TAX FORECLOSURE PREVENTION

BACKGROUND

The current tax foreclosure crisis in Detroit stems from changes to state tax laws in 1999, which shortened the foreclosure timeline and created new fees:

 

  • Taxpayers now face property tax foreclosure after being delinquent on payments for three years

  • Taxes that are delinquent for more than one year are charged interest at 1.5% per month, or 18% per year, plus fees

  • Since 2017, owners of foreclosed homes are banned from purchasing  their properties back at auction

 

Displacement caused by property tax foreclosure has a severe impact on individuals and their communities, including:

  1. A degree of homelessness

  2. Illegal eviction by new owners who either do not know the eviction process or do not care

  3. Forced moves to less desirable and more costly rental housing

  4. Renters remaining in the same property, often paying more than 50% of their income for rent

  5. Occupants entering into unethical lease purchase deals longer-term homeowners will often suffer some level of depression

  6. Family relationships, jobs, education, and children frequently suffer

  7. Vacant properties are vulnerable to vandalism and create blight

WHAT ARE WE DOING TO HELP?

  • UCHC has provided purchase support for more than 5,000 Detroit residents through our tax foreclosure prevention services

  • UCHC purchased 520 homes for their resident clients in tax foreclosure in 2018

  • UCHC sent more than 50,000 tax foreclosure outreach mailings in 2018

  • UCHC had more than 4,000 attendees at 66 workshops in 2018

  • UCHC has saved clients’ homes from tax foreclosure through purchasing homes at an average cost of $4,000 per home

 

Following the tax law changes, UCHC started concerted tax foreclosure prevention efforts targeted at both tenants and homeowners. We have since made significant progress with the help of our funding partners*:

 

In 2010, UCHC began assisting homeowners in the October tax foreclosure auction conducted by the Wayne County Treasurer as a last resort to save homes.

  • UCHC purchased 147 homes the first year with a revolving loan pool of $80,000

  • Since then, UCHC has provided purchase support for more than 3,000 homes

 

*Through grants and partnerships with Quicken Community Loan Foundation, the Skillman Foundation, UWSEM, the Ford Foundation and others, UCHC has been able to continue to fund and grow the loan pool.

WHAT IS THE RIGHT OF REFUSAL?

UCHC partnered with Michigan Legal Services in 2017 to created the Right of Refusal Program by working with the City of Detroit to exercise its option to purchase foreclosed homes back from the Wayne County before auction:

  • With support from the Quicken Community Loan Foundation, UCHC purchased 80 tenant-owned homes at an average price of $4,000 and sold them to the occupants for at cost plus some minimal fees

  • In 2018, the number of homes purchased grew to 520 and expanded to allow low-income, former owner-occupants to participate

  • In 2019, through a grant from the Quicken Community Loan Foundation, we began a pilot repair program to address housing repair needs for the homes purchased

WHAT IS THE HOMEOWNERS PROPERTY TAX ASSISTANCE PROGRAM (HPTAP)?

The City of Detroit has a poverty property tax exemption that is underutilized.  Approximately 40,000 Detroiters are eligible each year but around 5,500 applied for the exemption in 2017.

 

By lowering or eliminating tax bills, the HPTAP can improve housing affordability and prevent tax foreclosure among owners with low and fixed incomes.

 

UCHC works with our clients to complete and file HPTAP applications in order to lower their property taxes and reduce the risk of foreclosure. For more information about our HPTAP counseling hours, visit our Contact Us page.

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We believe that having a place to live is a basic human right, and are passionate about preserving this right in our communities.

© 2019 by United Community Housing Coalition