Proposed law would end home equity theft in Massachusetts

Boston; February 22, 2021: Lawmakers introduced a bill on Friday to protect the equity that Bay Staters have in their homes. Under current law, municipalities can transfer the entire deed to someone’s home to a private investor for a small tax debt. The result: people lose their homes over debts that are a fraction of the homes’ value.

That’s what happened to Mark Mucciaccio, whose family home — valued at more than $275,000 — was transferred to a private investor over a $4,300 debt. Along with the title, the government gave more than $250,000 of the Mucciaccios’ equity to the investor. This is called home equity theft.

Introduced by Representatives Jeffrey Roy (D – Franklin) and Tommy Vitolo (D – Brookline), HD 3441 would stop municipalities from violating the constitutional rights of property owners.

“The equity that people have in their homes is as much their property as the structure itself, and the U.S. Constitution protects that property,” said Daniel Dew, director of legal policy at Pacific Legal Foundation, which represents the Mucciaccio family in Bristol County Superior Court. “It’s unfair for the government to take the entire value of someone’s home to settle a small debt. Most states require surplus funds from such foreclosures to be returned to the owner once debts are settled. Representatives Roy and Vitolo’s bill will protect property owners’ rights and prevent costly lawsuits from those who are victimized by home equity theft.”

Home equity theft is widespread in Massachusetts. One study found that in a single year, more than $56 million in equity was taken from Massachusetts property owners.

Massachusetts is one of a shrinking number of states that allow local governments and private investors to reap windfalls when they take property. Last year, the Michigan Supreme Court found a similar law unconstitutional, ruling that people have a right to any surplus proceeds from a tax foreclosure sale after back taxes are paid. Pacific Legal Foundation is committed to ending the practice of home equity theft across the country.