ROBBERY: Local governments loot home equity from homeowners to cover property tax debts

ROBBERY: Local governments loot home equity from homeowners to cover property tax debts

Image: ROBBERY: Local governments loot home equity from homeowners to cover property tax debts

(Natural News) We all know that failing to pay your taxes can have repercussions, but you may be surprised to learn that 12 states regularly seize dramatically more than what they are owed by homeowners who have fallen behind on their property tax payments in a practice that has been termed “home equity theft.”

A new report from the Pacific Legal Foundation that illustrates “the injustice of home equity theft through tax foreclosure” shows how homeowners across the nation lost more than $777 million worth of life savings on thousands of homes through transactions from 2014 to 2021, and they note that the real number is likely higher as data was not available for every state. Homeowners lost, on average, 86 percent of their home equity in such transactions.

To understand how it works, imagine that you owe someone $12, and they take a $100 bill from your wallet and keep the change. This is exactly what is happening when these states take people’s homes to cover delinquent real estate taxes.

For example, when 93-year-old Minnesota woman Geraldine Tyler failed to pay roughly $2,300 in property taxes, Hennepin County foreclosed on her Minneapolis condo and sold it for $40,000. Instead of refunding her the $25,000 that was left after paying the delinquent taxes and related costs such as penalties and interest, the government kept all of the money for themselves.

When Nebraska man Kevin Fair fell behind on property tax payments after quitting his job to care for his dying wife, Scotts Bluff County sold the property tax debt to a private company that tried to collect the taxes plus 14 percent interest. When he was unable to get a loan to cover it, the county treasurer deeded his home to the investor. This left Fair with nothing, even though his home was worth around 11 times more than the debt he owed.

Brighteon.TV

In one of the more outrageous cases, a Michigan man’s home was seized over an underpayment of just $8.41, leaving him with nothing, although he is one of the lucky few who successfully fought the move in court.

Stories like these are all too common, with the “End Home Equity Theft” report noting that nearly 8,000 homes were taken as payment on property tax debts that were worth only 14 percent of the home’s value. This means private investors and government bodies have been keeping millions of dollars’ worth of equity that people have built into their homes. Unfortunately, it is often the elderly and those who are struggling financially who are the victims of these actions.

Can your state rob you of your home equity?

In Vermont, Mississippi, Virginia, Michigan and New Hampshire, state supreme courts have ruled the practice unconstitutional. In states like Florida, the property may be sold to pay the debt, but the money left over is returned to the former owner.

However, New York, Illinois, Colorado, Arizona, Oregon, Minnesota, Nebraska, Massachusetts, Alabama, Maine, South Dakota, New Jersey and Washington, D.C. view the situation differently and allow people’s homes to be stolen via home equity theft. These laws have enabled investors and governmental officials to take homes that were in families for many generations, leaving some people homeless over a tax debt that is sometimes less than 1 percent of the value of their property.

Pacific Legal Foundation Strategic Research Director Angela Erickson said: “Home equity theft is robbing thousands of people of their homes and all the equity they’ve built. 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.”

Government entities collected around $26 million more than they were owed during the time period studied, while private investors who buy tax liens racked up $250 million more than they were owed in this appalling practice.

Groups across the political spectrum are strongly against the practice, with only those who profit from the system coming out in favor of it. The Pacific Legal Foundation notes that most people do not even realize this is happening, and they are hoping to raise awareness of the issue and get all states to outlaw this unreasonable practice.

Sources for this article include:

TheEpochTimes.com

PacificLegal.org