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Foreclosed homes to be sold back for $1,000 in ACLU, city settlement

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Photo by Michelle & Chris Gerard

Earlier this week, the ACLU of Michigan and the City of Detroit reached a settlement after a two-year lawsuit over how the city administers property tax breaks for the poor, often leading to foreclosures. In the agreement, these homeowners will be able to stay in their homes and avoid foreclosure for $1,000. The ACLU says the settlement will also make the process “less burdensome” for those applying for the program.

Homeowners who are currently in foreclosure need to apply right away, as the deadline is July 13. The United Community Housing Coalition (UCHC), at (313) 963-3310, ext. 339, can offer assistance.

“We are excited to partner with the City of Detroit and community organizations to craft a creative settlement that will prevent thousands of Detroiters from losing their homes to tax foreclosure,” said Michael J. Steinberg, legal director of the ACLU of Michigan. “It is a win for homeowners unfairly facing loss of their homes, and a win for the city, which will have fewer abandoned properties in residential neighborhoods. This agreement will hopefully mark the beginning of the end of the worst tax foreclosure crises since the Great Depression.”

Four neighborhood organizations were plaintiffs in the case: the Oakman Boulevard Community Association, the MorningSide Community Organization, the Historic Russell Woods-Sullivan Area Association, and Neighbors Building Brightmoor.

According to a release from the ACLU of Michigan, under the terms of the settlement:

The City of Detroit will mail a notice, each year, to all city homeowners with homes worth less than $95,000 about tax relief for low-income households available through the Homeowners Property Tax Assistance Program (HPTAP).

The city will create a streamlined application HPTAP process, similar to other cities, with fewer paperwork requirements for applicants.

The HPTAP application—which previously could only be obtained by mail after filling out an application in person at the Coleman A. Young Municipal Center—will now be available for download on the city’s website at detroitmi.gov.

For poverty exemption-eligible homeowners with homes currently in foreclosure, the city will exercise its “Right of First Refusal” (ROR) to purchase these homes from the Wayne County Treasurer before the properties are sold at a tax auction.

The City of Detroit will forgo recovery of its portion of the taxes, resulting in an approximately 40 percent reduction in back taxes owed.

After acquiring properties of eligible applicants, the city of Detroit will sell the homes at the discounted rate to the United Community Housing Coalition (UCHC). The city will contribute $275,000 to the funds UCHC will use to purchase homes this year. This will build upon a program that was piloted last year between local philanthropies and the city.

UCHC will sell the acquired homes back to their original owners for $1,000, which will be used to save additional homes from foreclosure over the next two years. If a homeowner does not have $1,000, UCHC will work with the homeowner to develop a non-interest payment plan.

The city will continue its “Homeowner Right-of-Refusal Program” to enable poverty exemption-eligible homeowners to save their homes from foreclosure for $1000 for the next three tax years: 2018, 2019, and 2020.

The City of Detroit says that it has mailed out 3,741 applications to homeowners who are delinquent on their 2017 property taxes and have not requested an application and the Assessor has mailed out another 5,000 applications based on requests that have come already.

“We want to help Detroiters stay in their homes, and a big part of that is reaching out to people when they first fall behind on their taxes,” said Deputy Chief Financial Officer/Assessor, Alvin Horhn, who added that homeowners don’t have to be behind on their taxes to be eligible for the exemption. “We encourage any homeowners who think they may qualify for the hardship exemption this year based on their income to reach out to us immediately.”

A recent study concluded that inflated tax assessments of homes caused ten percent of Detroit foreclosure between 2011 and 2015. These were often on homes valued at less than $8,000, which led to many low-income Detroiters losing their homes.