AG’s Office Calls for Improved Process for Collection of Delinquent Property Taxes by Private Investors
BOSTON – June 10, 2015 – (RealEstateRama) — In an effort to protect vulnerable homeowners in Massachusetts, Attorney General Maura Healey’s Office today sent a letter to the Joint Committee on Revenue in support of legislation to improve the tax foreclosure process.
The AG’s Office also testified today in support of reforms proposed in An Act Relative to the Improvement in the Process for Collecting Delinquent Property Taxes, filed by Senator Sal DiDomenico and Representative John Mahoney. The AG’s Office recommended several additional reforms to help boost important protections, without impeding the ability of municipalities to collect taxes and deliver critical services.
“Tax foreclosure threatens the economic security of some of our most vulnerable homeowners, especially elders,” AG Healey said. “We believe that many provisions in this legislation, as well as the additional changes proposed by our office, will bring greater transparency to the tax foreclosure process and, critically, allow more struggling homeowners to stay in their homes.”
In the letter to the Joint Committee , AG Healey’s Office expressed specific concerns about the lack of homeowner protections available when third-party investors collect and foreclose on tax obligations purchased from municipalities. Typically, municipalities make extensive efforts to avoid tax takings and foreclosures, going above and beyond the statutory requirements to avoid displacing their residents who have fallen behind on their property taxes. However, incentives for private investor purchasers of tax liens often result in much different treatment of homeowners.
According to the letter, private investor purchasers of tax liens collect interest at the mandated rate of 16 percent, and upon foreclosure gain title to the property. As a result, they often have little reason to encourage homeowners to cure the tax debt or workout agreements.
AG Healey supports reforming the current tax foreclosure statutes to require private investor purchasers to offer repayment plans and send regular notices to homeowners during the tax foreclosure redemption period.
AG Healey also supports adding additional information to existing homeowner notices, extending the redemption period from six months to one year for occupied residential properties, and providing municipalities with greater flexibility to enter into repayment agreements. These reforms are intended to improve transparency in the system, encourage homeowner cures and help prevent unnecessary tax foreclosure.