Table of Contents

Introduction and Overview

1

Brief History of Tax Foreclosure: Prior to 2010

5

Disinvestment Indicators and Deteriorating Housing Conditions

8
Purchasers at the Auctions: Residents, Non-profits, Speculators,
Profiteers and Big Investors
10
Flippers
12
Speculators
13

2010-2013 Tax Foreclosures Skyrocket

15

Thousands Lose Their Homes and Non-profits are Swamped with Work
17
A Quick Look at the 10 Largest Buyers in the 2013 Auction
17
Two Examples of the Tax Foreclosure Abuse
18

2014 and Beyond The Tragedy Deepens

19

Step Forward Michigan - Its Limits and Effectiveness

23
Tax Repayment Plans, Reassessment and Exemptions
23
Two Year Plan or Citywide Property Tax Reassessment - Too Little Too
Late
New Squatters Law (8), Restricts Homeowners and Tenants Rights to
Resist Unjust Evictions or Foreclosures

Detroit Land Bank Authority and Gentrification

24

The Context of Unemployment, Poverty and Rising Housing Costs

26

Foreclosure, Evictions and Homelessness

31

Some Necessary Actions to Protect Human Rights to Safe, Secure,

Adequate, Affordable Housing in the Face of the Massive Detroit Tax
Foreclosure Crisis
32
References
35

Appendix A
36

Introduction and Overview

The following report attempts to document the massive tax foreclosure epidemic that
continues to progressively undermine low and middle income Detroit residents ability to
maintain adequate and affordable housing. This has resulted in wholesale seizure of
homes and their transfer often to large investors, the City of Detroit, and now, the Detroit
Land Bank Authority.
This transfer of wealth from a majority poor and working class Afro-American population
to private investors and government entities is an inverse form of the widespread racist
and predatory lending practices before the 2008 housing market collapse. Rather than
giving out easy money under onerous made to fail terms, the City and County
demand onerous taxes on property, whose market value has dropped drastically, and
represent an already major loss to the homeowners. Compound this with eroded fixed
income or loss of income also growing out of 2008 financial collapse, and an 18%
compounded penalty in late fees. The result is a progressive inability of low and middle
income homeowners to pay these usurious taxes. The initial housing and financial crisis
resulted in thousands of families homes lost to the banks and mortgage companies. Now
low and middle income homeowners property is being transferred to private investors or
the City and County. Just as the Banks and Mortgage companies pled, we are only trying
to recoup what is owed, so says the City and County in this devastating reenactment of
2

the earlier tragedy. Moreover, as with the Bank bailout, those with the greatest wealth
are getting millions in property and other tax breaks, while others with little, lose their
homes or housing.
The impact of these crises already have devastated neighborhoods across the city,
driven thousands from their homes, resulted in increasingly deteriorating housing
conditions for homeowners and renters, overcrowding as families absorb persons evicted,
an increase of the homeless population, and spawned a growing squatter population
living often in unhealthy and/or unsafe conditions.
Right at this moment about 10,000 owner-occupant or occupants (renter or former
owners) and their families homes are on the auction block or part of a blight bundle
(7610 Occupied Structures and 5358 Unknown (1)). On top of this a surveyed, 6,025
occupied structures are part of the publically owned properties (2), making the City
a very large and inadvertent landlord (3).This occurred after the County failed to sell the
home at auction and occupant-owners, or renters remained after foreclosure. Looming
on the horizon is the next round of forecloses, an estimated 118,000 properties (3).
The former Mayors Detroit Blight Removal Task Force explained a portion of
the problem, albeit minus the human impact, and with timid recommendations
(in the report), where decisive action is needed:
The confluence of the 2008 financial crisis, some of the highest property taxes in the
country, and Detroits descent into bankruptcy have further eroded payment of taxes. At
this moment, more than 76,000 properties across Detroit are subject to tax foreclosure
because the property owners have not paid taxes in more than three years. More than
42,000 are tax distressed and on the way to foreclosure, with unpaid taxes for at least
one year (but not yet three years delinquent). Combined, these 118,000 properties owe
more than $500 million in unpaid property taxes. These properties are in addition to the
more than 84,000 Detroit properties to which various public entities already hold title as
a result of tax foreclosure.
Without intervention, county tax foreclosure will continue to sweep across the
city until the inventory of foreclosable properties is exhausted. Speculators
will buy cheap property and allow it to deteriorate. Despairing and frustrated
3

