – also known as S.921 – provides that any equity remaining beyond the tax debt will be paid to the homeowner.
Currently, when homeowners fall behind on their property taxes, cities and towns can foreclose on and take ownership of the entire property. Municipalities are then free to sell the property and keep all the profits, even if the amount exceeds the back taxes owed.
“Massachusetts’ foreclosure law wrongly takes away people’s homes for even a small debt and allows municipalities to profit off their home equity well beyond the debt owed,” Comerford said. “Leaving homeowners vulnerable to housing and economic instability.”
According to Comerford, Massachusetts is just one of 12 states in the U.S. that still allows the practice of tax foreclosure, and from 2014 to 2020, over 250 Massachusetts homeowners collectively lost $60 million in home equity due to the foreclosure and sale of their homes over tax debts.
“This is hard-earned equity,” Comerford said during the Judiciary hearing. “And research proves that this is disproportionately affecting communities of color.”
Hitting right at home
Joining Comerford in testimony on May 9 were Greenfield residents Joan Marie Jackson, Mitchell Speight and Al Norman.
Jackson and Speight, theater consultants who jointly purchased a home in Greenfield in 1997, said they fell behind on their property taxes when theatrical productions shut down during the coronavirus pandemic.
In late December 2021, Jackson and Speight were served a letter from a Greenfield law firm that said they had until Feb 1, 2022, to vacate their home or the firm would take them to Greenfield court to vacate them.
Within 14 days of their first notice in December, the homeowners were served a second notice to quit by the same law firm, despite the fact that at that time, they had already paid 97% of their taxes to their lawyer’s Interest on Lawyers’ Trust Account.
According to Jackson, the homeowners attempted to pay half of what was owed for their taxes back in July of that year, or around $20,000, but the city of Greenfield refused to accept the payment.
“This partial payment would have greatly reduced accruing interest on our outstanding obligation,” Jackson said.
The city eventually cooperated with Speight and Jackson once they hired an attorney in December 2021, but the expenses were compounding.
“In addition to what we owed in taxes, we had to pay our own lawyer’s bill to defend our right,” Jackson said. “The tax title-taking process in Massachusetts is highly flawed.”
According to Jackson, she and Speight eventually managed to pay all their taxes, including legal and collection costs, at a price of $56,000 to avoid having their real property sold at a public auction.
“At that time, we stood to lose all of our equity in the property, which was assessed at $275,100 for a tax bill of $55,728,” Jackson said. “This is a 500% potential windfall of legal larceny for the amount of taxes owed to the municipality.”
Jackson said the state law empowers a city or town to create a local ordinance that directs whether its collector should exercise the power of sale or power of taking to enforce the lien for taxes.
“The law allows cities and towns to opt out of stealing people’s home equity,” Jackson said. “There is no requirement for a municipality to exercise the tax title-taking foreclosure process.”
During her testimony, Comerford said that after the city acquiesced, the mayor of Greenfield subsequently admitted that the state law needs to be changed.
Jackson ended her testimony by showing support for the legislation presented by Comerford. “This bill will protect the equity of the most imperiled real property owners of the Commonwealth, many of them seniors,” she said.
Speight reiterated a lot of what Jackson said, but he also added that the homeowners are closely following a home equity theft case at the U.S. Supreme Court that is scheduled for June.
“I don’t want any other homeowner in the state of Massachusetts to face the fear and confusion that I felt when the sheriff came to my house to attempt to evict me,” he said. “Why have we allowed this to go on for so long?”
Norman, who worked for 33 years on Beacon Hill as a lobbyist for senior citizens, said that Greenfield sold a total of eight properties in 2020 and 2021, and made a profit of over $400,000 from tax title auctions.
“We need to be in the business of housing people, not unhousing them,” Norman said. “Please don’t listen to third party companies who make a profit off of these sales … this is not about their profit, it’s about the wealth of equity built up by the families that should be able to hold onto them.”