Fighting Tax Foreclosure



Image: Foreclosure

Introduction

A tidal wave of tax foreclosures threatens our city in 2015. Wayne County has already opened the floodgates with a petition to foreclose on 62,000 Detroit properties by April 1-including an estimated 37,000 occupied homes. Families struggling with job loss and low wages are now threatened with homelessness by a system that better serves absentee investors, speculators, and banks.

Every Detroiter has something at stake in the fight to halt this looming disaster. Even if your home wasn't posted with a recent notice of foreclosure, one or more of your neighbors were. If they are forced from their homes, the resulting fire sale of their property will further depress the value of your house, especially when empty homes are stripped by scavengers. We need to organize for the emergency measures that will stop blight before it happens.

Downward Spiral

Layoffs, medical emergencies and other hardships have forced thousands of Detroit families into default on their taxes, their mortgages, or both, setting off a downward spiral of foreclosure and eviction that feeds on itself. As empty houses are vandalized, property values in the poorest neighborhoods fall to less than one-tenth of their inflated tax assessment.

Banks have accelerated this downward spiral by refusing to modify mortgages and foreclosing on struggling families, blighting Detroit with an estimated 45,000 empty homes. Speculators and property managers can buy these homes on the cheap, selling some to absentee investors as rental properties and abandoning the rest to tax foreclosure.

Adding insult to injury, homeowners heading towards foreclosure in 2015 for taxes owed from 2012 can be charged interest on the unpaid balance at a punishing rate of 18% a year.

Individual families can take the steps outlined below to defend the home they live in, but we'll need to act together to replace an unjust tax system with one that serves working people.

  • Pay back taxes ONLY to Wayne County. DO NOT pay them to the city, which will only credit your payment to current taxes. The county treasurer has sole responsibility for collecting back taxes and will not retrieve money mistakenly paid to the city. People have lost their homes because the city refuses to transfer the homeowner's payment to the county. We need to pressure the city to stop this bureaucratic stonewalling.

  • Step Forward Michigan. This state program is supposed to loan money to distressed homeowners to cover back taxes or delinquent mortgages, with the loans forgiven over five years if the borrower stays in the house. It's worth applying online at stepforwardmichigan.org, but be aware that the program suffers from bureaucratic delay, a narrow criteria for eligibility, and diversion of funds to pay for demolition. In the last four years, the program has assisted only 6,700 families in all of Wayne County.

    We need to push for more funding and expanded eligibility to keep people in their homes. Banks and other financial institutions that trashed the housing market with their fraudulent foreclosure practices should pay for blight removal, not Step Forward.

  • Taxpayer Assistance from the County. The several programs that homeowners can access on line at waynecountv.com/treasurer/761.htm offer limited relief. The most favorable among them is the stressed Owner/Occupant Extension: homeowners in financial hardship can get a one-year extension on paying back taxes if the unpaid taxes go back no further than 2012. Upwards of27,000 households that wiii otherwise go to foreclosure may qualify for the "DOOEn program.

  • The Michigan legislature bas just amended state law to give county treasurers the option to lower annual interest on unpaid taxes from 18% to 6%, and to cut accumulated back taxes on owner-occupied homes to no more than one-quarter of the home's market value. These reductions only apply, however, if the home has a ..primary residence exemption" and the homeowner enters a strict payment plan that many struggling families can't afford. Interest charges and penalties need to be waived for homeowners in hardship, and payment plans made affordable.

  • United Community Housing Coalition. UCHC is a non-profit organization that advocates for homeowners fighting foreclosure. Its dedicated and over-worked staff will help people negotiate payment-plans with the county and apply for state emergency relief and poverty exemptions. Intake for homeowners seeking assistance is every Monday, Wednesday, and Friday, 9 am to noon, on the 9th floor of 220 Bagley in downtown Detroit, comer of Grand River. Their phone is usually busy,so go in person.

  • Show Cause Hearing. The Wayne County Treasurer's office has notified homeowners facing tax foreclosure of the Show Cause hearing at Coho Hall in late January and early February where they can pay back taxes or commit to a payment plan. Staff from the United Community Housing Coalition will be on hand to advocate for homeowners.

  • Tax Re-Assessment. Bureaucratic inertia and state law have driven thousands of Detroiters to foreclosure in recent years on the basis of wildly inflated assessments. If there is no system-wide re� assessment, efforts to force re-evaluation will come to a head in the first two weeks of February, when the city assessor's office normally considers appeals. Homeowners seeking an individual re-assessment of their property can access the six-page guide available on the web site of the Historic Boston-Edison Association (written in 2009, it's still a useful guide).

    In the past, the city has rejected many of these appeals because the assessor uses a small sample of comparative prices that excludes distressed sales of foreclosed properties. Mayor Duggan has called for an alternative reassessment process that is too slow and too small to stem the immediate crisis.

Stop Blight Before it Happens

To save our neighborhoods, we need to keep people in their homes and stop the cycle of foreclosure and eviction that causes blight.Demolishing empty homes only addresses the symptoms, not the cause.

We need to call a halt on foreclosures of occupied homes until a city-wide re-assessment sets taxable values at realistic levels and cancels back taxes based on inflated assessments and penalties.

To make that happen, we need to support families strUggling to save their home,. talk to neighbors in need, and build a city-wide coalition with neighborhood associations, block clubs, and other allies committed to actions and solutions that keep people in their homes.

Join Us!

Detroit Eviction Defense holds open meetings every Thursday at 6pm. Bring your concerns and ideas to Old St. John's Church, 2120 Russell St. at Gratiot, near Detroit's Eastern Market. For more info, go to detroitevictiondefense.org Email questions and comments to detroitevictiondefense@gmail.com.

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