residents will continue to walk away from their tax-foreclosed homes and from
Detroit. Unscrupulous landlords will evict tenants and scrap their own
properties. The county and city will continue to lose incredible amounts of tax
revenue. The city will continue to inherit liabilities by the thousands. (emphasis
added, (3))
Only decisive action, jointly by City, County, State, Federal and Community organizations
can hope to block the snowballing and devastating impact of these foreclosures on all
Detroit residents. The governmental parties are notoriously slow to act, given the
powerful interests involved, but someone must cry out Stop this Madness.
Immediate suspension of both the present auction of owner-occupied and
occupied homes, involving about 10,000 homes, and the next wave of
owner-occupied foreclosures is urgent! This would signal a decisive good will
on the City's and Countys part. First, to not increase the injustices already
incurred, and second, to begin the task of correcting the failed property tax
system and process, in earnest. This would be a first step to seriously reach
out and open communication with the tax distressed homeowners. To work
toward achieving realistic affordable plans for tax payment, and where
possible restore owner-occupants to their homes in City owned houses. And
it will allow time for deep evaluation and action at all levels.

The Limited Amount of Direct Data on the Human Toll of the Tax Foreclosure
Crisis
One of the major problems facing any analysis of the tax foreclosure crisis is the dearth
of information related to its causes: the specific effects on the people and families
directly involved; the neighborhoods they lived in; and the human rights implications.
There are two major reports of significance for investigating these issues. One report was
commissioned by the Wayne County Treasurer and generated in April 2011. From
Revenue to Reuse: Managing Tax-Reverted Properties in Detroit, gives a brief history and
overview of the issue. Unfortunately, it is not aimed directly at investigating the origins of
the crisis, but toward managing outcomes. Specifically, it examines how to generate both
better capital return to the Wayne County Treasury and productive land use. The second
4

report, was generated from the Detroit Mayors office by his Detroit Blight Removal Task
Force in May 2014. Its main focus was on blight, such as, abandoned housing and
industrial sites, and plans for its removal. These are largely outcomes of industrial
disinvestment over many decades, mortgage foreclosures, and a more recent result of
tax foreclosures. Chapter seven of the report, How Do We Get Ahead of Future Blight?
does hone in on the failure of the property tax process, including foreclosures and
auctions, leading to negative outcomes for the city, communities and individuals. It also
has some suggestions for action.
This year, Loveland (Why Dont We Own This?) and the Motor City Mapping project have
begun the first surveys to actually distinguish properties that have a structures and are
occupied. Previously estimates of the occupancy of foreclosed properties came from
the numbers attending Show cause Hearings by the County, the case load of groups
such as United Community Housing Coalition and theirs and other community groups
door to door work. Unfortunately, this occupied designation is dimensionless . Are
they a home owner or renter, elderly, sick, unemployed, handicapped? What portion of
their income goes to housing? Have they sought assistance and do they qualify for an
exemption? Do they know of possible resources and are they eligible? These questions
may come up at places, such as, the Show Cause hearings (already a very late stage of
the process), or in an application for Step Forward Michigan assistance, but only some
results are recorded and as yet have not been available or fully analyzed.
This element of introducing a human side to the problem, is part of what is lacking,
particularly by the County, City, and State. While individual County Commissioners, or
City Council Persons may work with individual constituents with tax related issues, when
approached no one in political power has been interested in exposing the massive
tangles of bureaucracy and hardship faced by thousands of families stuck in this process,
or tossed by the wayside.

Brief History of Tax Foreclosure: Prior to

2010

The relation of the financial crisis, unemployment, mortgage pressures and

foreclosures impacted the steep rise in properties entering the auction in 2008-

2010. As of the 2010 census, approximately 60%

had a housing-related loan or mortgage.2

of the homeowners in Detroit

This graph below shows the diminishing percentage of sales as the number of houses
entering the auction increases.

1 This figure was calculated by adding the census data totals from Map of Housing Units
Occupied by Owner, With a Mortgage or Loan (6) and Map of Housing Units Owned Free
and Clear (7), then determining percentage total.
2 The following three graphs are From Revenue to Reuse: Managing Tax-Reverted
Properties in Detroit. (4)
7

This pattern of fewer sales during the first auction, where the minimum bid is that of
taxes owed, continues on through 2014

Disinvestment Indicators and Deteriorating Housing Conditions

8

The study of auction outcomes early on indicated a number of disinvestment features

that exacerbated the effects of the growing mortgage crisis and helped lead
destabilization of neighborhoods and loss of property values. Vacant Open and
Dangerous houses and buildings, failure to maintain rental properties with hope to flip
them, result in safety and habitability issues for residents and neighbors. The problems
only multiplied with the growing impact of the auctions.
As pointed out in From Revenue to Reuse: Managing Tax-Reverted Properties in Detroit:
As Figure 5.8 indicates, many single-family houses and duplexes suffer from poor
maintenance or need to be demolished at the time of the auction. The conditions
deteriorate rapidly after purchase at auction.
Many residential structures bought at auction show signs of further disinvestment after
sale at auction. In many cases, occupied houses become vacant houses, and vacant
houses become vacant lots. Demolition is the only significant investment in many
properties, for which the City of Detroit bears the cost in more than two-thirds of the
cases.

