In a foreclosure crisis, Detroit residents fight to remain in their homes
In late August, Michael Andrews learned his Southwest Detroit home was in foreclosure. It came into his family’s possession in 1963, but falling on hard times during the 2007 recession made it difficult to keep up with his property taxes. The city’s systematically flawed practices have further created and perpetuated an oppressive system nearly impossible for at-risk residents to escape.
A yellow bag appeared on Andrews’ door twice in the past year. He recognized that as an obvious sign of foreclosure, but the following notifications of the status of the home were ambiguous and easy to ignore. His story isn’t uncommon. Yellow paper bags appear on residents’ front doors and mail is sent to their address, but many don’t comprehend the severity of their situation due to the legal jargon and confusing format of the notifications.
It wasn't until a United Community Housing Coalition volunteer came to his house that he realized how dire his situation was.
"I'm looking at (the notices) and it was the first time I sat down to read them,” Andrews said. “I started to read them and I was like I seen October you know and that's how they do it in bold, so it makes you think you have until October. I'm looking at the papers then I read down below in the writing and I'm like ‘Oh wow.’ You're right. I got to get down here and do something.”
However, having lived in Detroit for 40 years, Andrews is committed to saving his family home.He sits in counseling appointments with UCHC to see if there is any possibility that he might keep his home. When confronted with the idea that he might be evicted, Andrews was shock.
“I don't know, I really don't know,” Andrews says. “As long as I've been there, I have no idea what I would do. I pretty much lost all my family. I'm just lost for words because I've never been in this situation.”
In the past few years, leaders of the City of Detroit have made countless headlines proclaiming the city’s so-called comeback. They point to the end of state oversight of the city’s finances, the new Little Caesars Arena, Ford’s Motor Co.’s purchase of the Michigan Central Station and new construction of homes and office buildings around downtown and midtown as evidence of the city’s resurgence. However, the revitalization of these areas contrasts with the reality of other city neighborhoods. Far from downtown, trash builds on corners, windows are boarded up, streets remain dark through the hours of the night and residents are being pushed out from their homes by a tax foreclosure process that over assesses the tax burden for some of the city’s most vulnerable residents.
According to Motor City Mapping, 111,167 Detroit properties went up for foreclosure between 2002 and 2014. With Detroiters paying one of the highest property tax rates in Michigan and the second highest in the nation as of 2016, it comes to no surprise that already steep taxes, coupled with an archaic tax assessment process and persistent poverty lead to Detroit’s immense volume of tax foreclosures.
Filling a gap unserved by the city, community organizations, like the United Community Housing Coalition, have established programs to help thousands of Detroiters at risk of losing their homes to navigate the foreclosure process. Residents like Andrews use their services to stay informed about the status of their homes, keep up with their payment plans and in extreme cases, explore last resort options.
The sound of footsteps and shuffling papers can be heard from the elevator on the third floor of 2727 Second Ave. in Midtown, where UCHC is housed. There is a glass door at the end of the hallway that displays their logo, and behind it, the hallway is filled with people waiting their turn for a word with the front desk. UCHC counseling hours for tax foreclosure prevention started a few minutes prior, and everyone waiting is here because their homes are at risk of being taken away through formalities of a system encompassed by racism and bigotry.
The smell of a pot of coffee brewing and the scent of dusty filing cabinets lingers in the air. The walls are clad with inspirational quotes, pictures and art from Black historical figures, but that is the last thing anyone was paying attention to. People sit, face between their knees, some cradling their children, with folders of paperwork in their hands. Every chair in the waiting room is taken, so people spill into the hall and take up some of the chairs against both sides of the wall. All the while UCHC staff runs in and out of the waiting room and main hallway, bringing people into individual counseling rooms.
Bustling mornings like this are common at UCHC. The organization has been committed to providing housing assistance to low-income Detroiters since 1973, and this year is no exception. Operating at near capacity, UCHC will save 515 homes this year, including Andrews’, from being sold in the auction through their Right of Refusal Program.
The program permits at-risk Detroit residents, previous owners or renters alike, to stay in their homes. To do this, they evoke the Right of First Refusal in which the Wayne State Treasurer’s office is required to offer the homes to the right holder, which in this case would be the person occupying the home before it can open up a deal to other potential buyers.
Through buying the homes from the Wayne County Treasurer’s office before the bidding starts, UCHC is able to acquire them for an affordable price and offer their clients a fair payment plan. This way, the person who occupied the home before it was foreclosed is able to remain in the property, and even better yet, their tax bill starts anew.
As many as 25 percent of Detroit properties went into tax foreclosure between 2011 and 2015. This crisis has affected the composition of neighborhoods, displaced families and changed the overarching atmosphere in the city as many houses lay unoccupied and blighted. The underlying drivers for these foreclosures are disputed, but prominent narratives don’t acknowledge the role of the city and treasurer’s office in enforcing laws that have long disproportionately affected at-risk communities.
However, Bernadette Atuahene, a professor at the Chicago-Kent College of Law, argues the city of Detroit is over-assessing the value of these properties and foreclosing on them in an unconstitutional manner.
According to the Michigan Constitution, properties need to be assessed annually and at no more than 50 percent of their market value. Atuahene found that Detroiters homes were assessed between 53 and 84 percent of their value between 2009 and 2015.
