Stossel on Home Equity Theft

John Stossel's latest piece mentions a legal campaign by the Pacific Legal Foundation (PLF) to end home equity theft, a surprisingly common abuse of government power that I'd never heard of, but now would place in the same category as I would civil asset forfeiture.

That is, it's a particularly ruinous form of legalized plunder.

Stossel briefly explains what this is, but here's a more elaborate explanation by the PLF:

Property taxes must be paid, and it's legal for governments to take property to pay an outstanding debt. But the government shouldn't keep any more money beyond what's owed. The rest is your property: home equity that you've worked hard to build. [emphasis removed from original]

As with civil asset forfeiture, you will see that, as if such laws weren't bad enough, some local officials regard these laws as opportunities for predation and find -- sometimes "creative" -- ways to use them.

Stossel discusses one case in part as follows:

Image by respres, via Wikimedia Commons, license.

[PLF attorney Christina] Martin won one case in Michigan's supreme court. Oakland County had taken an entire home over an $8 debt.

...

Despite the Michigan Supreme Court ruling, a judge dismissed [nurse Tawanda] Hall's [later] case because the government itself did not make the profit. In her case, the town gave her home to a private business. That business, the Southfield Neighborhood Revitalization Initiative, sold the house and kept the money.

The business says it uses the town's donations to maintain attractive, safe neighborhoods, protect and raise property values.

"Government shouldn't be able to steal from its own people and then give it over to their friends," says Martin.

I ask her how she knows Southfield Neighborhood Revitalization officials are "friends" of the politicians.

She replies, "The company is literally run by the mayor and the city administrator!"

Stossel mentions another outrageous case along the way to noting that the PLF is suing local governments six states over this practice and has gotten three states to stop. "Eleven more to go," he adds.

Regulars here will know that I also regard taxation and inflation as theft-by-government, but we are far from the day of seriously repealing either practice. Until then, we should at least restrain the government from enabling petty functionaries to simply take whatever they want from unfortunate individuals without even a semblance of due process.

-- CAV