Housing ending up back in foreclosure tend to be in worse shape and are more likely to
end up demolished.(Fig. 5-16)

Another indicator of disinvestment is the resale rate. Of the homes resold after auction,
69 percent were tax delinquent as of 2011, the Treasurers Office foreclosed on 28
percent for unpaid taxes, and 14 percent are now city-owned.

10

Purchasers at the Auctions: Residents, Non-profits, Speculators, Profiteers and

Big Investors

11

The use of the auctions by big bulk buyers has rapidly expanded as the number of
auction properties has increased.

The treasurers report issued in 2011 points to a spectrum among the large bulk
investors. There are those that pay their property taxes and invest in their property, and
those that make no investment, payment of taxes, and hold them for as long as they
continue to generate a rental profit off the house until the property is uninhabitable.
These equity extractors receive returns without investing in the preservation of
property. Five of the 11 largest buyers are included in this category (4).
A 2002 Metro Times expose of Ernest Karr showed he neglects his properties and fails to
pay property taxes. These properties are maintained in very poor condition and he seeks
out extremely low income tenants. Figure 6.9 is an example of the condition of one of
those properties. Karr purchased at least 201 properties in the 2010 auction primarily on
Detroits west side that the Treasurers Office regarded as occupied (4).

12

Flippers
These are considered the largest subtype of investors. They resell the
property quickly with little or no investment. These properties are often sold
to out of town or foreign buyers over the Internet. Sometimes a property is
turned over in quick land contract deals and dumped on unsuspecting buyers
with additional hidden costs, such as property taxes.

13

A
Speculators
The above mentioned report (4) categorizes five of the 11 largest bulk buyers as
speculators. They also tend to minimize their investment, as example Detroits five
largest speculators received 472 City of Detroit blight violations and only attended 8% of
the subsequent hearings. In contrast, they scheduled 643 Michigan Tax Tribunal
Hearings-in hopes of reducing their property taxes- attended nearly by all of them. Two
of the speculators purchasing models are called profiteering obstruction and
preventative obstruction. On the one hand land is purchased that is needed for some
development and sold for great profit. In the other case land is purchased to sit on and
obstruct a development. Figure 6.14 is an example of speculator Michael Kellys
profiteering obstruction. In one case, the piece of property purchased for $500 was
sold to the City of Detroit for $30,000.

14

Unfortunately these exposures of flippers, bulk buyers, and speculators only

sometimes allude to the harm to renters who live in their properties or nearby
residents, but never the hardships faced by families whose homes were seized.

15

2010-2013 Tax Foreclosures Skyrocket

16

17

Thousands Lose Their Homes and Non-profits are Swamped with Work
The rise in the tax foreclosures during the 2010-2013 period began to swamped nonprofits, such as United Community Housing Coalition (UCHC), with requests for help.
Hundreds daily had attended Show Cause Meetings at Cobo and other sites hoping to
make arrangements early in the year. Door to door work found many more in the
community still unaware of the danger to their homes ownership, and renters unaware
of their landloads tax problems. The UCHC had estimated the number of owner-occupied
homes in auction in 2013 at about 9000.
The 2013 dip in the above graph of foreclosed properties was most likely related to the
January 2013 introduction of tax assistance by Step Forward Michigans Loan Rescue
program. At the time it was not widely known about, so the Treasurer agreed to pull from
auction anyone applying for the program, as the process was lengthy. As the auction
deadline approached this included about 1700 homeowners.

A quick look at the 10 largest buyers in the 2013 auction (10)

The orgy of profit taking at the expense of low and middle income families
unable get assistance with their tax problems continues. By the auctions close
late last month, investors scooped up two-thirds of the roughly 15,000 available
properties, many of which sold for the minimum $500 bid. (10)

1. Wendy Briggs, 428 properties, $379,000 - A Michigan real estate agent, Briggs paid
between $500 and $18,000 for houses all over Detroit. Of the 428 properties, more than
18