She suggests three reasons the city violated protocol. First, the assessor's office could be too short-handed to actually assess the value of most properties in the city, and assumed property values were growing at an unrealistically high rate. Alternatively, many Detroit residents are unaware of the relevant regulations and therefore fail to hold the city government accountable. Finally, she raises the possibility the city found it easier to raise revenues by illegally assuming its taxable properties were more valuable than they actually were, rather than withstanding the political burden of raising tax rates.
“Given the (Detroit) property tax rate is already one of the highest in the nation, it may be challenging to get voters to approve a hike,” Atuhene’s article reads. “In contrast, Wayne County reimburses Detroit for any property tax revenue that it fails to collect; in exchange, the county receives the right to collect the revenues (with penalties and interests) and to confiscate the home if payment is not forthcoming after three years of delinquency.”
Similar to any other property owner in Michigan, Detroiters get two property tax bills in the year. One usually comes in the summer and the other in winter. The current year’s tax bills come in the from the city of Detroit, but delinquent taxes or back taxes that have accumulated from previous years are billed by the Wayne County Treasurer’s office. When residents get a bill from the treasurer, it means that they are behind on their taxes and the 18 percent interest rate is already accruing.
When delinquent or back taxes accumulate for three years, a yellow bag is dropped by the front door of the property by the treasurer, signaling that it is in the list of potential foreclosures. The county offers a few options for residents to pay back their delinquent taxes before their home goes into auction, and some of the most widely used are payment plans.
Payment plans like the Interest Reduction Stipulated Payment Agreement and the Stipulated Payment Agreement allow residents to pay back their delinquent taxes in split payments with the interest reduced to 6 percent. However, if residents fail to register for a payment plan or if they fall back on taxes again, their homes end up on auction.
As a last resort to collect the taxes owed to them by the properties, the Wayne State Treasurer’s office holds an annual auction for the purchase of foreclosed properties. This year, around 1,500 occupied homes are up for foreclosure auction — including Andrews’s — yet this number is much lower than the 2015 peak when 9,111 occupied homes went up for sale. Many of these homeowners or renters experience financial and emotional difficulties that inhibit them from keeping up with their property taxes.
“Right now, I have been unemployed,” Andrews said. “With my background, stuff has been kind of hard to find employment so I do whatever I can on the side. Sparse side jobs. It’s tough just to make ends meet.”
Living below the poverty line and trying to stay current on all bills on top of already high property taxes can take a toll on residents like Andrews, who makes less than $1,000 a month and would have to buy back his home for a minimum of $500.
“It’s stressful when, you know, you have a debt and they send it and let you know you’re always on it,” Andrews said. “After I get this situated I’m going to go file for bankruptcy for my first time. I’ve never done it before, but I’m going to go get that cleaned up and then I guess they will start over my credits.”
Another lifelong Detroiter, Wesley Mosley, is in a similar situation. She sits in the counseling room at UCHC, visibly pregnant and glowing with joy at the thought of finally having a girl after raising three boys. She tells the story of how she recently married her husband just released from prison, but the joy escapes her eyes when the topic reverts to her house. It is listed for the upcoming auction, as she has also found it hard to stay current with her taxes due to unemployment.
“I got a yellow bag on the door, and that was in 2016,” she says. “The house was still under my sister’s name, but she quit claim deed it to me because I had been there since 2011.”
The state of her neighborhood, like Andrews’s, has fluctuated throughout the years. Her elderly neighbors have managed to stay, but most other houses either change owners often, are always on the verge of going vacant or lay blighted.
Despite these circumstances, she is also committed to saving her home. It is the first home she has owned and where she is raising her children. She has been living in it for many years and is still constantly trying to turn her “house” into a “home.”
“Now I have just recently seen that over the summer people are coming to look at the homes that has been abandoned or what not,” she said. “I don’t want my home to be one of the homes that they look at, so I try to stay on top of everything. It’s just been hard being a single mother.”
Her home’s situation is why she is here, but the outcome is still uncertain.
“I wouldn’t have no choice but to work hard and try to get into another home, but it’s going to be hard,” she said. “I know I probably won't get into no home until about March of next year or something like that when I have enough money saved up to have a down payment. I don’t want to have to go to no shelter with no newborn baby and three kids.”
Andrews and Mosley are two of many Detroiters who utilize the services UCHC has to offer. They will likely get to stay in their homes, but unfortunately, going to a homeless shelter is a reality for others. Out of 1,500 occupied homes that were listed for the auction, UCHC was only able to buy back 515. Those residents did not have access to UCHC Andrews and Mosley were will likely be pushed out of their homes soon.
Even then, Andrews’s and Mosley’s fights aren’t over. Every six months, when their tax bills come and if they are still unable to pay them despite being informed and willing, they will be on the foreclosure track again. After a year, they might get another yellow bag on their doorstep, and three years after that they might find themselves at UCHC again, wondering what they can do to stay in their homes.
This cycle will continue to be a reality until the city and county make concrete efforts to reform how they assess properties values for taxes, and make genuine strides to inform the public about the status of their homes and options for payment. This cycle not stop until the government ceases profiting off the misery of its constituents.