In Wayne County, tens of thousands of properties go into tax foreclosure every year.
Most are in Detroit. But it happens in the suburbs too.
Some suburban communities have started buying those tax-foreclosed homes, and turning them over to developers.
But many of the affected homeowners didn’t know that until it was too late to save their homes.
Some tried to fight anyway. But this month, that fight came to a bitter end.
“I still have no idea how this could happen.”
Brandy Gutierrez is exhausted. She’s at work, hunched over a desk in the storefront office of a Dearborn roofing company.
Right now she’s the only one here, if you don’t count the office kitten and bird.
“Right over there on that couch is where I will be sleeping,” says Gutierrez, “because I don’t have a place to stay.”
Gutierrez was just evicted from the home she owned in Lincoln Park, a tiny city just south of Detroit.
Even though she knew it was coming, the way it happened came as a shock.
Gutierrez says she came home from work to find her house locked, and a 24-hour eviction notice pasted on the door.
What remained of her possessions was broken and scattered on her front lawn. Everything else was gone.
“My TVs, my tools, my jewelry, my cash at the house; all of that was gone,” she said.
“It’s just, it’s shocking, disgusting, and I’m still mostly clueless on what’s going on, to be honest. I still have no idea how this could happen.”
The story starts a few years ago.
Gutierrez and her husband moved from Detroit to Lincoln Park in 2009, paying cash for a two-story brick colonial in a nice, quiet neighborhood.
But when they split up in 2013, Gutierrez says she discovered her husband hadn’t been paying city property taxes. By that point, it was Wayne County’s problem to collect them.
So Gutierrez went down to the Wayne County Treasurer’s 0ffice and got on a payment plan. She says that over the course of about eight months, she gave them $8,000.
But when the summer of 2015 rolled around, Gutierrez knew she couldn’t make payments for a couple months.
So she told Wayne County. And she says they told her: that’s ok. So long as you catch up by the end of the year, you’re fine.
But in September, Gutierrez got an eviction notice from a group she’d never heard of, called JSR Funding. And that’s how she found out they had foreclosed on her house.
“It was unbelievable,” she said. “I was like, ‘You said I had until December. And you sold it in June. And you didn’t even tell me you sold my house.’”
And the buyer? The city of Lincoln Park.
Cities turn to right of first refusal
The city exercised what’s called the “right of first refusal” in the tax foreclosure process. It allows municipalities to buy back foreclosed properties before the county puts them up for sale in a massive online auction.
“We’ve had a lot of people and companies purchase the [foreclosed] properties, and they don’t reinvest back in them. And for the most part they become rentals that we have to struggle with to try to bring up to the code the city requires,” says Lincoln Park City Manager Matthew Coppler.
Coppler wasn’t in charge when Gutierrez lost her home last year. In fact, Lincoln Park had an emergency manager, Brad Coulter, at the time.
Coulter bought dozens of homes through right of first refusal. Then he quickly turned them over to a local developer—JSR Funding.
(Jim Budziak, an agent for JSR, declined comment for this story. His attorney could not be reached for comment).
The idea was to avoid the property flippers and absentee landlords who so often pick up cheap properties at auction.
Lincoln Park isn’t the only city doing this. In fact, it modeled its program off similar ones in other Wayne County cities, including Garden City, Redford Township, and Wayne.
Coppler says JSR is required to invest in the properties before selling them. And so far, they’re selling for prices that pull up local property values.
“It is working,” said Coppler. “We’re getting the investment, we’re getting new ownership property, people living in those things, which will help our neighborhoods.”
Lincoln Park exercised right of first refusal again this year. This time, Coppler says someone did visit the homeowners prior to the county actually foreclosing. And about half of them managed to avoid foreclosure at the last minute.
But Coppler notes they have no obligation to do that. And he says there’s no reason to think tax-delinquent homeowners could buy back their properties, either.
“If they didn’t have the wherewithal to take the action to save the property at that point in time, why would you believe that they can do it afterwards?” he asked.
A conspiracy to seize homes?
But Timothy Padden insists he could have.
“If I would’ve got a notice on my door from Lincoln Park saying ‘You got two weeks to pay this much or we’re buying your house,’ no doubt I could have came up with it, and I wouldn’t be sitting here right now,” Padden says.
