U.S. Supreme Court rules on home equity theft case as Nebraska bill hangs in balance
OMAHA, Neb. (WOWT) - A U.S. Supreme Court decision Thursday is being hailed as a victory for property owners everywhere.
Especially for seniors, who have ended up on the wrong side of not only losing their homes -- but all the equity built up over the years.
This decision affects homeowners in 12 states, including Nebraska. A spot check done from attorneys who filed this class-action claim found 9,000 homeowners who lost more than $800 million in home equity.
The case centered on 94-year-old Geraldine Tyler. The Minnesota woman fell behind on her taxes when moving into a retirement home. The county sold her place and kept the $25,000 profit. Thursday, in a unanimous decision, justices ruled it violates her constitutional rights of the government taking more than what is owed.
“She’s very happy about what this means for property owners everywhere, but especially for seniors who would otherwise be put out on the streets because they not only lose their homes, but their life savings on it,” said Christine Martin with Pacific Legal Foundation.
The same thing happened to Kevin Fair of Scottsbluff. He owed $588 in back taxes after his wife fell ill. Private investors paid off three years of taxes plus interest -- and can now sell it and keep all the profits.
The Nebraska Supreme Court said it was within their rights, but their decision is now in jeopardy after the U.S. Supreme Court’s ruling.
“We’re hoping that what this case means for Mr. Fair is that he too will get just compensation for his home equity,” Martin said.
Fair’s home is valued at $60,000.
Sen. John Cavanaugh of Omaha has a bill awaiting final approval in the unicameral that would end the practice of private investors keeping all the profits after selling a home in this scenario.
Investors would still receive 14% interest on the back taxes and fees paid. County treasurers would still fill the coffers, but the profits would still go to the original homeowner.
“I feel like we’re on the right side of history,” Cavanaugh said. “To punish the elderly and their savings...it’s a shock that it’s taken this long to get to this point to fix this.”
The Nebraska homeowner we featured petitioned the U.S. Supreme Court. It’s likely his case will be vacated and sent back to the Nebraska Supreme Court.
Any decisions made by the legislature to ban this practice will only impact future cases.
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