A “hurricane without water” and a “looming disaster” — those are just two of the phrases that have been used to describe the unprecedented foreclosure crisis facing Detroit this year.
But this time, it’s not about banks and mortgages. It’s about unpaid property taxes, and efforts to patch up a system everyone admits had been broken for years.
“I never, ever thought I’d be in a predicament like this”
On a gray, frigid February day, hundreds of people jammed into a big, windowless conference room at Detroit’s Cobo Center.
Each was assigned a number. Some waited for hours to hear that number called, so they could line up and start another assembly-line process of talking with bureaucrats, non-profit groups, and doing paperwork meant to put them on payment plans to avoid foreclosure.
These people represented just a tiny slice of the tens of thousands of people in Wayne County facing possible foreclosure this year due to back property taxes.
Nearly 75,000 properties received foreclosure notices late last year. More than 80% of those properties are in Detroit.
“It’s just hard right now,” said Jermaine Lockett. When we spoke, he’d been waiting over four hours to hear his number called. “I never ever thought I’d be in a predicament like this.”
Lockett has a hard time making ends meet right now because he lost his job — after he got hit by a truck while on the job, as a driver for a private transportation service.
The accident happened not too long after Lockett had purchased a house on Detroit’s east side. He had been living in the suburbs, but decided this house — even though it needed some pretty substantial work — was too good to pass up.
“It’s a three bedroom, with a fireplace, basement, and a brick garage,” said Lockett, showing off pictures on his cell phone. “I mean, it’s a nice area, a nice neighborhood, nice neighbors … I couldn’t get a better place.”
What Lockett didn’t realize when he bought the house was that the prior owners owed property taxes — and he was on the hook for them. Lockett doesn’t think that’s fair, but he hopes to cut a deal to reduce the debt and get on a payment plan.
As Lockett waits to hear his number called, he’s hopeful but nervous . Hopeful that he will get a break, but nervous that he might find himself disqualified by some kind of technicality.
“I’m hoping that when we get to the golden doors on the other side, things will be different,” Lockett said. “But right now, it’s kind of iffy.”
More help available — but too many cracks to fall through?
State lawmakers, at the urging of Wayne County local officials, made some recent moves to deal specifically with the situation in Wayne County this year.
County treasurers can reduce the amount of interest owed. For many people that is a substantial relief, because the interest rate on delinquent property taxes had been a state-mandated 18% per year.
And treasurers can now cap the taxes owed at just a fraction of a home’s assessed value.
According to the latest Wayne County data, at least 7,000 occupied households facing foreclosures have gotten on payment plans — and the county treasurer hopes as many as half of them will get help before all is said and done.
But some advocates warn that even once people are in the system, there are still lots of potential pitfalls and complications.
“I’m not trying to be negative, but I do think inevitably a large number of people will fall through the cracks,” says Michelle Oberholtzer, founder of the Tricycle Collective.
Oberholtzer started that group last year, after hearing about the plight of many families — especially those with young children — facing tax foreclosure in Detroit.
She says the new rules will undoubtedly help a lot of people, but thinks more drastic action is needed.
Oberholtzer encourages people to get help through Wayne County and the usual non-profit channels. But she also warns them not to accept payment plans they can’t afford. “Because I have seen, anecdotally, people who pay thousands of dollars to get on a payment plan out of desperation, and they fail to keep up with it,” she says.
And Oberholtzer thinks that even with the recent reforms, the larger system needs a major overhaul — and many individual property owners, especially those in really tough circumstances, need the kind of significant debt relief Detroit itself got through the bankruptcy process.
Duggan: Time to mix help with tough love
It’s no secret that in Detroit, many people are over-charged based on highly inflated property assessments, or debts that are simply miscalculated. In fact, Detroit Mayor Mike Duggan is spearheading a complete reassessment of all city properties based on that widely-accepted reality.
But Duggan — who lobbied Lansing heavily for some of the relief measures now in place — says post-bankruptcy Detroit also needs to collect all the revenues it can right now to stay on track.
He admits it’s difficult to hear the “human stories” behind this foreclosure crisis, but says it’s time to mix reasonable support measures with some tough love.
“It would be easier to tell them what they want to hear,” Duggan told the Detroit City Council. “Instead, we’ve set up a process with the new law.”
It will be months or even years before we know exactly how that process plays out for Jermaine Lockett, and thousands of others like him.
But even with all the help available, a record number of properties will likely end up on the auction block this fall. And that could be one of the biggest challenges the city has yet to deal with, as it tries to turn the page on its bad debts once and for all.
