A person’s home should be a sanctuary. But for years, in 23 states, local governments were allowed to violate—and steal—that safety.
Home equity theft is the practice of local governments foreclosing on homeowners’ property for property tax debts, selling it at auction, and keeping 100% of the proceeds. Home equity theft, at its core, is a manipulation of tax forfeiture laws to take from vulnerable Americans.
Jurisdictions across the country have used home equity theft to rob homeowners of their life savings over minuscule debts. For example, in Michigan, a local county foreclosed on an elderly man’s rental property and sold it for over $24,000 for an $8.41 property tax debt.
In 2023, Pacific Legal Foundation (PLF) won a massive victory for homeowners when the Supreme Court unanimously ruled home equity theft unconstitutional.
However, despite the victory, the work wasn’t over.
Just because the Supreme Court rules on an issue, it is up to states and local governments to change their laws to reflect the Court’s ruling. And if those states and localities don’t make those changes themselves, it’s up to advocates like SPN partners to ensure they do.
After the Supreme Court’s decision in Tyler v. Hennepin County, the Platte Institute, Mountain States Policy Center, Cascade Policy Institute, Maine Policy Institute, and the Pioneer Institute won crucial victories against home equity theft in Nebraska, Idaho, Oregon, Maine, and Massachusetts.
After Hennepin County, defeating home equity theft was a well-coordinated, multi-state, multi-organization campaign. These five organizations, along with PLF, led that charge.
Between 2014 and 2021, local governments across the US used home equity theft to take more than 8,600 homes and rob owners of over $780 million in home equity. And the truly despicable truth: this theft was legal.
Hennepin County deemed home equity theft unconstitutional. But without the Platte Institute, Mountain States Policy Center, Cascade Policy Institute, Maine Policy Institute, and the Pioneer Institute, millions of homeowners were still at risk. These SPN partners all worked in a coordinated campaign to ensure Hennepin County became law across the country:
From 2016 to 2023, local Nebraskan jurisdictions used home equity theft to foreclose on 300 Nebraska homes. Those homeowners lost over $17 million.
After Hennepin County, the Platte Institute immediately got to work. The Platte team worked with policy experts, legislators, and PLF to propose needed reforms. The first, LB154, would force local governments to give homeowners more notice when they fell behind on their property taxes. The second, LB577, would end home equity theft altogether. Platte Senior Fellow Laura Ebke explains, “In addition to tightening up notification requirements, this bill would require the tax foreclosure to go through the judicial foreclosure process already found in Nebraska statute. While a property sale may still happen to collect back taxes, any equity that remains after the sale would go to the original owner.”
After these bills were introduced, Ebke and Platte’s team capitalized on their local relationships and political knowledge to build support for getting them passed. Platte testified and lined up critical legislative support. Platte also helped form a broad coalition, including Legal Aid of Nebraska and the ACLU of Nebraska. Many of the protections of both bills were included in a larger bill, LB727, that the legislature passed and the governor signed. Now, thanks to Platte, Nebraskan families’ property rights are intact and fully protected from home equity theft.
“Traditional” home equity theft consisted of localities foreclosing and selling homes and keeping all the proceeds. Hennepin County made this unconstitutional. But Idaho’s foreclosure law had a loophole: local governments were allowed to foreclose on properties and instead of selling them at auction, keep them for public use without paying the homeowners any compensation.
To erase this loophole, Mountain States Policy Center (MSPC) senior policy analyst Madilynne Clark published a report on home equity theft that raised awareness of the issue among state legislators. That report caught the attention of State Rep. Jeff Ehlers who later went on to pass HB444, a bill that would close Idaho’s foreclosure loophole.
After HB444 was introduced, MSPC followed up with several explainer videos, op-eds, media interviews, and legislative testimony that led to more legislative support and even broader awareness of the issue.
MSPC’s work paid off, at the end of the 2024 session, the Idaho Legislature unanimously passed HB444.
Based on available data, in 2014 and 2021, local governments in Oregon used home equity theft to take at least $28 million from 146 homeowners.
Cascade Policy Institute recognized the tremendous burden home equity theft was placing on property rights in the Beaver State. The Cascade team worked with PLF to champion more than half a dozen amendments to end home equity theft. Cascade’s team worked to build support with legislators and bat down unreasonable demands from opposing legislators that would have scuttled reforms.
The result of that work was HB4056. The bill imposes a moratorium on home equity theft until the end of 2025, then the Department of Revenue must draft permanent reforms. Without Cascade’s efforts, the Oregon Legislature likely wouldn’t have done anything to address home equity theft after Hennepin County. But Cascade continues to work on cementing permanent reforms in Oregon.
After Hennepin County, Maine legislators revived a home equity theft reform bill that had died earlier in the session. Maine Policy Institute worked with PLF to ensure that reform (LD2262) became law.
Maine Policy Institute’s team not only provided data and wrote op-eds supporting LD2262, they testified before the legislature to make sure elected officials knew how important the reforms were. Largely because of Maine Policy Institute’s work, legislators amended the bill to better protect property owners and kill loopholes local governments were pushing.
The legislature ultimately passed LD2262 and, thanks to Main Policy Institute, outlawed home equity theft in the Pine Tree State.
According to available data, in recent years, local Massachusetts jurisdictions used home equity theft to foreclose on 315 homes and take $48 million in equity.
After Hennepin County, the Pioneer team worked with PLF and policymakers to ban home equity theft in Massachusetts. Pioneer’s team produced hours of content advocating for these reforms and also testified in front of the legislature. In April 2024, Pioneer also secured a victory for property owners in court. The Hampden Superior Court ruled that municipalities in Massachusetts must return surplus equity to former property owners. And finally, thanks in part to Pioneer’s work, the state budget was amended with language to end home equity theft in Massachusetts once and for all.
No court decision or piece of legislation can fully repair the damage home equity theft has wrought on thousands of homeowners across the country. But the Hennepin County victory began the healing process. And now, because of the local state wins championed by the Platte Institute, Mountain States Policy Center, Cascade Policy Institute, Maine Policy Institute, and the Pioneer Institute, no future American will ever be the victim of home equity theft.
Home—thanks to these SPN organizations—is truly a sanctuary again.
