WUOMFM

Much progress reducing tax foreclosures in Detroit, Wayne County

Sep 19, 2017

In 2015, the city of Detroit foreclosed on 6,400 owner-occupied homes.

This year, that number was down to 786 -- an 88% reduction.

Detroit Mayor Mike Duggan says a new law that knocked down the 18% interest rate for back tax payment plans to 6% helped, as did a media blitz by Wayne County Treasurer Eric Sabree and scores of groups and volunteers who got the word out.

"Our neighbors went out and knocked on the doors of homes that were in danger of foreclosure, and person to person said, 'There is help available," said Duggan.

About 36,000 homeowners are now on payment plans to get caught up on back taxes.

Tax foreclosures on rental properties is still a big problem. Some landlords let their properties go into foreclosure with the aim of buying them back at auction for pennies on the dollar. 

The practice is illegal, but Wayne County Treasurer Eric Sabree says the city and county have had little success cracking down on it, because the owners create new limited liability corporations to hide their identities in order to buy back the properties.

Duggan says a proposal before Detroit City Council could help. It would bar landlords from collecting rent if they are behind on property tax payments. Two-thirds of the owner-occupied tax foreclosures this year were landlord-owned.

Ted Phillips, executive director of the United Community Housing Coalition, says the progress on reducing tax foreclosures is incredible. But more work is needed.

"We need to be mindful of the fact that many people who've gotten on payment plans are going to need some support," says Phillips. "Many are low income and those on public benefits, they need to be able to take advantage of the poverty tax exemption."

The poverty tax exemption isn't retroactive, though, so while it helps homeowners going forward, it doesn't help them with their back taxes. 

The ACLU of Michigan has filed a lawsuit claiming thousands of people wrongly lost their homes because their property assessments were inflated, resulting in being charged for taxes they didn't actually owe.