Many Coloradans spend a lifetime building up equity in their home, creating a financial cushion that is often the sum of their life savings. Few people know that those savings can be unfairly confiscated by the government in the event of a property foreclosure. It’s time for the state legislature to step up and ban home equity theft.
When homeowners fall on hard times and get behind in taxes, local government may file liens against the property. If those back taxes aren’t paid over a period of years, the property may be foreclosed on and sold.
Recently, the U.S. Supreme Court made a significant decision that impacts the rights of homeowners facing foreclosure. Prior to this ruling, the government was permitted to keep all the proceeds from the sale of a foreclosed property, often well above the tax debt owed. However, the Supreme Court deemed this practice unconstitutional, with Chief Justice Roberts emphasizing the importance of fairness and adherence to the biblical principle of not taking more than what is owed.
Despite this ruling, Colorado law still allows for the government to retain all the equity when a foreclosed property is sold. It is now crucial for the Colorado legislature to bring the state’s laws into alignment with the Supreme Court decision and protect the rights of homeowners.
Home equity theft is a significant problem both in Colorado and across the country. The American Property Owners Alliance, an organization that closely monitors this issue, reports that between 2014 and 2021, over 8,600 U.S. homes were affected, resulting in a loss of $780 million in home equity savings. In Colorado alone, the estimated losses amount to a minimum of $45 million statewide.
The impact of home equity theft can be particularly devastating for Colorado seniors who rely on the equity in their homes to fund their future or leave a legacy for their loved ones. For them to risk losing their entire nest egg due to a lien on their property is a grave concern.
To address this issue, reform legislation should be passed to ensure that when homeowners face a foreclosure due to tax debt, any outstanding debts to the government are satisfied, but the remaining equity is returned to the homeowner rather than being kept by the government.
This straightforward reform should garner the support of lawmakers from both sides of the aisle. Regardless of political affiliation, elected officials have a responsibility to protect the rights and financial well-being of Coloradans. It is unacceptable for the government to take more than what is owed or profit from the sale of a property at the expense of families who have fallen on hard times.
In a time of intense political divisions, this issue presents a unique opportunity for all 100 legislators and the governor to unite and enact meaningful reform that will benefit homeowners throughout Colorado. By removing the threat of home equity theft, lawmakers can make a positive impact on the lives of countless individuals and families in the state.
It is imperative that Colorado’s elected officials prioritize this issue and take swift action to correct the current laws. Home equity theft should not be tolerated, and homeowners should be able to retain the equity they have worked so hard to build. By ensuring fairness and protecting the rights of homeowners, Colorado lawmakers can make a significant difference in the lives of their constituents.
Opinion by: Michael Fields, President of Advance Colorado.
