Wayne County, Michigan, is launching an aggressive campaign to begin foreclosure proceedings on 75,000 residential properties whose owners are three years or more behind on paying property taxes.
By comparison, Wayne County began the foreclosure process on 56,000 homes last year, 42,000 in 2012, and 26,000 in 2011. The majority of the 75,000 homes targeted for foreclosure are located in Detroit, which is the county seat of Wayne County.
The county's goal is not necessarily to complete the foreclosure process on these properties, however. Wayne County Treasurer David Szymanski said that of the 56,000 homes the county began the foreclosure process on last year, the process was completed on only 20,000 of them, meaning that the county helped 36,000 of them stay in their homes.
Szymanski said there are three reasons for the county's latest aggressive foreclosure campaign: to help homeowners find a successful solution that allows them to stay in their homes, to eliminate blight, and to enroll eligible homeowners who are behind on their mortgage or taxes in the state's "Step Forward" program.
"The earlier in the process we contact a distressed taxpayer, the more likely we are to find a successful resolution," Szymanski said. "The earlier we contact them, the more options they have available."
Detroit's population has been steadily declining in the last 60 years or so, from a peak of about 1.8 million in 1950 down to about 700,000 in the 2010 census, resulting in "a lot of housing for people who don't exist any longer," Szymanski said. "That leads to a staggering number of foreclosures."
In some parts of Detroit, property values have plummeted by as much as 90 percent, according to Szymanski, and in many of those cases, the amount of money owed in delinquent taxes is more than the house is worth. Due to the large number of empty or abandoned homes, blight has become a significant problem in Wayne County for many years, and Detroit Mayor Mike Duggan is making a push to eliminate blight, Szymanski said, which is important because "blight breeds blight in communities."
"If we don't foreclose on all the properties that are eligible for foreclosure, we leave blight behind," Szymanski said.
The third reason for the aggressive foreclosure campaign in and around Detroit is the Step Forward program, which was created in response to the 2008 housing crisis to help distressed borrowers pay their taxes. The federal government provided $500 million for the program and so far it has helped about 4,000 distressed homeowners in Wayne County pay a combined total of about $40 million in taxes, according to Szymanski. Borrowers must meet certain requirements to be eligible for Step Forward, such as: they must own and live in the home, they must be pursuant to a deed, and they must have experienced a financial hardship that was not of their own doing.
Though the program has helped 4,000 homeowners, that is "a drop in the bucket compared to what we want to accomplish," Szymanski said. There are many more who have applied for relief through Step Forward and are waiting for the state of Michigan to determine their eligibility.
Szymanski said they are touting Step Forward more heavily recently because there is about $200 million left in the program, and county officials fear the federal government might discontinue the program and reclaim the remaining funds.