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Idaho Legislature unanimously acts to close home equity theft loophole

Updated: Mar 14

Unanimous support. That was the response from the Idaho legislature to Mountain States Policy Center’s recommendation to close the state’s home equity theft loophole. The Senate adopted HB 444 (Home Equity Theft reform) by a vote of 34-0 on March 5. The House passed the bill 66-0 on February 9. MSPC worked with the Pacific Legal Foundation to highlight the need for Idaho to adopt this reform to protect taxpayers.

Rep. Jeff Ehlers, sponsor of HB 444, told me this today about the bill’s adoption:

“Not only is this legislation important for complying with the Constitution, it also leads to greater fairness for Idaho taxpayers. I appreciate the unanimous support of my colleagues in both the House and Senate in closing the home equity theft loophole in our state.”

Madi Clark, a Senior Policy Analyst for MSPC, wrote a study on the need for this reform and testified in the House and the Senate by legislative invitation on HB 444. Madi told lawmakers:

Imagine a homeowner who is struggling to make ends meet and then comes into debt of a few thousand dollars to the local government in a home they own with tens of thousands of dollars in equity. The local government decides to foreclose the property and so sells the home and pays the debt. But instead of returning the remainder of the equity after the debt is paid, the government keeps this for themselves. This is home equity theft . . .


The [U.S.] Supreme Court decision has only ruled this action unconstitutional but the laws remain on the books for many states. Idaho is one of those states. In Idaho, the current wording of the law permits local governments from foreclosing a property and instead of selling the property, they can gift it to another government entity and take the equity in the property for themselves.


HB 444 will remove the loophole from local governments. This is a good policy protecting property owners from unwanted government greed. It also protects local governments from future lawsuits.”


MSPC is grateful to Rep. Ehlers for taking the lead on this reform and to the Idaho Legislature for fully closing the state’s home equity theft loophole.

Governor Little is expected to act soon on HB 444.

Here is a KTVB 7 interview featuring MSPC's Madi Clark and Rep. Ehlers on the adoption of HB 444:

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