Law reducing interest rates on delinquent property taxes extended | Michigan Radio
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Law reducing interest rates on delinquent property taxes extended

Jul 1, 2019

Wayne County Treasurer Eric Sabree is applauding a new law signed by Governor Gretchen Whitmer that allows county treasurers to work with homeowners, and implement payment plans with reduced interest rates on back property taxes.

A temporary law from late 2014 allowed this, but was scheduled to sunset June 30th. Now, the law has been extended until 2026.

Wayne County Treasurer Eric Sabree
Credit Wayne County

By state law, the usual interest rate on delinquent property taxes is 18%. Interest Reduced Stipulated Payment Agreements (IRSPAs) set interest at 6%, and allow homeowners to pay their back taxes over five years. The program also mandates that homeowners stay up to date on current property taxes while paying off the delinquencies.

Sabree credits the law with reducing the number of property tax foreclosures in Wayne County. He says that around 14,000 county homeowners are currently on IRSPAs.

“Wayne County’s not the only county that uses it to help taxpayers, but the majority of taxpayers that take advantage of this plan are from Wayne County,” said Sabree.

Property tax delinquency and foreclosure have been particular issues in Detroit, where one in four homes was foreclosed from 2011-2015. Last year, the county foreclosed on a relatively low number of properties—fewer than 3,000 ultimately went to auction—but property tax delinquency remains a persistent problem, with tens of thousands of homes still entering the foreclosure cycle every year.

Outreach efforts and buyback programs have also helped reduce foreclosures, and after settling a lawsuit, Detroit is now working to make sure that more eligible low-income homeowners actually get the property tax exemption they’re entitled to by law. Some advocates say back tax debts should be canceled for people who should have received that exemption, rather than putting them on payment plans.

Sabree hasn’t advocated for that. But he says the county continues to make progress, and he credits programs like IRSPAs with helping cut foreclosure numbers down. “And I hope that by the time this law sunsets, that foreclosure will be such a small issue that we won’t even need it,” he said.

To qualify for an IRSPA, homeowners must be owner-occupants of a property, have a principal residence exemption (PRE), and be suffering some kind of financial distress, including poverty as defined by federal guidelines. More information can be found here.