4 ms·

Efforts to ban ‘home equity theft’ in Massachusetts picking up steam

11 points by harambae 5y ago

fargle 5y ago
This has everything any campy 1980s movie about the poor old lady losing her house because <something evil> will evict her unless she pays back <largesum> by <deadline>. But read this carefully. In real life, that "evil" private corp. wouldn't buy the debt, foreclose, and "steal" the equity if there wasn't equity to steal. The lady should have taken a regular (or reverse) mortgage, etc. and paid the relatively tiny tax lien and would have come out $200K+ in the black. The fact that she did not understand or was unable to do that does not erase the fact that she owed and did not pay her taxes. Can you imagine what would happen if "I didn't know" or "I was stressed out" was an excuse to avoid taxes? There's nothing unique, unconstitutional, or immoral about any of this. Sad, yes, but that should be solved by education not law. And in one form or another it's the same everywhere - you don't pay your taxes, you will get screwed!
- tehwebguy 5y ago
  > There's nothing unique, unconstitutional, or immoral about any of this. Of course it’s immoral! From the article: > If the homeowner still cannot pay, the company can foreclose on the property and evict them. After paying the taxes, it gets to keep the remaining equity in the property — which could be hundreds of thousands of dollars. > That contrasts with what happens when a bank forecloses on a property. In that case, the bank sells the property, deducts from the proceeds what it is owed, then returns any remaining equity to the former owner. If someone wants to buy the tax liens from a government and charge the 16% interest mentioned in the article, fine. But to grant them some kind of nuclear foreclosure power that lets them take the entire property (rather than simply force a sale and take the owed amount), especially if it happens to be someone’s actual home, is absolutely immoral.
  - fargle 5y ago
    How is that "immoral"? It's not. She had the choice to pay the taxes and keep the house. And CHOSE not to. If you make a bad business decision and you get screwed, it's not a moral problem. She could at ANY TIME have paid the lien. She had ample assets to do so. > But to grant them some kind of nuclear foreclosure power that lets them take the entire property (rather than simply force a sale and take the owed amount) This is 100% misleading reporting in the article. In nearly all jurisdictions, when a bank forecloses, they CAN keep the property and do whatever they want. Including selling for a ridiculous profit. The reason this isn't a problem is that people that are highly "right side up" don't generally fuck up and foreclose, because that would be STUPID.
    - toomuchtodo 5y ago
      16 percent interest is usury considering the real estate asset the lien is attached to and IRS short term interest rates. It would be entirely reasonable to prohibit the sale of the asset until the death of the elderly owner and have the taxing authority made whole with a transfer at that point. > This is 100% misleading reporting in the article. In nearly all jurisdictions, when a bank forecloses, they CAN keep the property and do whatever they want. Including selling for a ridiculous profit. The law is whatever the local citizens want it to be, by the way. Even if that means being overly cautious with seniors and what is possible the last meaningful possession and wealth they might have. > The reason this isn't a problem is that people that are highly "right side up" don't generally fuck up and foreclose, because that would be STUPID. Some amount of empathy is required when considering policy that impacts the elderly. Government exists, in part, to provide harm reduction measures. And they'll get their property tax revenue due eventually as long as the property stands. > In a 50-page report released in December, the Pacific Legal Foundation says “unlike most states, which return what isn’t owed to them after a property tax debt is paid, the [Massachusetts] tax foreclosure system unjustly take millions of dollars in home equity from property homeowners every year — indifferent to the suffering it causes.” > More than 150 homes were foreclosed upon for tax debts by private companies in the seven-year period ended in December 2020, allowing “the taking of an estimated $37 million in equity above what these homeowners owed in property tax debt,” according to the report.
tempnow987 5y ago
This needs to be an either or. If company is given right to foreclose, they can recover costs + interest, remaining equity to homeowner. If company is not given right to foreclose, fair enough, they get an equity interest they can't liquidate until perhaps a sale in the ordinary course (ie, passing of owner).
deleted 5y ago
[deleted]

