AARP Nebraska Supports Bill to End Home Equity Theft

AARP Nebraska is pressing state lawmakers to protect homeowners from losing all of their home equity if they fall too far behind on paying their property taxes.

Nebraska is one of 11 states where property owners can lose their entire nest egg if they neglect to pay their property tax bill. Local governments can take their entire land and home as payment – no matter the size of the debt or the value of the property.

LB 577, introduced by Sen. John Cavanaugh, puts in place a timely and transparent notification process for property owners at risk of losing their homes due to a tax lien on delinquent property taxes and provides them with information on how they can avoid this loss.

AARP Nebraska strongly supports the reforms in LB 577. Requiring these extra steps in the notification process would help protect homeowners from losing all of the equity they had built up in their property, which for some represents their life savings, said Suzan DeCamp, state president of AARP Nebraska and a Registered Abstracter.

“The consequences of losing a home’s entire equity cannot be overstated,” DeCamp told the Legislature’s Revenue Committee at a March 23 hearing. “That’s especially true for older Americans, who have higher rates of physical and cognitive disabilities and are more likely to live on modest, fixed incomes. Those conditions make it more likely for them to be victims of tax foreclosure.”

A report by the Pacific Legal Foundation reveals that governments and private investors have pocketed hundreds of millions of dollars in hard-earned home equity at the expense of often elderly and struggling owners. In Nebraska, between 2014 and 2021, about 300 homes were taken as property tax debts in the seven counties that were studied. Homeowners caught up in this process lost an average of 86% of their home equity, for a total of about $17 million.

“While property owners should be aware of their responsibility to pay their real estate taxes on time, many of them, particularly the more vulnerable elderly population, don’t understand the complicated tax lien and foreclosure process,” DeCamp said. “They may not even be aware that a third party has paid their property tax and down the road will be able to acquire the property for much less than what it is valued at, leaving them with nothing.”

LB 577 also ensures that any equity in the property after payment of outstanding liens would be returned to the property owner, allowing them to keep the equity they had built up over the years.