400 cost just $500. Briggs typically resells each house for $5,000 to $8,000, according to
real estate listings. In 2012, Briggs bought 50 properties for $33,160.
2. Ee Meng Peh, 412 properties, $325,000 - An investor of distressed properties
nationwide, Ee Meng Peh paid between $500 and $1,600 for houses on the west and east
sides. He does business using a variety of corporations, which include Michigan Assets
LLC.
3. Dennis Elliot, 363 properties, $232,600 - Paid between $500 and $1,000 for distressed
homes across Detroit. Not much is known about him yet. He may be an agent for another
developer.
4. Udi Perez, 235 properties, $195,000 - Representative of Nevada-based Direct
Properties LLC., which buys homes in bulk and often sells them without ever seeing
them. We cant rehab all of them! the companys website reads. Therere so many of
them that its impossible for us to rehab each and every one of the hundreds of
properties that we have. Houses ranged from $500 to $3,500.
5. Great Lakes Property and Investments, 203 properties, $602,700 - Detroit-based
company that buys up houses and rents them out for between $500 and $1,000 a month.
The company paid between $500 and $37,000 for Detroit properties.
6. Frank Ivezaj, 171 properties, $188,000 - Paid between $500 and $11,000 for each
house. Not much is known about him yet.
7. Stephen Hagerman, 171 properties, $758,1000 -Paid between $500 and $18,000 for
each house. Details about him are still unclear.
8. Nate Heaps, 146 properties, $104,300 - A 30-something investor from American Fork,
Utah. He bought 290 properties at last years auction for $190,000.
9. Fluturie Loga, 138 properties, $218,000- Spent between $500 and $4,700.
10. David Pakhchanian, 113 properties, $110,900 -Pakhchanian is managing director of
Detroit Progress LLC, a real estate venture that sells distressed homes, generally for
between $2,000 and $7,000. Pakhchanian spent between $500 and $4,100 on each
home in the auction.
Two Examples of Tax Foreclosure Abuse

Weve raised a number of points relative to the growth and expansion of tax
foreclosures, and questions of equity. Here we are two examples of people,
caught up in the process.

Urealdene Henderson had lived at her home on Stoepel in Detroit for 36 years. She
worked at Great Lakes Steel/US Steel for 34 of those years as a member of United
19

Steelworkers Local 1299. In 2006, Ms. Henderson was diagnosed with cancer and was off
work for three years for treatment. She returned to work in 2009, only to be laid off. This
is when she got behind on her property taxes. She now is retired and on disability from
US Steel.

Ms. Henderson had paid off the mortgage on her house, but she fell behind on
taxes. She had a deal with the Wayne County Treasurer to pay $2100 to prevent tax
foreclosure and to pay that amount by October 15, 2012. Through no fault of Ms.
Henderson, her payment was not made until October 18, 2012, but the Treasurer sold Ms.
Hendersons home at tax auction to Metro Property Management for $7000.

After the auction Ms. Henderson was repeatedly harassed by persons working for
Metro. One Notice posted on her door said: This property is illegally occupied by a
SQUATTER. The Detroit Police Department has been notified.

The LLC involved, Metro Properties, demanded $42,000 for the house initially.

Ms. Henderson was finally able to purchase back her home for $10,000 after a
demonstration and campaign to demand justice by Detroit Eviction Defense and her
United Steelworkers Local 1299.

20

Mr. and Mrs. Armstrong paid the property taxes they owed on their Detroit home but
then were shocked to discover that the County had sold their home to a management
company, which then took them to court to evict them.

They had paid their overdue tax bill to the City, who had sent them a notice. Detroit kept
the money for the coming tax bill and failed to inform them the matter was in the
Countys hands or to pass the money on to the County. They assumed things where ok
with their taxes. After the County failed to provide proper notice of the coming auction,
the next thing they knew a Realtor was having them evicted. The Armstrongs sued the
City and County, but the case was dismissed, but has been appealed to a higher court.
They were removed from their long time home unjustly.

21

2014 and Beyond The Tragedy

Deepens

October 2014 Auction - Dk. Green are Auctioned properties - Red are Blight Bundle

22

As pointed out earlier the tax foreclosure crisis appears only to be worsening.
The maps above and below bear this out visually. The first, above, shows the location of
the properties in the present auction, and the pie charts explain the numbers sold in the
first auction, in the blight bundle, those known to be occupied or unknown, and other
information. While occupied structures are not identified in the map, the pie chart
identifies the results of surveys and what is known. It is clear from this that thousands of
families are facing immediate loss of their homes. While some may join the 4,500 to
23

6000 persons (2) who are de facto tenants of the City, others may be evicted by the
new owners.
The second map, shows the locations of the 100,000 plus property subject to
foreclosure. The next wave of auction candidates. Included in this will be many more
thousands of homeowners and tenants facing hardship, stress, and despair.
October 2014 Tax Distressed - Yellow Tax Distressed - Orange Subject to
Foreclosure

24

Tax Repayment Plans, Reassessment and Exemptions

Investigative journalist Steve Neavling wrote (14): We have decided to foreclose
on everything, Chief Deputy Treasurer David Szymanski told me. In 2008 and
2009, finances were so tight that people had to decide between eating and
paying taxes in Detroit. But, Szymanski said, The economy has improved
25

