March 31, 2022 Update: Deborah has been living out of her car. Her family and friends have launched a GoFundMe to help her secure housing. If you’d like to donate directly to Deborah, visit her GoFundMe page.
Life has not been easy for Deborah Foss in recent years. The 66-year-old grandmother lives in Massachusetts on a small, fixed income from Social Security. She suffers from several medical conditions, including chronic lymphocytic leukemia, COPD, and neuropathy. Despite these struggles, Deborah cared for her ailing mother for the last 10 years of her life.
Deborah hoped her 2015 purchase of a home would help put her hardships behind her. After her mother died, she used money from the sale of her mother’s house in Quincy, Massachusetts, and her life savings to buy a $168,500, two-unit home in New Bedford.
Deborah moved into the downstairs unit and rented out the upstairs unit to a family member as a new source of income, but the financial struggles soon resumed. The new home needed more repairs than she anticipated, and she could not afford to cover them with her remaining funds. Plus, her tenant stopped paying rent.
When Deborah, with her limited income, could not pay part of her 2016 tax debt, the City of New Bedford initiated a “tax taking,” meaning the debt went on the books and began accruing 16% annual interest, subsequent tax bills, and administrative fees. Eighteen months later, the city sold its tax lien to Tallage Davis, LLC for $9,626—the amount Deborah owed the city.
Tallage is a private investment company that specializes in buying property tax debts. It either collects the amount owing from the homeowner at generous interest rates or—if an owner cannot pay—forecloses on the property and takes ownership, and then sells it for a massive profit.
The company did the latter with Deborah’s home, starting the foreclosure process in the Massachusetts Land Court just nine days after buying the tax lien. The court sent foreclosure notices to Deborah nine months later. However, it took another two months for the certified mail to finally reach her. Deborah pleaded for a 6-to-12-month grace period to sell the property and pay the full debt, but the court rejected her request, foreclosed on the lien in September 2019, and handed absolute title and ownership of Deborah’s home to Tallage.
The property’s market value is $241,600, and Deborah owed only about $30,000. But instead of ordering the company to turn back to Deborah the roughly $210,000 in equity she retained in the home, the Land Court held that Massachusetts law allows the company both to take her home and to keep the equity.
Tallage also secured an eviction judgment against Deborah and in February 2022, as if losing her life savings was not enough, on the heels of a New England snowstorm, Deborah was suddenly homeless.
But Deborah’s devastation turned into determination when she realized she is not alone in losing her home, her hard-earned equity, and her life savings under the state’s predatory tax taking law. Pacific Legal Foundation’s research has revealed that homeowners subjected to tax foreclosure lose 87% of their home equity on average—nearly $260,000 per home. In just one year, municipalities and private investors stole more than $56 million in property equity from Massachusetts residents.
A home’s equity is just as much property as a home itself. It cannot be taken by government without just compensation. Represented free of charge by PLF, Deborah fought back with a lawsuit challenging the state’s home equity theft system that preys on its most vulnerable members.
Tallage settled the case rather than going to court. The company tried to force Deborah to accept a $65,000 offer, but she stood firm. Tallage relented and paid Deborah $85,000, which she used to get back on her feet. She is no longer homeless.
Deborah’s case was resolved without addressing the Massachusetts’ law that allows private investors like Tallage to prey on property owners. Therefore PLF’s work to defeat home equity theft continues in Massachusetts and a shrinking number of other states with similar predatory laws.