NEW BEDFORD — As local lawmakers call for an end to “home equity theft,” current and former city officials say they did what they had to in order to collect unpaid taxes.

The reactions follow The Light’s recent investigation into property tax foreclosures — it found that dozens of New Bedford property owners lost their houses and all the remaining equity in them over unpaid tax debts that were often a fraction of the property’s value.

One Boston-based company, Tallage, earned millions of dollars by buying the tax debt from the city and pursuing foreclosure to collect on it.

Read The Light’s investigation into “home equity theft”

In response, several state legislators representing New Bedford said they want to push forward tax foreclosure reform.

The lawmakers plan to work with Representatives Jeffrey Roy (D-Franklin) and Tommy Vitolo (D-Brookline), who introduced a bill that would protect homeowners’ equity in a tax foreclosure. The bill, which was first introduced in 2021, would also ensure property owners are informed about what’s happening once their property falls into a tax foreclosure.

Rep. Chris Markey said he planned to meet with Rep. Roy to discuss the bill — he imagined that the reforms could be rolled into a larger housing package this session.

Markey said homeowners need to face some kind of penalty for not paying their taxes, but they shouldn’t be at risk of losing all their equity.

“In the end, people fall on hard times, and I just don’t think it’s fair to have a draconian result when there may be something in the middle that could resolve it,” he said.

The legislator disapproved of the city’s decision to sell its tax debt to Tallage, a Boston-based for-profit company.

“It’s an easy way out for elected officials to pass it off onto somebody else as opposed to finding a way in the community, when there’s legitimate financial concerns.”

In a statement to The Light, New Bedford Chief Financial Officer Mike Gagne said that the city doesn’t have any plans for another tax debt auction, but it currently has more than $15 million in outstanding taxes. 

“This represents an important financial challenge for city government that ultimately affects all residents,” he said. “When some property owners are delinquent on their taxes, every other taxpayer has to make up the difference and pays more than they would have otherwise.”

Gagne added that the city will work with property owners who fall behind on their taxes, and urged those people to contact the city tax collector to discuss payment plans.

Rep. Tony Cabral said he would fight to pass Roy’s and Vitolo’s bill as a co-sponsor. In a statement, he said he would also look for “creative alternatives,” like requiring cities and towns to offer payment plans or reducing the interest on unpaid taxes, which the law currently sets at 16%.

“I’m sickened. What really concerned me is that big money can come in and pull the homes away from working people in New Bedford.”

State Rep. Paul Schmid

“From what we’ve seen in New Bedford, this is hurting our most vulnerable residents,” Cabral said. “Foreclosing on someone’s home and evicting them should be the absolute last resort. New Bedford should do better.”

Rep. Chris Hendricks told The Light he would also co-sponsor the bill.

“I am glad to hear that the City has been less aggressive since the pandemic but a legislative fix is necessary to further prevent this type of predatory legal maneuvering,” Hendricks said in a statement.

Rep. Paul Schmid said the foreclosures are just another example of the widening wealth gap.

“I’m sickened,” he said. “What really concerned me is that big money can come in and pull the homes away from working people in New Bedford.”

Schmid said he looks forward to working with Roy and Vitolo.

“I think they have a role, a niche to fill. I think they’re very efficient”

Ari Sky, former New Bedford chief financial officer, on Tallage’s services

Meanwhile, state Sen. Mark Montigny has introduced his own bill in the state Senate, which is similar to the one Roy and Vitolo put forward.

“Permitting private, profit driven companies to prey upon the misfortunes of homeowners, robbing them of every cent of their equity, is unconscionable,” Montigny said in a statement. “Homeowners must be provided with enhanced protections so that their residences are not stolen under the guise of a bureaucratic process, and that they have every opportunity to settle their debt.”  

Montigny also called on local officials to provide restitution to property owners who lost equity through this “predatory” process.

New Bedford Mayor Jon Mitchell and City Councilor Shane Burgo, who chairs the Affordable Housing and Homeless Affairs Committee, did not respond to requests for comment.

Ari Sky, the Lakeville town administrator, was the chief financial officer for New Bedford when the city was auctioning debt to Tallage. He said the city needed to sell the debt because delinquent taxes were “spinning out of control” at the time, to the point that the city’s credit rating had taken a hit.

“The city did this with every intention of addressing a serious and chronic problem that was hurting the city’s bottom line,” he said. “It was not just some mustache twirling plot.”

Sky said the city had to sell the debt to show residents they were serious about collections — the perception that the city wasn’t serious is part of why property owners weren’t paying taxes to begin with, he said. He emphasized that selling the debt was always a last resort after other outreach efforts to restore tax accounts that had been delinquent for years.

Tax foreclosure is a “blunt instrument,” Sky said, but there are limits to what the city is allowed to do with payment plans and forgiveness, so in some cases it’s necessary. Pursuing foreclosure in the land court is an expensive and time-consuming process, though. That’s why the city decided to sell the debt to Tallage, he said.

Sky did not disapprove of reforms that would allow homeowners to keep their equity in a tax foreclosure, but he said they would only make sense if there were also changes that reduce the burdens cities and towns face.

“If the problem is companies like Tallage buying tax titles and what they do with it, then eliminate that incentive and make it easier for localities to collect on the tax debt,” he said.

Still, Sky didn’t have much of a problem with Tallage’s business.

“I think they have a role, a niche to fill,” he said. “I think they’re very efficient”

Meanwhile, Rep. Markey had different feelings about the company’s practices.

“Yeah, it’s efficient, but is that what we want in our community?” he said. “The most efficient processes don’t necessarily work for government because our goal isn’t always profit margin.”

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  1. If property owners don’t pay their taxes, and don’t create a payment plan with cities and towns to repay all back taxes owed, the property should be sold for fair market value to pay all taxes and associated court costs, and filing fees, then pay the remaining balance to the former property owners.
    It’s not right for the majority of property owners in the city or town to pay increased taxes to cover the shortfall left by delinquent property owners.

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