(emphasis added). Szymanski was referring to the coming 80,000 plus foreclosures they
are processing for 2015. For the majority of low and middle income Detroit residents the
recovery has still passed them by. Detroits official unemployment is still among the
highest in the nation, and is closer to 20% (among adults) when including the number of
people who have dropped out of the labor market or are seeking only part time
employment.
In fact the choice of eating, paying taxes or having ones water shut off is a
very real situation for thousands who were forced to agree to the Countys
onerous Stipulated Payment Agreements or have their home foreclosed and
placed in auction. Initial payments start at 10%, 20% or 30% of the tax year causing
the person to go into foreclosure depending on if the agreement is signed in January,
February, or March respectively.
The Countys Distressed Owner Occupant Extension (D.O.O.E.) extends the payments
until December 16th of the year the foreclosure and auction would have occurred in.
Neither plan takes into account any consideration of housing affordability, and both
continue to accrue an 18% interest rate for the unpaid portion of the bill. It is not unusual
for fixed income homeowners to be expected to pay nearly their whole income, and still
have to pay again the succeeding year all the while the 18% continues to accumulate.
The City Tax Assessor is responsible for property tax assessment requests to the
Michigan Tax Tribunal. Unlike some counties in Michigan theres a two week period in
February to apply for reassessment. This short window, a lack of awareness, and the
very slow processing time has discouraged many from correcting seriously skewed
property tax assessments.
The City also handles exemptions for sufficiently low income homeowners, a bureaucratic
process that old and young alike are expected to do annually. Many homeowners were
unaware of this exemption when they first fell on hard times, end up owing back taxes
they would have been exempt from paying. No provision is made for these often elderly
homeowners to verify prior eligibility and wipeout the debt driving them into foreclosure.
Step Forward Michigan - Its Limits and Effectiveness
Step Forward Michigan did not become available as a means to assist some tax
distressed residents until January 2013. This was at the urging in the Wayne County
Treasurer and was an agreement between Federal government and State. It was
incorporated into the Loan Rescue program of Step Forward Michigan.
The program is required to issue a quarterly report to summarize certain aspects of its
work. Unfortunately being a portion of the Loan Rescue program, its statistics are
merged in with those persons that may be seeking assistance related to their mortgage
only. Statistics on the Loan Rescue program show that over half of those initially
applying for help are denied (12). Many do not make the strict guidelines of the
program, such as, it must be the homeowner who has the qualifying involuntary
hardship (11). Not just a family member or other bread winner in the house? Median
26

Length of Time from Initial Request to Assistance Granted for the most recent quarter
was 292 days, for the life of the program and it was 119 days (12).
The total cap on Hardest Hit Funds (HHF) for Michigan is $498,605,738.00 (11). The
specific amount allocated to the Loan Rescue program is about $137 million
(excluding administrative costs). The Assistance Provided to Date is $ 112,632,524.17 (12),
as of the end of the second quarter of 2014. The agreement between the State of
Michigan and the Federal government on use of Hardest Hit Funds has been amended 9
times since its initial mandate in 2010. As example the use of funds for back tax
assistance was an agreed to addition, as was the more recent Blight Elimination
Program. In the ninth amendment a cap is cited as $154,500,000.00 for the Portion of
Program Participation Cap Representing Original HHF Funds. It is believed the Loan
Rescue program is a part of this. In either case the end of this tax relief
assistance, despite its unavailability to many deserving homeowners, will only
increase the number of homeowners and families facing loss of their homes.
Two Year Plan or Citywide Property Tax Reassessment - Too Little Too Late
Most the parties involved, agree that Detroit property taxes are way too high (among the
highest in nation). In Detroit the drop in property values after the housing market
collapse, massive foreclosures, and an increased number of abandoned houses
outstripped the rest of Michigan and the country. The loss of value hit low and middle
income homeowners severely. This blow was compounded by property tax assessments
that reflected closer to 2 to 5 times the present market value of the homes. While
property taxes are impacted by various local mileages, the State Equalized Value
(S.E.V) is a major component of property tax assessment.
One of the major problems with the Citywide Property Tax Reassessment plan, assuming
it reflects a fair readjustment, is that it will only effect taxes going forward. It is the years
of excessive property taxes assessment after the market collapse that resulted in many
low and middle income homeowners falling behind due to other economic factors and the
pushing of housing costs to be unaffordable. When the property tax is delinquent greater
than a year the County charges of interest go from 12% to 18%. This accumulation of
debt is what is driving the massive numbers of properties in foreclosure or subject to
foreclosure.
In the face of a County policy recently asserted by Chief Deputy
Treasurer David Szymanski that, We have decided to foreclose on everything
(14), waiting on the two year plan of citywide property tax assessment is too
little too late. Szymanskis further comment, If someone cant pay their taxes,
they really shouldnt own a home, (14) not only ignores the unjust level of
taxation, but is oblivious to the struggle of low and middle income
homeowners to keep their homes during continued hard times. Even if their
circumstance has improved, it is the catch up that is hard.
The City and County should read their own commissioned evaluations about
how the massive increases in foreclosures provides only diminishing returns,
and in the long run hurts homeowners, their families, neighborhoods, the City
and County. Everyone except the profiteers. To reiterate the comments of
the Detroit Blight Removal Task Force Plan:
27

