Snyder signs bills closing tax foreclosure loophole
Gov. Rick Snyder on Wednesday signed bills that provide relief to homeowners facing tax foreclosure and close a loophole that let tax deadbeats buy back their own foreclosed properties.
Spurred in part by a series of articles in The Detroit News, the bills allow homeowners to enter into county repayment plans that lower interest on debt from 18 percent to 6 percent. In many cases, the legislation would also cap the amount a homeowner has to pay to a quarter of the market value of the home.
More than 65,000 owners face foreclosure this fall in Wayne County, including Carlotta Upton. She owes $11,000 on her home on Detroit’s west side and she hopes the legislation will help reduce the debt.
“A lot of people are struggling with hard times and they need help,” said Upton, 53, who is unemployed and on disability. “It’s hard for them to catch up.”
Officials estimate about 20,000 Wayne County homeowners will be able to cut their debt under the measure.
Snyder also signed a bill that prevents foreclosure auction bidders from buying properties if they have “outstanding tax payments, unpaid blight fines or a history of financial negligence,” according to Snyder’s press release announcing the bill signing.
The legislation follows a 2012 News investigation that found owners erased at least $4.7 million in property taxes and liens on more than 400 properties they purchased back at auction. One landlord profiled by The News erased about $600,000 in taxes and other liens by buying back 34 of his foreclosed properties.
Detroit Mayor Mike Duggan lobbied for the legislation during the past year.
Wayne County Deputy Treasurer David Szymanski said his office doesn’t have the staff to vet every buyer, but the law will require auction bidders sign an affidavit declaring they don’t owe taxes and face perjury charges for lying.
“Helping homeowners overcome financial hardship and meet their legal responsibilities will help keep families in their homes in a responsible way, lessen the number of vacant buildings and improve public safety while generating tax dollars to provide vital services to city and county residents,” Snyder said in a statement. “Developing a more transparent foreclosure system also ensures previously foreclosed property does not return to the hands of delinquent taxpayers.”
Homeowners can contact the Wayne County Treasurer’s Office to get more information on the payment plans or meet with staffers at a series of hearings Jan. 29 through Feb. 6 at Cobo Center in Detroit.
To qualify for the payment plan, the owner has to have a principal residence exemption filed with the city, which means the individual uses the home as their primary residence. They also have to make a down payment of 10 percent of the debt, Szymanski said.