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New program would clear property tax debt for poorest Detroit homeowners

Some low-income Detroiters with property tax debt should soon get a chance to get that debt wiped out, thanks to a new program from the Wayne County Land Bank.

The program will work through a legal process called quiet title. The land bank will take ownership of the home. Then it will use quiet title to clear any debt attached to the property, and return the home to the former homeowners.

A key caveat: The program is only available to people who have a 100% property tax exemption from the city of Detroit when they apply. That’s offered to many homeowners who meet the income eligibility requirements (maximum of $26,104 for a family of four). That exemption needs to be re-applied for every year.

Daniel Rosenbaum is the land bank’s executive director. He says the program is meant to prevent tax foreclosures, because if people can’t afford current property taxes, they probably can’t afford to simultaneously pay off back taxes either.

“They’re basically not delinquencies that are going to be collected, they’re delinquencies that are more likely than not to lead to foreclosure,” Rosenbaum says.

“We want to keep these homeowners where they are. You’re trying to promote stability in the community, you’re trying to promote stability for residents of the community, and you’re trying to support stability for the properties in that community,” he says.

The idea is not without detractors. Wayne County Treasurer Eric Sabree, who’s responsible for collecting delinquent property taxes for cities and foreclosing on homes delinquent after three years, voted against the program at a Thursday land bank meeting. He cited concerns about the legality of erasing past debts.

Although the county has foreclosed on sharply fewer Detroit properties in the past two years, tens of thousands of city properties still enter the tax foreclosure cycle every year. Wayne County sent out around 34,000 foreclosure notices in Detroit last year, and that number is expected to increase this year. Some 34,000 Wayne County homeowners are on payment plans to pay off back taxes.

And access to the poverty tax exemption is still lacking, despite recent efforts to improve access spurred by a legal settlement with the ACLU of Michigan. According to University of Michigan research, an estimated 35,000-40,000 Detroit households are eligible for the exemption; only about 5,200 received it in 2018.

Rosenbaum says the quiet title program is only meant as an interim measure to help prevent foreclosures among people who weren’t legally obligated to pay property taxes in the first place. The state Legislature would need to change the law to allow for retroactive property tax exemptions.

Rosenbaum says due to time constraints with the upcoming tax cycle, it’s likely the program won’t get started until early 2020.

Sarah Cwiek joined Michigan Radio in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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