In Wayne County alone, some 10,000 properties are scheduled to be auctioned off this fall because of back taxes, according to Treasurer Eric Sabree. It’s a massive problem affecting people across the Metro Detroit area, and county officials are pushing homeowners to see if they can qualify for federal help.
They tried to get the word out Wednesday about the Step Forward Michigan program, which offers up to $30,000 in no-interest loans to help people catch up on back taxes or mortgage payments. The state says some 6,000 Michigan households are eligible for the $40 million left in the program. (That money expires in 2020, at which point they go back to the US Treasury.)
But to qualify, owners need to prove they had an “involuntary qualifying hardship” (like losing a job or getting divorced) that prevented them from making those payments.
Owners also need to show they’re making enough money to afford future payments - but they’ll also be asked if they have less than $10,000 in the bank (not including retirement accounts), which is a prerequisite for qualifying.
“Statewide, 34,217 Michigan homeowners have qualified for $305 million in loans since the program began in 2010, with nearly half being in Wayne, Oakland, and Macomb counties,” officials said in a press release Wednesday.
But when asked how many residents who apply are accepted into the Step Forward program, a state official says that’s tricky.
“That’s always a hard one to answer, because a lot of residents will start the application, but then they, ya know, turn a blind eye to it, saying ‘maybe this will be too much work,’ or ‘I don’t want to do this,’ and then they stop,” says Mary Townley, director of the Michigan State Housing Development Authority’s Homeownership Division. “Of those that finish the application, we have a pull through rate of about 60 percent. Which I think is pretty high.”
The average assistance from the program is about $7,000, Townley says, which is the total of what’s past due.
Under the program, loans are forgiven at 20 percent a year, and then forgiven entirely after 5 years, so long as the homeowner remains in the home during that time.
“From a family’s perspective, it’s going to look probably like two to three years of delinquent taxes,” says Oakland County Treasurer Andy Meisner. “They got knocked off their stride by joblessness, medical problem, divorce, death. They got in a hole. And that’s when they stopped paying. A lot of these people had good payment histories before that.”
But some housing experts say that money could be better used to help a wider range of people stay in their homes – especially those who are struggling with poverty.
“I see thousands of people every year who need help,” says Michele Oberholtzer, founder of the Tricycle Collective, a non-profit helping Detroiters at risk of foreclosure. She also helps residents apply for the Step Forward program at the United Community Housing Coalition. “What we see in terms of the application for homeowners, is it’s very, very few people who are approved [for Step Forward Michigan.] I council my clients: ‘This is like a free lottery ticket. It doesn’t hurt to apply, but you’re very unlikely to win.’”
“The reasons people are rejected are wide-ranging, and often pretty frivolous,” she says. “You can’t get help if you’re low income. The unexpected hardship [requirement] is very telling, [and doesn’t help] if you’re just poor and struggling. It’s a very narrow, middle class mindset.”
But for those who do qualify, it’s a pretty solid program, says Libby Palackdharry, director of financial stability programs at Southwest Solutions, a Detroit agency that offers housing and financial help.
“The reason there’s been so much activity [around this program] in Detroit is it can also be used for property tax foreclosure issues,” Palackdharry says. “That’s what the vast amount of people we’re working with [are experiencing.] It’s been very popular because it helps to bring people current.”
But eligibility has gotten trickier, she says.
“The new wrinkle that’s made it kind of challenging, is that in addition to proving that you have that [qualifying hardship] setback, is you also need to be able to provide receipts showing that you’re paying that [cost] instead of your property taxes.”
And that’s been a big hurdle for the people they counsel.
“Before you just had to prove there was something going on and you would be eligible. But now in addition to proving what happened, you also need to prove that you were paying towards that.”
"All applicants must document the hardship such as medical expenses, loss of income, death, etc.," says Mary Townley of MSHDA in an email. "With these qualified hardships, homeowners may be eligible to obtain assistance for delinquent property taxes and/or delinquent mortgage payments."
Katy Twining is with the state's Step Forward Michigan program, in collaboration with MSHDA. It's not that the application process has changed, she says, "but your financial counselors are also correct in the fact that on some cases we do need to ask for more information or confirmation of the out-of-pocket expenses.
"For example, we review the application package in its entirety and often the initial hardship expressed does not meet the Program’s financial hardship requirements, or doesn’t seem to correlate with the delinquency dated, or even possibly changed from one hardship to another. In these cases before we are able to determine the homeowner’s eligibility, we have to ask for additional documentation to support the approval decision. If they now tell us they paid $2,000 for critical household repairs or $300 for a medical procedure, we would ask for a copy of the receipt/cancelled check before we could proceed," she says in an email.
Editor's note: this post was updated with Townley's response, and to include Oberholtzer's work with UCHC. As we get more clarification about the eligibility requirements, we'll update this story.