(The Center Square) – A lawsuit designed to end predatory tax foreclosures in Massachusetts was filed this week, one legal foundation said.
Pacific Legal Foundation announced Foss v. City of New Bedford has been filed in Massachusetts Superior Court and aims to challenge a state law “that allows private investors to confiscate the equity” built into properties by homeowners.
“For many people like Deborah Foss, the equity in their home is their life savings,” Pacific Legal Foundation attorney Joshua Polk said in the release. “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.”
According to the release, state law has permitted the state acquiring an estimated $37 million in equity that falls above property tax debt owed by homeowners.
A Thursday phone message left for Eric Jaikes, who serves as solicitor for New Bedford, was not returned before this story published.
According to court documents, Foss fell behind on property taxes and Tallage Davis LLC, a private tax lien investor, was able to foreclose on her $241,600 home. The move settled around $30,000 in delinquent property taxes. However, the suit claims the company, working under the state’s foreclosure law, was able to acquire $210,000 for the home after paying the tax debt.
Tallege then was able to get an eviction judgement against Foss, according to the release, who depleted her life savings in the foreclosure and was evicted in February.
Foss was then left homeless, the release reads.
Foss, 67, is a grandmother living on a small, fixed Social Security income and suffers from multiple medical ailments and is currently living in her car, the release says.
Pacific Legal Foundation, according to the release, conducted a study that shows “the state’s tax foreclosure system unjustly takes millions of dollars in home equity” from homeowners in the state each year.
The study showed that 87% of homeowners lose an average of $260,000 per home during foreclosures. One-third of the state’s population were included in the study and from January 2014 to June 2020, 254 homes were foreclosed on and sold for tax debt. According to the study, the state’s law “allowed the taking of an estimated $60 million in equity” beyond what homeowner owed in property taxes.