12 States allow home equity “Theft”’ Over Homeowners’ Tax Payment Shortfalls

A new report shows that twelve states and the District of Columbia permit local governments and private investors access to significantly more than homeowners who are behind on their property tax payments.

This is a practice that Pacific Legal Foundation (PLF-) calls “home equity theft,” It is documented in what the group calls the “first national study” aimed at exposing “the injustice of home equity theft through tax foreclosure.”

“Our findings are alarming,” PLF’s strategic research director, Angela Erickson, said in a statement.

“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.”

Based on the market value of their homes, homeowners lost $777 million in their life savings in transactions that occurred between 2014 and 2021. The true total is probably higher because statistics from New York state and some statistics from the other states studied weren’t available. According to the study, homeowners lost on average 86 percent of equity. found.

In addition to the $26 million they earned on 1,300 homes, government agencies often unload properties at a fraction of market value. Private investors, who purchased tax liens, made approximately $250 million more than the amount they owed on around 2,600 homes.

Alabama, Arizona Colorado, Illinois, Maine Massachusetts, Minnesota, Nebraska and the District of Columbia have laws in place that permit local governments and private investors to access their laws “steal” According to PLF homeowners who are behind on property taxes can lose substantial amounts of their home equity.

Nine other states—Alaska, California, Idaho,