Reverse Robin Hood—How private firms profit from home equity theft
Robin Hood stole from the rich and gave to the poor. That’s the opposite of what’s happening in Massachusetts, where home equity theft allows the state to steal homes from struggling, low-income families and give them to private investment firms.
It should be said: Companies that profit from home equity theft—the unconscionable government practice of seizing homes over small tax debts, even when the value of the home far exceeds the debt—didn’t create the laws they benefit from.
It’s not these firms’ fault that states like Massachusetts still allow home equity theft, even though all but 11 states have banned the practice. Unlike officers of the state, investors at private firms didn’t take an oath to faithfully serve the people of Massachusetts.
Still, it’s worth taking a closer look at how these companies profit from home equity theft—because it’s an unfortunate example of how bad laws incentivize companies to act in predatory, parasitic ways.
Tallage, a Boston-based investment firm
Tallage is a “real estate investment company” that has played a starring role in our Massachusetts home equity theft cases. The company’s name is a bit too on-the-nose: The word “tallage”—derived from the French word taillier, meaning “to cut”—refers to a medieval land tax exacted by kings and barons. The tax was abolished in England in the 14th century.
Tallage is comprised of multiple LLCs, including Tallage Lincoln, Tallage Davis, Tallage Adams, and Tallage Brooks. All the LLCs share the same downtown Boston address, across from the historic Boston Common and around the corner from the Ritz-Carlton Hotel.
The company’s website describes its business model as “a win win for municipalities and our investors.” What does Tallage invest in, exactly? From the website:
The company’s investment philosophy is to identify opportunities below the institutional radar that through the experience of its principals is likely to yield superior returns for the perceived market risk of the investment.
Here’s what “opportunities below the institutional radar” means in real life: When a Massachusetts resident falls behind on their property taxes, their tax debt starts accruing interest at a steep 16%. Localities can seize the resident’s home over the debt and auction it off, keeping all the proceeds—or, if a locality doesn’t want to hold the tax lien and deal with the foreclosure process itself, it can sell the tax lien to a private company like Tallage.
Tallage can then collect the tax debt with interest, or start foreclosure proceedings and pocket the full value of the resident’s home—the option that is almost always financially preferable for the company. After all, as Massachusetts Lawyers Weekly writes, “Who could resist the opportunity to buy a property tax lien title for $1,052.84, and end up owning real estate worth more than $270,000?”
With that kind of return on investment—and because it takes debt off localities’ books—Tallage’s business model is, indeed, a win-win for Massachusetts municipalities and Tallage’s investors.
But not everyone wins in this arrangement.
‘I still can’t believe this happened to me’
Two Pacific Legal Foundation home equity theft clients, Deborah Foss and Mark Mucciaccio, spoke at a March 2022 press conference in Boston about their experience with Tallage.
Deborah Foss is a 67-year-old grandmother with chronic health problems. In 2016, she missed a property tax payment of $3,748 on her New Bedford, Massachusetts, home, which was valued around $240,000.
The city placed a tax lien on Deborah’s home. For two years, the tax debt collected interest.
Then, in 2018, the city sold Deborah’s tax lien for $9,626.19 (the principal debt plus interest and fees) to Tallage—which immediately started foreclosure proceedings.
“I had never heard of Tallage Davis before, but now they owned my tax debts,” Deborah said at the press conference. “And after never sending me a bill, they started foreclosing procedures on my home.”
Deborah asked the court if she could have time to sell the home herself and use the windfall to settle her debt with Tallage. But her request was denied. Even though Deborah’s debt was far less—over $200,000 less—than the value of her home, Tallage was able to take full ownership of the property.
Tallage evicted Deborah in February 2022. With nowhere to go and her life savings wiped out, Deborah was forced to spend the Massachusetts winter living in her car.
“My worst fears came true, and I became homeless,” Deborah said. “Being left homeless in the winter, while still recovering from COVID, was excruciating for me and it’s still affecting my mental and physical health.”
After evicting her, Tallage promptly sold Deborah’s home for $242,000—a stunning return on their initial $9,626.19 investment. Meanwhile, Deborah’s family set up a GoFundMe to help the struggling grandmother get off the street.
“I still can’t believe this happened to me,” Deborah said. “I understand the government trying to settle debts that I owe, but giving away my home and all the money I held in it is cruel and wrong. It shouldn’t be allowed to happen here or anywhere else.”
Mark Mucciaccio agrees. He and his brother, Neil, inherited their Easton, Massachusetts, home from their late parents and live there together with Mark’s wife, disabled stepdaughter, and two grandchildren.
“I’m blessed to be among three generations of Mucciaccios that have lived in my home for the last 60 years,” Mark said.
A series of family health problems left the Mucciaccios in serious financial trouble. In 2016, they failed to pay $3,982 in property taxes on their home, which is valued at around $287,000. The next year, the Town of Easton sold the Mucciaccios’ tax lien to Tallage for $4,355.49.
Tallage waited only a month before filing foreclosure proceedings against the multi-generational Mucciaccio household.
“We never imagined a day that the Mucciaccios wouldn’t live in that home,” Mark said. “We had no idea something like this could happen, when a real estate agent came to our house, knocked on the door, and handed us paperwork saying they were there to change the locks and assess the property. I said, ‘This is my home. I don’t understand. I don’t know what’s going on.’ I didn’t even believe that this was happening.”
When Mark tried to negotiate with Tallage to get the title back, the investment firm wanted $160,000.
“My home, which is worth upwards of $287,000, was not mine anymore, and was everything that my family and my children have owned, and now we had nothing. And now I had Tallage telling me they wanted $160,000 to get my house back, for a $3,900 tax bill.”
After PLF filed a lawsuit against Easton and Tallage on behalf of the Mucciaccios, Tallage had a sudden change of heart. The company reached an agreement with the Mucciaccios that would allow the family to keep their home for the amount they owed in taxes, fees, and interest. Thanks to some friends and family who helped put the money together, the Mucciaccios paid Tallage and were able to keep their home.
But Deborah Foss’ home is long gone, sold to new owners. Her lawsuit is ongoing.
Tallage’s responsibility
As a private investment firm, Tallage is responsible to its investors, not the people of Massachusetts. Their goal is to maximize return on investment—and because they’re able to buy tax liens for under $10,000 to procure and sell homes upward of $240,000, they’re successful at making money for their investors.
But that doesn’t make what they’re doing easy to stomach—and Massachusetts should stop making it easy for Tallage to unconstitutionally profit off struggling residents like Deborah and Mark.