Without intervention, county tax foreclosure will continue to sweep across the
city until the inventory of foreclosable properties is exhausted. Speculators
will buy cheap property and allow it to deteriorate. Despairing and frustrated
residents will continue to walk away from their tax-foreclosed homes and from
Detroit. Unscrupulous landlords will evict tenants and scrap their own
properties. The county and city will continue to lose incredible amounts of tax
revenue. The city will continue to inherit liabilities by the thousands. (3)
New Squatters Law (8), Restricts Homeowners and Tenants Rights to Resist
Unjust Evictions or Foreclosures
An estimated 4000-6000 publically owned properties are occupied by former
homeowners, renters and others (2). While these individuals and families have largely
acted independently of each other this represents a spontaneous resistance to the wave
of unjust tax foreclosures, as well as, the need for affordable housing while a great pool
of unused housing rots.
In the face of this growing resistance, recently the state legislature passed three
Draconian laws that strengthens the hands of landlords, investors, the City and Detroit
Land bank authority against these so-called squatters. HB5069/PA 223, HB 5070/PA
224, and HB 5071/PA 225 were passed just as the new auction will bring more
foreclosures and homes under the City and Detroit Land Bank Authority control. Or into
the hands of investors or landlords.The laws took effect on September 24 2014.
Previously a landlord had to go to court to remove a tenant after the lease had expired.
Though these court proceedings were usually just a formality, and the 36 th District Court
in Detroit runs like assembly line justice, they can provide some venue to raise
grievances and legal issues. HB5069/PA 223 will allow landlord to use force (but not
including assault) and self-help when recovering possession of premises from a person
considered to be trespassing (squatting). (8) Using the other laws passed the other
laws they can have the person or persons arrested by the police. So due process is
eliminated for tenants whose lease has expired.
HB 5070/PA 224 criminalizes squatting. Squatting in a single family house or a duplex a
misdemeanor for the first offense, with a $5,000 maximum fine and 180 day maximum
sentence; and a felony for second and subsequent offenses, with a $10,000 maximum
fine and a 2 year maximum sentence. (8)
The last law, HB 5071/PA 225 identifies the felony for second and subsequent
squatting offenses as a class G felony with a 2 year maximum sentence.
In one case in early July, eight police officers were among those who showed up to get a
woman out of a home on the citys west side where the taxes hadnt been paid. She
avoided eviction, the newspaper said, by going inside to make a phone call and refusing
to leave. Authorities left to avoid a confrontation, but towed two vehicles authorities said
were illegally parked. Under the new law she would have been arrested rather than just
harassed.
Squatter horror stories in the press preceded passage of this law. All squatters are not
dope sellers, many are desperately poor. The vast majority of occupiers are in effect
28

resisting their unjust tax foreclosure, or just unable to afford rent or a house, so rather
than sleep in a car, on the street or a shelter live in an unused.
In the article mentioned earlier (9), another west side resident, Jason Buckens, said he
wants the Land Bank to work with occupants. His bungalow went into foreclosure last
year, he said, because the mortgage company never sent the city money he paid every
month for property taxes.
You are already trying to get people to stay in the city, said Buckens, who said he helps
maintain vacant lots in the area. You need to create a program so people can get the
houses. We are good for the neighborhood, and we deserve a chance to stay in the
houses.

The Detroit Land Bank Authority and Gentrification (15)

Mayor Duggans reconstitution of the Detroit Land Bank Authority was a bold move to
end the stagnation and inaction of the former Land Bank Authority. It already has
assumed control of the vast amount of city property. The question is will it be responsive
to community needs or support a Two Cities Policy One, Upper Income, the Other
Middle and Lower income to very Poor Separate and Unequal.
The auctions of the Land Bank Authority are smaller in scale. They had hoped to draw
more buyers willing to commit to the improvements needed to bring these properties up
to code and to live in the homes. The majority of sales in these auctions have gone to
investors, albeit the smaller scale of the auctions has allowed better control of equity
extractor types of investors. In part the failure to attract home residents is caused by
the reluctance of banks and mortgage companies to grant home loans in Detroit.
An added wrinkle to the Authority s plans may be some of the estimated 4,500 to
6,000 occupants living the homes purchased by the City, some were passed on to the
Authority. If they had been former homeowners forced into foreclosure, they are not
allowed to bid on their own homes, under present Authority policy. This fails to take into
account their specific circumstances, such as, whether housing affordability, unfair
taxation, other failures in the property tax and mortgage process, or economic hardships
resulted in their loss of the property to foreclosure . It codifies the prejudice that all homeowners
falling behind in their taxes are an undesirables class, whose opportunities should be restricted. Of course
this perspective is widespread among our political leadership and makes toss them and their families onto
the street easier to justify. This treatment also reinforces the Two Cities Policy.

