The Michigan Supreme Court is being urged by Pacific Legal Foundation to halt a state law which allows counties to “profit” from the sale of foreclosed properties, after a home in Oakland County was sold for $24,500 after being foreclosed on for $8.41 in unpaid taxes.
“It is akin to stealing,” said Pacific Legal Foundation attorney Larry Salzman, in Bridge Magazine [1]. “The government shouldn’t be taking more than is owed to them to cure the tax deficiency. I understand states are under [budget] pressure but government should not use citizens as a bank teller or an ATM machine.”
According to Bridge Magazine [1], county tax foreclosure is a common practice in Michigan, and counties have foreclosed on over 177,000 properties in the state since 2012. Oakland County, the state’s second largest in population, foreclosed on over 5,500 properties between 2012 and 2017 according to state records, but 65% of county foreclosures took place in Wayne County (Detroit).
A study from Quicken Loans revealed that as of 2018, 21% of Michigan homeowners were unaware their property was behind on property taxes, and another 61% of renters in tax-delinquent properties were unaware of the home’s tax status. However, property tax foreclosures in Detroit are at a 14-year low. In 2018, 2,920 properties faced property tax foreclosure auction, down from 6,052 in 2017, and far below the peak of 15,000 in 2015.
“As Detroit comes back, we need to do everything we can to make sure those who stayed in our city through good times and bad are able to stay in their homes,” Mayor Mike Duggan told Quicken Loans [2]. “We are seeing real progress in tax foreclosure reductions that impact all of our neighborhoods, and through programs like Neighbor to Neighbor, we will continue this important work in close partnership with the community.”
Although outreach programs have helped improve Detroit's tax foreclosure issues, the city still faces other foreclosure-related challenges. According to GOBankingRates [3] and data [4] from Zillow [5], 34.4% of homes are currently underwater, and the median home value at the Detroit-Warren-Dearborn metro-area level is $161,300, far below the national median of $226,300. GOBankingRates puts Detroit second on its list of U.S. cities most likely to enter a housing crisis.