BAN ON HOME EQUITY THEFT IS NOW MASS LAW

On Monday, July 29th, Governor Maura Healey signed a new law banning cities and towns in Massachusetts from the practice of selling a foreclosed home and keeping the former homeowner’s equity as profit, widely known as “equity theft”.

Under the provisions of the new law, if a city or town forecloses on a home and sells it, whatever remains of the equity after the tax is paid off must be returned to the former homeowner.  This could apply to people whose equity was taken up to three years ago.  The U.S. Supreme Court ruled in May 2023 that equity theft was unconstitutional, but Massachusetts state law did not outlaw the practice until now.

Other reform measures included in the new law would allow cities and towns to adopt more lenient payback plans, reduce the interest rate applied to tax debts from the 16 percent rate it had been, double the time homeowners have to settle the debt, and all cities and towns to waive accrued interest.