Padden is another Lincoln Park homeowner who’s now been evicted by JSR.
Like Gutierrez, Padden and his wife owned their home mortgage-free. But then they fell behind on property taxes.
So Padden got on a payment plan with Wayne County. And he says that worked fine for a couple of years.
Last year, there was some kind of hitch renewing the paperwork. But Padden says the treasurer’s office told him not to worry--even after he spotted his home on the county’s website, listed as a pending foreclosure.
“I said ‘I’ll bring what money I have right now,’” Padden said. “They’re like, ‘No, wait until August 3rd, come down, bring 10% of what you owe, we’ll put you on a new plan.”
So that’s what he did. And then: “Got up to the window: ’Sorry, your house was sold three days ago. Or it was bought by the city three days ago.’”
Padden and Gutierrez have remarkably similar stories. And some think that’s not a coincidence.
20 Wayne County homeowners all swore in affidavits to the same basic chain of events: That they were on tax-repayment plans with Wayne County; that the treasurer’s office assured them they had more time to make payments; and that they never received any kind of foreclosure notice (you can read those affidavits here).
Padden and Gutierrez are both plaintiffs in a federal lawsuit that accuses Wayne County, several cities that have used right of first refusal, and two developers (JSR Funding/Global Realty and HP SNAP Investment/Enterprising Real Estate) of plotting to illegally seize their homes.
It sounds a little far-fetched, and Padden admits he’s not even sure exactly what happened here. But he says something was just not right.
“I believed I was doing the right thing,” he said. “Filled out the same paperwork the same way. I just don’t understand why Wayne County would tell you to wait if somebody’s willing to come down there and pay them money.”
All the defendants named in the federal lawsuit deny any wrongdoing.
But the Wayne County Treasurer’s office insists these foreclosures were done by the book—even if they admit some homeowners may not have received foreclosure notices sent out by mail.
(Wayne County Treasurer Eric Sabree declined an interview for this story, citing pending litigation. Now-retired Wayne County Treasurer Raymond Wojtowicz was in office until late 2015. Former Deputy Treasurer David Szymanski, who is named in the lawsuit, is now with the city of Detroit).
State law requires that homeowners facing foreclosure receive notice by several means, included certified mail.
By matching U.S. Postal Service tracking numbers, the federal lawsuit revealed that many of the notices the Wayne County Treasurer’s office sent out by certified mail were still listed as “in transit” by the post office, or had been mailed elsewhere. A Detroit News sampling of other foreclosure notices sent by certified mail found that more than half were never confirmed as delivered.
Padden and some other plaintiffs fought their evictions in Wayne County Circuit Court, too. They managed to delay them for months, but finally lost the cases this month.
Padden says it was a “long fight—but it’s pretty much over.”
“At this point I don’t want my house back,” he said. “Compensation would be nice.”
The homeowners’ federal case was dismissed over jurisdiction issues; that decision is being appealed, and the two sides are starting mediation.
Trying to start over
In the meantime, Padden’s family is split up while they look for a new place. Friends have set up a Go Fund Me page to help with relocation expenses.
Brandy Gutierrez has also turned to online fundraising for help. But first, she’s looking to get her stuff back. On her lawyer’s advice, she went to file a police report at the Lincoln Park police station.
“I’m trying to make a police report for all of the items that were took out of my house by a development company,” Gutierrez told the officer sitting behind the glass.
And then she has to explain the whole thing all over again. The officer listens, but seems confused. Gutierrez starts to get a little frustrated.
“That’s what I’m telling you,” she said. “They put a 24-hour notice on the door, Friday. I got off work and my stuff was out.”
“I understand that,” the officer replied. “But what I’m asking you is, did the court give them the 24-hour notice for eviction? Was it the court officers who put you out?”
“I have no idea,” Gutierrez said wearily. “That’s why I’m here.”
The officer examined Gutierrez’s writ of eviction, noting the court’s seal. He told her this is probably not a criminal matter, and she should take it to the courthouse next door.
She does—and comes back out in about two minutes.
“I go in the courthouse, and they know exactly who I am,” Gutierrez said. “She tells me they do not have to give me 24 hours, and don’t you have an attorney? Call him.”
Gutierrez seems resigned about it, though. This, she says, is pretty much just what she’s come to expect.