His initiative in several communities to use nuisance laws to force home improvement
and or demolition of vacant or abandoned properties has had modest success. But to
apply this against homeowners struggling to contain rising housing costs should be
restrained. Former programs to help seniors weatherize or other make major repairs need
to be restored. One source of funding could be Step Forward Michigan. The use of these
funds to demolish homes is being done as a part of neighborhood stabilization. These
funds use to help struggling homeowners to pay for major repairs is clearly justified.
Unfortunately the above mentioned Two Cities Policy seems to be a major element in
the Citys Future Cities Plan. In the neighborhoods this is reflected in policies directed
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at stabilization of more affluent or tipping point neighborhoods, while many low and
middle income neighborhoods are effectively written off.
In the next five years over a dozen senior and supportive large apartment buildings in
the Mid and Downtown could convert to market rate apartments. This may force at least
1000 individuals to relocate: often with little notice or assistance. An example is Gilberts
new renovation the Albert, a former senior and low income building. Those tenants
were priced out of residency. This foreshadows the above mentioned trend.
The Citys tax policy granting major tax breaks to big land holders (15) such as Dan
Gilbert for buildings and Ilitch a new hockey stadium is more a center piece for building
Two Cities Policy, than a boon to our future. Big tax exempted projects have failed
repeatedly in Detroit and other cities in the past, costing the city more than they gain.
These projects highlight the tax inequities involved, when juxtaposed to the tax
foreclosures faced by low and middle income homeowners. It also reinforces the
suspicion that the tax foreclosure crisis, Detroit Land Grant Authority, and water shutoffs
are being used to cleanse the City of those living on the edge and are forced to
struggle to keep their homes, or just survive.

The Context of Unemployment, Poverty and

Rising Housing Costs

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Rising Housing costs, fixed and lower incomes and the threat of water-shutoff
or the addition of this bill to their property taxes, all have undermined or
destroyed the ability of many Detroit residents to maintain affordable housing.
The next few pages are taken from the Skillman foundation report, State of the
Detroit Child, 2012 Report. (5). They show the precarious circumstances faced
by a large portion of Detroits men, women and children.
As graphs and text on the next page indicate, housing affordability has declined in
Detroit over the last decade or more. Affordable housing is defined as spending less
than 30% of household annual income on housing costs (including taxes, insurance and
some utilities). In 2011 69.3% of renters lived in housing that was unaffordable.
Increased housing costs coupled with stagnant or decreasing wages resulted in over
half (52%) of the homeowners with a mortgage living in unaffordable housing. Even
for homeowners without a mortgage a significant portion (32%) suffered this fate. This
are priming conditions for todays present state of massive tax debt, thousands facing
auction, foreclosure or subject to foreclosure.
Unemployment in Detroit has consistently been twice the rate of

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Foreclosure, Evictions and Homelessness

There have been few studies on the relation of foreclosures, evictions, and homelessness.
Local advocates for the homeless have indicated surveys done among the homeless
show a portion of them landing in the streets, shelters, cars, abandoned houses or living
with friends and relatives soon after eviction or foreclosure. One study conducted in
Richmond, VA does confirm this and estimates 10% are homeless by this route.

How to characterize persons and families living in the 4500 to 6000 occupied publically
owned properties, as indicated by the Motor City mapping project survey isnt clear.
Many are perhaps former foreclosed homeowners who refuse to leave there home or be
homeless. Probably a portion of these residents and families may actually have been
renters. Often the former landlord continues to collect rent, pretending to still own the
property. So they would be unaware of their true standing. These folks status is
particularly precarious as the alleged landlord is scamming them and has no reason to
invest in upkeep of the property. Others are homeless trying to make a home

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Some Necessary Actions to Protect the

Human Right to Safe, Secure, Adequate,
Affordable Housing in the Face of the
Massive Detroit Tax Foreclosure Crisis

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The citys plans for tax reassessment will be coming, too little and too late. Community
organizations and non-profits have been swamped by the sheer numbers needing assistance.
The one federally funded program that has provided some help will be ending before it mandate
ends in 2017, unless action is taken.

