Thanks to a July 3 settlement [1] in a two-year-old class-action suit, Michigan homeowners now have new options when faced with foreclosures due to unpaid property taxes. The terms of the settlement will allow distressed homeowners to avoid foreclosure by paying $1,000, or by working with the United Community Housing Coalition [2] to work out a zero-interest payment plan. The settlement also makes it easier for homeowners to apply for the Homeowners Property Tax Assistance Program, a poverty tax exemption program.
The case was originally brought by the ACLU [3], accusing Detroit and Wayne County of using inflated property tax values to calculate nonpayment of taxes. According to the ACLU, this led to tens of thousands of improper property tax foreclosures, with black communities bearing much of the brunt.
“This agreement will hopefully mark the beginning of the end of the worst tax foreclosure crises since the Great Depression,” said Michael Steinberg, legal director of the ACLU of Michigan. Steinberg also suggested that the changes would also help make a dent in Detroit’s large accumulation of abandoned zombie properties by keeping more homeowners in their homes in the first place.
Eli Savit, aide to Detroit Mayor Mike Duggan, told Courthouse News [4], “I think it’s just a big win for everybody. It really moves the ball and allows us to work together to keep people in their homes. We’re just really happy with the outcome and we’re looking forward to moving forward together.”
Detroit will also be required to notify all homeowners whose homes are worth $95,000 that they might be eligible for relief. Homeowners already facing foreclosure will have until a July 13 deadline to see if they meet the requirements to apply for the program. The city will also have first right of refusal to purchase the homes of homeowners in foreclosure before they end up going to auction.
A recent report by the Coalition to End Unconstitutional Tax Foreclosures [5] found that, between the years of 2009-2015, “anywhere between 55 percent to 85 percent of properties were being assessed in violation of the Michigan Constitution.” Detroit News [6] reported that “the Wayne County treasurer foreclosed on about 100,000 Detroit properties for unpaid property taxes from 2011 through 2015.”