GREENFIELD — In light of a recent ruling on the tax title taking process, Mayor Roxann Wedegartner recently released a statement emphasizing that foreclosing on an owner’s property remains a last resort for the city.

“It is rare that the city carries out a tax sale. Rather, we try hard to assist the homeowner in paying their back taxes in order not to have to foreclose on the property,” Wedegartner wrote. “It’s even rarer that the city keeps the equity funds that may be involved in the sale. We are allowed under the law to utilize the sale proceeds to cover legal costs and other expenses associated with a foreclosure process, and we will do that.”

Some residents in the community, however, feel the city should be doing more to protect those who might find themselves in this position. Resident Al Norman — who has been outspoken in his concern for the process known by critics as “home equity theft” — argued that “such equity theft should not be rare; it should never happen.”

At this week’s City Council meeting, Precinct 6 Councilor Sheila Gilmour agreed to take on related ordinances proposed by residents Norman, Joan Marie Jackson and Mitchell Speight that would make homeowners the mortgagors in a power of sale process, similar to how banks collect on a foreclosure. Meanwhile, Wedegartner cautioned city councilors from considering an ordinance before the passage of state legislation.

“Banks give homeowners any excess left after collecting on their foreclosure — that’s what Greenfield should do now,” Norman told councilors Wednesday night. “The city is not prevented from making property owners whole for equity unconstitutionally taken from them.”

Another proposed ordinance seeks to provide restitution for surplus home equity for homeowners “who fall within the statute of limitations.”

“It’s an ordinance, but I think … it’s an ordinance about restitution,” said City Council President Dan Guin. “It kind of branches into [Appointments & Ordinances, Economic Development Committee and Ways & Means].”

Wedegartner’s statement comes in the wake of a unanimous U.S. Supreme Court ruling that local government can only retain tax debts owed, and no more, when seizing and selling private property.

The case the Supreme Court ruled on involved a 94-year-old Minnesota woman who owed $15,000 in back taxes when the county government foreclosed on her condominium. The court ruled that the $25,000 extra that the county collected when the condo was sold violated the Takings Clause of the Fifth Amendment.

Before this ruling, Massachusetts, along with 11 other states, allowed local governments to foreclose on private property when taxes were overdue and keep all the proceeds, even if the taxes owed were a fraction of that amount.

Norman agrees with Wedegartner’s statement that the city should publish an annual report showing all tax title activity by street address, as well as all proceeds from tax title sales and the net equity revenue collected by sale that is in excess of tax debt. The idea was originally proposed by Norman, Speight and Jackson more than a year ago.

Wedegartner also urged residents to contact their state legislators to urge swift passage of H.2937, a bill concerning tax deeds and protecting home equity for people facing foreclosure. She cautioned city councilors from considering an ordinance before the bill’s passage.

“When the bill is passed, the city will take whatever steps it needs to, if it needs to, in order to follow the law,” she said. “Currently, there is no legal path for the city to pay back any equity retained by the city from foreclosures that happened in the past.”

Reporter Mary Byrne can be reached at mbyrne@recorder.com or 413-930-4429. Twitter: @MaryEByrne.

An earlier version of this article incorrectly described an ordinance proposed by Greenfield residents Al Norman, Joan Marie Jackson and Mitchell Speight. The proposed ordinance would make homeowners the mortgagors in a power of sale process, similar to how banks collect on a foreclosure. The city would be the mortgagee. Also, to clarify, the three residents originally proposed that the city should publish an annual report showing all tax title activity by street address, as well as all proceeds from tax title sales and the net equity revenue collected by sale that is in excess of tax debt.

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