Electronic tax

Wayne Co. Treasurer Sabree Must End Tax Foreclosures

Disaster is heading for Wayne County, but Eric Sabree can stop it.

Sabree, the county treasurer, could ask a Wayne County Circuit Court judge to stop tax foreclosures on more than 4,000 owner-occupied homes.

Last month another 7,200 rental properties belonging to tax defaulting owners were seized. These tenants also need help and should be included in any consideration.

But he must act before the March 31 lockdown deadline; otherwise, the court will approve the county’s request to foreclose on the homes of residents and owners who have owed property taxes for three years, most of them in the city of Detroit, and sell them to the highest bidder in a auction this fall.

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Sabree told me last week that he thinks most of these tax-delinquent homeowners will enter payment plans before the end of the month. There aren’t as many options for owners. The Treasurer expects 1,200 to 1,500 occupied homes will likely be seized, numbers he seems to consider an improvement, but will still displace thousands of residents.

Sabree has already asked the court to stop the foreclosures. He can do it again.

In the past two years, no one in Wayne County has lost a home to foreclosure, a rare reprieve in a county that seized 145,458 parcels between 2005 and 2017. an analysis by Detroit data firm Regrid foundabout a third of all city property.

In 2020, the pandemic caused a moratorium on foreclosures; the following year, Sabree asked the court to stop the seizure of occupied homes, citing continued economic hardship due to the pandemic.

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Sabree said last week that he had no choice but to seize thousands of occupied homes this year, pointing out a report by the Wayne County Legislative Auditor General who has found his office routinely missing state-mandated deadlines in the lockdown cycle, and what he says is pressure from fellow state treasurers to resume foreclosure tax delinquent homes.

Treasurer cites new offerings, like weekly online Ask the Treasurer meetings, which Sabree says draws hundreds of residents, online payment options or door-to-door, which entice Detroiters into payment or other arrangements to repay their debts.

Sabree also says new tools are giving homeowners the chance to erase their tax debt and keep their homes, such as an influx of federal relief funds, and Pay As You Stay, a new payment program for poor homeowners adopted by Wayne County and the City of Detroit in 2019.

But too few homeowners are enrolled in the new payment program.

First, homeowners must apply for and obtain a property tax exemption granted to homeowners living in poverty. Then, homeowners can enroll in PAYS, which caps tax debt at 10% of home value.

A 2019 survey by the Quicken Community Fund found that 75% of tax-delinquent Detroit homeowners that year would have been eligible for the poverty exemption. Yet despite the awareness, many still don’t know the exemption exists or are intimidated by its bureaucratic requirements. Only 9,626 owners were registered with PAYS on February 18, according to data provided by the Sabree office.

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But it takes time to apply for and receive federal relief dollars, housing advocates say. After the foreclosure deadline, homeowners will no longer be eligible for Michigan Homeowners Relief Fundexplained Ted Phillips of the United Community Housing Fund, as they will no longer own their home – even if they continue to live there, awaiting in dread auction and eviction.

Sabree notes that homeowners applying for PAYS or MIHAF should send their applications to his office ([email protected]), saying it will stop the foreclosure process. The same, he says, for homeowners who have filed for bankruptcy or probate court.

And this audit that Sabree cites as justification for resuming foreclosures is an indictment of the way his office conducts its affairs.

In a number of critical areas, county auditors found a broad lack of process and safeguards that you’d like to parenthetically think about a process as important as foreclosure (a spokesperson for Sabree says he disputes parts of auditing):

  • State law requires the county to send repeated rounds of mail to tax-delinquent homeowners. But the county doesn’t keep records that show those letters were sent or that the owners were properly informed of their tax debt and risk of foreclosure.
  • A continued shortage of call center staff means that only a fraction of the office’s daily calls can be answered.
  • When the property tax payments arrive in the county mailroom, the staff simply takes the checks to the collection department. Instead, the auditors noted, mailroom staff should log the receipt of checks and track each payment through their app to the owner’s account. Owners only receive a payment receipt if a self-addressed, stamped envelope is attached to the payment.
  • Checks must immediately be stamped “for deposit only” upon receipt, a restrictive approval that prevents the misuse of these funds, the auditors wrote.
  • The audit team also investigated the Treasurer’s foreclosure prevention efforts, trying to gather data on homeowners who owed less than $1,500 in back taxes, a group whose debt could more easily be erased. But the treasurer’s office said the data was not available and a scheduling change may be needed.
  • Auditors found that the treasurer’s practice of exempting some owners from the auction even after state-imposed deadlines made it difficult for the county’s legal team to defend other foreclosures in court.
  • There are not enough protocols around other administrative functions, such as deed transfers, cancellation of payments, cancellation of sales, and issuance of refunds, with predictable results.

All of this, on top of what we already knew about foreclosures in Detroit: some homeowners were overvalued and lost their homes when they couldn’t pay those illegally inflated tax bills; many, if not most, Detroit residents are eligible for a poverty exemption to pay no property taxes; the auction, intended to reuse abandoned goods for productive purposes, often leads to the opposite: displacing families, creating plagues; once seized, a home is more likely to be seized again.

Any situation in which the best case scenario moves up to 3,600 people is not the best case scenario. A process that condemns some homes to foreclosure again and again, or shifts families in favor of speculators, is a disaster.

But here we are, ready to start all over again.

Nancy Kaffer is a columnist and member of the editorial board of Free Press. She covered local, state and national politics for two decades. Contact: [email protected] Become a Freep.com subscriber.