FROMclosure Action Plan

A summary of principles and strategies for local government and outreach groups to address Detroit’s chronic tax foreclosure.

Fundamental Principles

1. We’re all in this together. It should be the understanding of every city representative that a foreclosure averted is a benefit to the entire city. Foreclosure is heavily linked with displacement and blight, which costs the whole city. We need a top-down culture of support and encouragement to maximize people’s efforts to save their homes.
2. Support continuous occupancy. “Continuous occupancy” means minimizing instances of displacement and vacancies. It’s much easier to keep an occupied home occupied than it is to demolish or renovate a vacant building and find housing for displaced people. Targeting support to residents of occupied foreclosed homes will maximize avoided costs.
3. No person’s home should be put up for sale without their knowledge. Foreclosure notices should contain information about the tax foreclosure auction and instructions for how to participate. Notices should provide information and resources for both owners and renters. Last year 5,000 occupied homes that could’ve been bought for $500 went unsold in the auction– a clear missed opportunity for residents and a burden on the Land Bank.
4. Foreclosure status must be accessible There is a huge void of information between the initial tax foreclosure notices and the auction one year later. This is especially true as policies change and deadlines extend and payment plans are entered into. Renters need to know if their landlord still owns the property, people need to know how much they owe on payment plans and when, and community groups need to know who still needs intervention. We need greater transparency of the status of pending tax foreclosures throughout the cycle.

Strategies

1. Improve Transparency and Notification

1. Create resources for community groups/non-profits/government agentsto use in outreach efforts (e.g. central resource: www.FROMclosure.com)
2. Increase transparency of foreclosure status throughout the cycle so people know who has and has no avoided the auction
3. Deploy multi-level foreclosure notification: certified letters/electronicnotification/etc., physical AND mailing address notifications
4. Issue notification for residents even if they are not owners, includingactionable information about auction and informational resources
5. Include Wayne County Tax Auction information and web address inforeclosure notices
6. Offer multiple city-wide town hall meetings to inform public
7. Create a hotline for foreclosure/housing/auction support

2. Foreclosure Abatement
   1. Aggressively promote payment plan options to those in tax distress andsubject to foreclosure
      1. Issue notices when payments are due
      2. Indicate when a property has been pulled from auction
      3. Allow most recent year’s delinquencies to be rolled in
      4. Automatically apply benefits of reduced interest rates and “half-SEV” rule even if the individual doesn’t know about them
      5. Allow retroactive homestead and poverty exemptions in adjustingamount owed
   2. Improve access and support to Step Forward funds
   3. Create an Enhanced Outreach Program for occupied residentialproperties
3. Support “Continuous Occupancy”
   1. Offer renter-residents and squatters First Offer to buy if the owner cannot/does not pay
   2. Offer community groups and non-profits Second Option to buy in the case of multi-family residences, historic buildings/neighborhoods
   3. Vastly expand and deploy Land Bank buyback program for occupied homes at risk of being vacated
4. Root-Cause Analysis
   1. Perform city-wide property value re-assessments
   2. Include tenant/renter outreach in foreclosure notifications
   3. Advocate for removal of mandates in Michigan laws that preventdiscretion of local governments
      1. 3-years back-taxes requires foreclosure
      2. Delinquent taxes incur 12-18% interest
   4. Enforce laws that prevent purchase of properties by owners ofblighted/condemned/tax-negative properties
   5. Mandate disclosure of tax/foreclosure status when a Property TransferAffidavit is filed
5. Big Picture
   1. Expand relocation programs for placing homeless Detroiters into empty Land Bank homes as per “Housing First” policies
   2. Consider retroactive tax forgiveness/adjustment in following cases:
      1. Property reassessment shows that actual property value is significantly (e.g. 50%) lower than the level it was taxed at
      2. City services are not available at the property location (e.g. public transportation, snow removal, trash pick-up, lighting)
      3. Property owner is at-or-below poverty line
      4. Property is owner-occupied