We at Model D have been closely following developments between the city, county, and other actors as they try to resolve the tax foreclosure crisis that's racked Detroit for nearly a decade. See our articles on understanding the crisis
, possible solutions to the crisis
, and other bits of news
In the last couple weeks, fortunately, it seems like a dam has broke.
First came news that the city of Detroit settled with the ACLU
in a lawsuit alleging that the process of applying for a poverty tax exemption was unnecessarily onerous. The exemption allows residents below a certain income level to forego all or part of their property taxes, which would have prevented many Detroiters from losing their home to tax foreclosure.
As a result of the settlement, the city will now notify all homeowners who quality for the exemption by mail and provide the option of applying online. Most crucially, it will allow low-income residents to buy back their home for $1,000 after the city exercises its "right of first refusal," which prevents the home from entering the Wayne County tax auction.
"It's a life changing win for homeowners unfairly facing tax foreclosure," Michael Steinberg with the ACLU told Michigan Radio, "and it's a huge win for the city which will have fewer abandoned properties in its neighborhoods."
Through its partnership with Quicken Loans and United Community Housing Coalition
(UCHC), the city also announced it would be expanding its program to buyback homes in tax foreclosure from 80 to 300 homes.
Once again using right of first refusal, the city will prevent renter-occupied homes from entering the county auction. "Then," according to a press release, "the City will pass these homes to UCHC at no additional cost, and UCHC will work with the individual renters and homeowners, allowing them to acquire the property with monthly payments set at an affordable rate."
Purchase price for owner-occupied homes will be set at $1,000; other prices will range between $2,500 and $5,500.
The partners are hoping to reach as many homes at risk of tax foreclosure as possible to notify them of their options through knocking on doors, mailers, and workshops.
The city is also creating a payment plan program to reduce interest rates on delinquent taxes, and is going to do its first reassessment of home values in decades. Because of the 2008 housing crisis, many property values are overassessed, which inflates property taxes.
These measures plus changing market conditions have resulted in the sharpest decrease in foreclosures in years, down 89 percent since 2015. This year, only 708 owner-occupied homes are at risk of foreclosures, compared to 6,408 in 2015.
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