11 points by harambae 5y ago

This has everything any campy 1980s movie about the poor old lady losing her house because <something evil> will evict her unless she pays back <largesum> by <deadline>. But read this carefully. In real life, that "evil" private corp. wouldn't buy the debt, foreclose, and "steal" the equity if there wasn't equity to steal. The lady should have taken a regular (or reverse) mortgage, etc. and paid the relatively tiny tax lien and would have come out $200K+ in the black. The fact that she did not understand or was unable to do that does not erase the fact that she owed and did not pay her taxes. Can you imagine what would happen if "I didn't know" or "I was stressed out" was an excuse to avoid taxes? There's nothing unique, unconstitutional, or immoral about any of this. Sad, yes, but that should be solved by education not law. And in one form or another it's the same everywhere - you don't pay your taxes, you will get screwed!

tehwebguy 5y ago
> There's nothing unique, unconstitutional, or immoral about any of this. Of course it’s immoral! From the article: > If the homeowner still cannot pay, the company can foreclose on the property and evict them. After paying the taxes, it gets to keep the remaining equity in the property — which could be hundreds of thousands of dollars. > That contrasts with what happens when a bank forecloses on a property. In that case, the bank sells the property, deducts from the proceeds what it is owed, then returns any remaining equity to the former owner. If someone wants to buy the tax liens from a government and charge the 16% interest mentioned in the article, fine. But to grant them some kind of nuclear foreclosure power that lets them take the entire property (rather than simply force a sale and take the owed amount), especially if it happens to be someone’s actual home, is absolutely immoral.
- fargle 5y ago
  How is that "immoral"? It's not. She had the choice to pay the taxes and keep the house. And CHOSE not to. If you make a bad business decision and you get screwed, it's not a moral problem. She could at ANY TIME have paid the lien. She had ample assets to do so. > But to grant them some kind of nuclear foreclosure power that lets them take the entire property (rather than simply force a sale and take the owed amount) This is 100% misleading reporting in the article. In nearly all jurisdictions, when a bank forecloses, they CAN keep the property and do whatever they want. Including selling for a ridiculous profit. The reason this isn't a problem is that people that are highly "right side up" don't generally fuck up and foreclose, because that would be STUPID.
  - toomuchtodo 5y ago
    16 percent interest is usury considering the real estate asset the lien is attached to and IRS short term interest rates. It would be entirely reasonable to prohibit the sale of the asset until the death of the elderly owner and have the taxing authority made whole with a transfer at that point. > This is 100% misleading reporting in the article. In nearly all jurisdictions, when a bank forecloses, they CAN keep the property and do whatever they want. Including selling for a ridiculous profit. The law is whatever the local citizens want it to be, by the way. Even if that means being overly cautious with seniors and what is possible the last meaningful possession and wealth they might have. > The reason this isn't a problem is that people that are highly "right side up" don't generally fuck up and foreclose, because that would be STUPID. Some amount of empathy is required when considering policy that impacts the elderly. Government exists, in part, to provide harm reduction measures. And they'll get their property tax revenue due eventually as long as the property stands. > In a 50-page report released in December, the Pacific Legal Foundation says “unlike most states, which return what isn’t owed to them after a property tax debt is paid, the [Massachusetts] tax foreclosure system unjustly take millions of dollars in home equity from property homeowners every year — indifferent to the suffering it causes.” > More than 150 homes were foreclosed upon for tax debts by private companies in the seven-year period ended in December 2020, allowing “the taking of an estimated $37 million in equity above what these homeowners owed in property tax debt,” according to the report.

tempnow987 5y ago

This needs to be an either or. If company is given right to foreclose, they can recover costs + interest, remaining equity to homeowner. If company is not given right to foreclose, fair enough, they get an equity interest they can't liquidate until perhaps a sale in the ordinary course (ie, passing of owner).

deleted 5y ago

[deleted]