Opinion: Wayne County treasurer needs to act fast, stop 4,000+ tax foreclosures

A disaster is headed for Wayne County, but Eric Sabree can stop it.

Sabree, the county treasurer, could ask a Wayne County Circuit Court judge to halt the tax foreclosures of more than 4,000 owner-occupied homes.

Another 7,200 rental properties with tax-delinquent landlords were marked for foreclosure as of last month. Those tenants need relief, too, and should be included in any consideration.

But he has to act before the March 31 foreclosure deadline; otherwise, the court will approve the county's request to seize the homes of residents and landlords who have owed property taxes for three years, most of them in the city of Detroit, and sell them to the highest bidder in an auction this fall.

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Sabree told me last week that he believes most of those tax-delinquent homeowners will enter into payment plans before the end of the month. There aren't as many options for landlords. The treasurer expects that 1,200 to 1,500 occupied homes will likely be foreclosed, numbers he seems to consider an improvement, but will still displace thousands of residents.

Sabree has asked the court to halt foreclosures before. He can do it again.

For the last two years, no one in Wayne County has lost a home to foreclosure, a rare reprieve in a county that foreclosed on 145,458 parcels between 2005 and 2017, an analysis by Detroit data firm Regrid found, about a third of all property in the city.

In 2020, the pandemic caused a moratorium on foreclosures; the following year, Sabree asked the court to halt the foreclosure of occupied homes, citing ongoing economic hardship because of the pandemic.

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Sabree said last week that he has no choice but to foreclose on thousands of occupied homes this year, pointing to a report by the Wayne County Legislative Auditor General that found his office regularly missed state-mandated deadlines in the foreclosure cycle, and what he says is pressure from fellow treasurers around the state to resume the seizure of tax-delinquent homes.

The treasurer cites new offerings, like weekly online Ask the Treasurer meetings, which Sabree says draws hundreds of residents, online payment options, or door-to-door outreach, that are ushering Detroiters into payment programs or other arrangements to pay down their debts.

Sabree also says that new tools offer homeowners the opportunity to clear tax debt and keep their homes, like an influx in federal relief funds, and Pay As You Stay, a new payment program for impoverished homeowners adopted by Wayne County and the City of Detroit in 2019.

But too few homeowners are enrolled in the new payment program.

First, homeowners must apply for and obtain a property tax exemption granted to homeowners living in poverty. Then, homeowners can enroll in PAYS, which caps tax debt at 10% of the home's value.

A 2019 survey conducted by the Quicken Community Fund found that 75% of that year’s tax-delinquent Detroit homeowners would have qualified for the poverty exemption. Yet despite outreach, many still don't know the exemption exists, or are daunted by its bureaucratic requirements. Just 9,626 homeowners were enrolled in PAYS on Feb. 18, according to data provided by Sabree's office.

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But it takes time to apply for and receive e federal relief dollars, housing advocates say. After the foreclosure deadline, homeowners will no longer qualify for the Michigan Homeowner Assistance Fund, explained Ted Phillips of the United Community Housing Fund, because they will no longer own their homes — even if they continue to live in them, waiting in dread for the auction, and eviction.

Sabree notes that homeowners who apply for PAYS or MIHAF should send their applications to his office (taxinfo@waynecounty.com), saying that will halt the foreclosure process. Likewise, he says, for homeowners who have filed for bankruptcy or in probate court.

And that audit Sabree cites as a justification for resuming foreclosures is an indictment of how his office conducts its business.

In a number of critical areas, the county's auditors found a broad lack of the processes and safeguards you'd like to think bracket a process as significant as foreclosure (a spokesperson for Sabree says he is contesting portions of the audit):

• State law requires the county to send repeated rounds of mail to tax delinquent homeowners. But the county doesn't retain records that prove those letters were sent, or that homeowners were properly notified of their tax debt and the risk of foreclosure.

• An ongoing shortage in call center staff means just a fraction of the office's daily calls can be answered.

• When property tax payments arrive in the county's mailroom, staff simply walks the checks to the cashiering department. Instead, auditors noted, mailroom staff should log receipt of checks, and track each payment through its application to the homeowner's account. Homeowners only receive a receipt for payment if a self-addressed, stamped envelope is included with the payment.

• Checks should immediately be stamped "for deposit only" upon receipt, a restrictive endorsement that prevents misuse of those funds, auditors wrote.

• The audit team also investigated the treasurer's foreclosure prevention efforts, trying to gather data on homeowners who owed less than $1,500 in back taxes, a group whose debt could more easily be cleared. But the treasurer's office said that data wasn't available, and that a programming change might be required.

• Auditors found that the treasurer's practice of exempting some homeowners from auction even after state-mandated deadlines made it difficult for the county's legal team to defend other foreclosures in court.

• There are insufficient protocols around other administrative functions, like deed transfers, canceling payments, cancelling sales and issuing refunds, with predictable results.

All of this, on top of what we already knew about foreclosures in Detroit: Some homeowners were overassessed, and lost their homes when they couldn't pay those illegally inflated tax bills; many, if not most, Detroiters qualify for a poverty exemption from paying any property tax at all; the auction, intended to put derelict property into productive re-use, often results in the reverse: displaces families, creates blight; once foreclosed, a home is more likely to be foreclosed again.

Any situation in which the best case scenario displaces up to 3,600 people is not the best case. A process that dooms some homes to foreclosure, again and again, or displaces families in favor of speculators, is a disaster.

But here we are, ready to do it all again.

Nancy Kaffer is a columnist and member of the Free Press editorial board. She has covered local, state and national politics for two decades. Contact: nkaffer@freepress.com. Become a subscriber at Freep.com.

This article originally appeared on Detroit Free Press: Opinion: Wayne Co. Treasurer Sabree needs to stop tax foreclosures