Supreme Court ruling protects homeowners in foreclosure

Some states, including Massachusetts, allowed municipalities to profit on foreclosure sales by keeping whatever equity was in homes seized in foreclosure. Say a homeowner owed $20,000 in property taxes and the town took the property in a foreclosure and sold it for $120,000. The town would get its $20,000 in unpaid taxes, but if the homeowner had paid $80,000 worth of the mortgage, i.e. had $80,000 of equity in the home, towns in Massachusetts would take that equity.A new (and unanimous) US Supreme Court ruling made that practice illegal. The ruling was on a case in Minnesota, but it applies to all states, including Mass, that keep those surplus proceeds beyond the overdue taxes. A recent study by the Pacific Legal Foundation found that "on average, Massachusetts homeowners subjected to a tax foreclosure lost 87% of their home equity, almost $260,000 per home and the average tax det owed was $36,000."Springfield had the most tax sale properties (129) between 2014 and 2020 and Wareham kept the most equity ($554,597) during that time period. Tallage is a company that handles tax sales for many municipalities and it is often they who keep the proceeds, as this chart shows:There are two bills before the Mass Legislature proposing an end to the practice of equity taking, but they may be moot due to the SCOTUS ruling. Read the whole Boston Globe article here.