This is the Cato Daily Podcast for Friday, January 27th,

2003. I'm Caleb Brown. When the bank takes your house,

they give you back any equity over whatever they sell the house for.

But in 12 states and the District of Columbia, when the government takes your house for unpaid or merely underpaid taxes and fees,

they keep that equity.

Nearly 8,000 homes have been taken in this manner in recent years.

Now a new case about to go before the US Supreme Court aims to challenge that process.

I spoke with researcher Angela Ericsson and attorney Larry

Salzman both of the Pacific Legal Foundation about the practice known simply

as home equity theft. You spend decades building up savings in your home, paying off a mortgage. And some people might miss a payment on a tax property bill or a sewer bill or maybe under pay it and then the government

comes in and they take their home to to get that unpaid debt but they don't just

take the home and pay off the debt like a mortgage company might do and return the equity.

They keep that whole savings, the whole nest egg that those people have created and then it's gone.

And so give me a sense of the comparison.

This is a state level operation that only exists in what,

how many states? So this is a, these are laws that exist in a dozen states plus DC where every state has a tax

foreclosure laws, these states don't have an opportunity for people to get their savings back, their equity back.

I'll jump into an example. In Michigan, we represented a man Yuri Raphaeli who bought a home and missed a tax payment.

And when calculating his taxes that he owed, including the late payment, he miscalculated it by $8.41.

He continued to pay his taxes and this $8.41 continued to be outstanding until the county took this home, sold it, and kept everything for $8.41.

So over a matter of $8.41, this guy lost the entire value

that he had been sort of socking away

...