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City and county propose new payment plan to reduce tax foreclosure

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The “Pay as You Stay” program would eliminate interest, penalties, and fees for low-income homeowners behind on taxes

Two abandoned homes in Detroit. Shutterstock

Over the last decade, tax foreclosure has devastated Detroit. The Wayne County Treasurer’s Office foreclosed on more than 100,000 Detroit homes between 2012 and 2017. A new program backed by the city of Detroit and Wayne County may help prevent future foreclosures.

The program, called “Pay as You Stay,” is meant to make payment on back taxes more manageable for low-income homeowners. Those who qualify will have all interest, penalties, and fees from unpaid taxes eliminated. They could even get their back taxes reduced if the amount is more than 10 percent of the value of the home.

Participants would then get on a three-year payment plan at zero percent interest. According to the city and county, a homeowner with around $11,700 tax debt would only need to pay $29 per month on the new plan.

The program is only eligible for those who qualify for the Poverty Tax Exemption—individual making less than $19,303 per year or families of four making less than $28,671 per year.

The city and county estimate that it would allow an additional 31,000 homeowners to avoid foreclosure.

“As we look to continue Wayne County’s rebuild we need to take more steps to address foreclosures and help residents break the cycle of poverty,” said Wayne County Executive Warren Evans. “Over the long term, we are much better off with people in their homes. This legislation reduces the burden on residents in payment plans and better positions them to avoid foreclosure while providing a more achievable path to home ownership.”

State Rep. Wendell Byrd is expected to introduce the plan in legislation this week.

Even Nancy Kaffer, columnist at the Detroit Free Press and regular critic of the county’s handling of tax foreclosure, praised the proposal:

This is a real change in the way Detroit and Wayne County have handled tax foreclosure, and it acknowledges something advocates for impoverished Detroiters facing tax foreclosure and this newspaper have argued for years: the value of occupied homes in a city that’s lost too many.

This isn’t quite the retroactive poverty exemption some had advocated for, which would have allowed eligible homeowners to wipe out all their property tax debt. That’s an idea that never got traction with Sabree, or Duggan, who worries that tax forgiveness wouldn’t be fair to Detroiters who did pay.

But this is pretty close. And it’s a big deal.

Tax foreclosure has been decreasing in recent years and even hit a 14-year low in Detroit in 2018. That was due to several factors, including proper administration of the Poverty Tax Exemption after the ACLU and other legal partners got a settlement from the city of Detroit last year.

But tax delinquent properties haven’t dropped nearly as much in that time, so legislation like this is still needed.