Wayne County, Michigan, has begun to execute the plan county officials announced in mid-October to start tax foreclosure proceedings on approximately 75,000 distressed properties for which the owners are three years or more delinquent on property taxes.
A large percentage of those 75,000 properties are located in Detroit, which is the county seat of Wayne County. The county's goal is not to complete the foreclosure proceedings and remove people from their houses, however. In fact, it's just the opposite – county officials are actually using the aggressive foreclosure campaign to try to prevent people from losing their homes, according to Wayne County Deputy Treasurer David Szymanski.
"I am hopeful that when we go to auction next year on these 75,000 properties that we will only auction about 20,000," Szymanski said. "We are working with the Mayor of Detroit on some legislative action that could assist in helping people avoid foreclosure."
Last year, Wayne County officials began foreclosure proceedings on about 56,000 properties. Only about 20,000 of them, or 36 percent, actually went through the whole procedure, meaning the county helped more than half of those homeowners stay in their homes.
Beginning the foreclosure process is meant to alert distressed homeowners that their delinquent property tax situation needs to be resolved, which hopefully will put them in contact with county officials who can let them know what their options are as far as relief that can help them stay in their home, Szymanski said.
"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."
One of the solutions available to help homeowners keep their homes 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.
The number of houses on which Wayne County officials began the foreclosure process has steadily increased over the last three years. The number increased from 26,000 in 2011 up to 42,000 in 2012, then 56,000 in 2013 – up to 75,000 for this year. A declining population in Detroit over the decades has led to an increasing number of vacant houses in the city – out of about 62,000 houses in Detroit that are part of the county's newest foreclosure wave, only about 37,000 of them are reported to be occupied. Szymanski said the county officials and Detroit Mayor Mike Duggan are combining forces to try an eliminate blight, which has become a significant problem in Wayne County in recent years.