Nebraska lawmakers to take up ‘home equity theft’ as part of tax credit package
OMAHA, Neb. (WOWT) - When Geraldine Tyler moved into a retirement home a few years ago, she fell behind on her taxes.
She owed $2,300, plus interest and penalties. The county sold it -- and kept the $25,000 profit. Geraldine doesn’t understand why she didn’t get any of it.
Her Minnesota case was just heard by the U.S. Supreme Court.
Kevin Fair owed $588 in back taxes for his Scottsbluff home after his wife fell ill. Private investors paid off three years of taxes plus interest, and can now sell it.
It’s valued at $60,000 -- and under Nebraska law, the investors aren’t required to share the profits.
“They stand to make the money,” Fair told 6 News. “Lived there for 20 to 25 years, and I won’t get none of it.”
Sen. John Cavanaugh of Omaha proposed a bill that would end the practice in Nebraska. Investors would still get 14% interest on the back taxes and fees. But at the time of a sale, the original homeowner, under his bill, would get the profits.
Cavanaugh thought the bill was stalled until Tuesday when it was submitted with a package of other bills for consideration.
“The reason this is a bi-partisan issue is because it’s government overreach,” Cavanaugh said. “It’s taking people’s property without just compensation.”
The U.S. Supreme Court is set to rule this summer whether what’s called home equity theft violates the Constitution’s taking clause. Nebraska lawmakers may end the practice first.
This bill is among nearly 30 others part of LB727. Sen. Robert Clements of Elmwood also shared the story of a family who fell behind on their taxes and lost their 80-acre farm this way to someone who bought out the tax lien. The private investors made $500,000 on the sale of the land.
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