Woonsocket residents will now benefit from statewide protections against losing their homes in a tax sale after the state housing finance agency announced Thursday it would no longer exclude local homeowners from a program designed to prevent foreclosure.
Under the Madeline Walker Act, Rhode Island Housing has the authority to purchase tax liens placed on property when homeowners get behind on their bills before investors, offering protection to homeowners on the brink.
In March 2023, The Public’s Radio reported that Rhode Island Housing had stopped purchasing liens in Woonsocket under the Madeline Walker Act in 2016, following a disagreement with local leaders over vacancy taxes. At the time, The Public’s Radio identified nearly three dozen homeowners who had faced foreclosure, despite appearing eligible for the law’s protections.
“We need to work with them,” Woonsocket Mayor Christopher Beauchamp said. “There’s a housing crisis everywhere, right?”
The city’s disagreement with Rhode Island Housing was related to the tax sale process. Rather than deal with settling debts directly with homeowners, local governments and utility companies in Rhode Island routinely collect on overdue bills by attaching a lien to property and holding a tax sale. At an auction, investors can buy the lien in exchange for paying the overdue bills. That means an investor has a right to the property unless the homeowner pays them back. If homeowners can’t pay off the initial bills plus interest and fees within a year, investors can foreclose on the home.
The Madeline Walker Act allows Rhode Island Housing to purchase homeowners’ tax debt before investors can scoop it up, giving homeowners more time and leeway to pay off what they owe. The act, passed in 2006, was named for an elderly woman in Providence who lost her house after falling behind on her water bills. An investor purchased the lien the city placed on her home for $836.
This story was reported by The Public’s Radio. You can read the entire story here.
