Detroit Property Taxes - 1 in 7 Residents At Risk Of Eviction

Oren Goldenberg, a 31-year-old filmmaker based in Detroit, could have bought a $500 house at the Wayne County tax auction this fall-- but having to evict a homeowner turned him off.
Goldenberg had been burned before. He had made a previous purchase in the yearly tax foreclosure auction. His coup turned less appealing as he was confronted with the reality of removing the owner and then-occupant from her home. Goldenberg sold the house back to its occupant for the bargain price of $7,000 – twice what he had paid for it, but half what she had owed in property taxes.
Now Goldenberg won’t consider an already-occupied house. “It goes into this long-term narrative of Detroit is vacant and empty and there’s no one here. So when you look at it and you think oh my god, we’re going to develop this area, no one thinks that you might be pushing people out.”

Goldenberg is facing the same dilemma that many young, educated - and mostly white -- gentrifiers are facing as well.
This coming year, 62,000 Detroit properties will be heading to the tax foreclosure auction if their owners fail to come up with money before April 1. The catch? Over half of these properties have someone living them -- usually the previous owner, who paid off the mortgage and whose family may have lived in the house for years.
The result: Young, predominantly white, college educated professionals and creatives may be moving into Detroit lured by tax breaks and incentives, participating in its “renewal” – but tens of thousands of mainly black Detroiters, struggling with bills, are simultaneously – and silently - being shown out the back door.

It’s a dynamic affecting a significant portion of Detroit’s small, poor population. This fall, the Wayne County treasurer is handing out tax foreclosure notices to 62,000 Detroit properties at least three years behind on paying their property taxes. All told, that’s over $709m in overdue taxes and penalties -- a heavy burden for a city in which 38% of residents are living below the poverty line.

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Of those properties, 37,000 are classified as occupied. With an average of 2.74 people per household, this means around 100,000 Detroiters are at risk of losing the current roof over their head. That is 1 in 7 Detroit residents, this coming season alone.

The end is predictable - and swift. If owners fail to work out payment plans or pay their entire tax burden within five months, their homes end up at auctions. The first one comes in September where properties are sold at a starting bid of the total amount of taxes and liens owed. The houses no one buys end up in the second round at a starting bid of $500.
After over a decade of this system, Detroit has completed 125,000 tax foreclosures, according to the city’s own report.

It’s a different kind of housing crisis. Jerry Goldberg, an attorney with Moratorium NOW!, credits Detroit losing one quarter of its population between 2000 and 2010 as a direct result of both tax and mortgage foreclosures.
Marilyn Mullane, the executive director of Michigan Legal Services, which has been working with Detroiters undergoing foreclosure, says the tax and subprime-foreclosure crises in the city are intimately linked.
One of the things linking them: lack of information. Low-income homeowners are eligible for tax exemptions. While many residents would meet the requirements, they must file requests before their taxes are due, neither of which are readily known pieces of information, Mullane says. Owners can buy their homes back with debts cleared at auction for $500 as a solution of last resort.
The payment plans are unrealistic for many Detroiters already desperately behind on their bills.

The flow of information is unequal - asymmetric, in Wall Street terms -- between the often wealthy buyers and the low-income residents who suffer foreclosures. Detroit’s real estate challenges are remaking the city and favoring outsiders.

taken from here