1). The County must implement an immediate moratorium on tax evictions and foreclosures of
owner-occupied or occupied homes, withdraw these homes from the Auction, and any bundling
and sale of owner-occupied homes or occupied homes. This can be put in effect by joint
agreement of the City and County, just as their recent bundling package was agreed to mid
auction. Sale of these homes should be suspended until there is a complete revision of the
property tax process, tax assessment, reassessment of back taxes and fees as it applies to Wayne
County. Renters in homes up for tax foreclosure should get first option to buy the homes they live in at the
auction at a reasonable price.
2). The City should continue with a tax reassessment plan, that must be fair and equitable, but include
adjustments for at least the previous 5 years of taxes to account for the accumulated gross inequities faced
by the vast majority of tax payers. Immediately and in the future the city should allow year round
application for reassessment.
3). The county and city must take into account the prior eligibility of homeowners for hardship exemption
for years back taxes are owed. Due to lack of knowledge and bureaucracy involved thousands have failed to
claim this exemption.
4). County back tax payment plans must take into account housing affordability costs, such that, they
should not with other housing costs exceed 30% of household income.

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5). The state must revise PA 123 to reduce interests and fees to a reasonable amount, allow waiver of fees
by the county as needed to safeguard home ownership, and include other provisions to protect home owners
and renters.
6). At City, County and State levels the courts must enforce full due process for homeowners, the City and
County property tax, delinquency, forfeiture, foreclosure, auction, and eviction process must be transparent,
with increased notification, verification of notification, direct assistance of owners and renters to assure their
rights are protected, correction of errors by the city or county should be prompt, communication between
levels increased to avoid confusion and errors.
7). The City and County must revoke and stop the addition of water bills to property taxes.
8). The County must stop reversion (rapid seizure without the normal process) of owner-occupant homes,
due to failure by them or scam artists to pay property taxes the year they bought the home. They must
give these homeowners a reasonable payment plan that meets housing affordability guidelines.
9). The State must utilize all HHF funds available ($498,605,738), in the Step Forward Michigan program
and not suspend this program prior to its 2017 authorization date, without trying to exhaust these funds.
The Cap on the Loan Rescue program must be raised to continue to help the huge number of tax
distressed homeowners. The State must streamline and ease restrictions on Step Forward Michigan, to get
the money to distressed homeowners, including tax distressed homeowners. They must stop spending
money that was supposed to help homeowners (about $54 million in Detroit) to demolish properties owned
and neglected by banks, mortgage companies, or Fannie Mae; these entities should pay. A program should
be established with Federal approval where Step Forward Funds should be used to help homeowners keep
their residence up to code, safe and habitable.
10). The City and County must take legal action to make banks, mortgage companies and Fannie Mae,
Freddie Mac or HUD stop dumping properties on the cities and county -- and to recover the taxes and other
costs they refused to pay. They must take legal action to demand and seek compensation for failure to
provide fair and non-discriminatory lending by banks, mortgage companies to those seeking homeownership
in Detroit.
11). The Detroit Land Bank Authority must not discriminate against, but give preference in their auctions to
owner-occupied or occupied houses residents, taking into account there circumstances, such as, whether
housing affordability, unfair taxation, other failures in the property tax process resulted in their loss of the
property to foreclosure. Funding must be sought through HUD and other entities to provide homeless
families support for maintenance and upkeep of a portion of the Detroit Land Bank Authority houses in
good condition.
12). City and /or County tax incentives to promote desirable tenants or homeowners based on racial, social
or economic class, while effectively removing lower income residents is unfair and discriminatory. Subsidizing
wealthy property and land owners projects while seizing the homes of lower and middle income
homeowners is unfair, discriminatory, and generally counterproductive and must stop. We live in one City, its
future must include us all!

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13). Rescind all laws directed at limiting the due process of homeowners in foreclosure, tenants and socalled squatters. Decriminalize squatting, and work to restore legal status to those forced occupy a
home, owned by parties

References
1. Why Dont We Own This?,
https://whydontweownthis.com/2014/mi/wayne/detroit#11/42.3530/-83.0996.
2. Motor City Mapping,
https://www.motorcitymapping.org/#t=overview&s=detroit&f=public
3. Detroit Blight Removal Task Force, May 2014. Detroit Blight Removal Task Force Plan,
Every Neighborhood Has A Future And It Doesnt Include Blight. Inland Press
4. Catherine Coenen, etal. April 2011, From Revenue to Reuse: Managing Tax-Reverted
Properties in Detroit. University of Michigan, Ann Arbor.
5. The Skillman Foundation, 2012. State of the Detroit Child, 2012 Report. Data Driven
Detroit
6. Data Driven Detroit, Map of Housing Units Occupied by Owner, With a Mortgage or
Loan,
http://www.datadrivendetroit.org/web_ftp/Data_Mapping/Maps_8-712/Housing1/BG_HUMortgageLoan.pdf
7. Data Driven Detroit, Map of Housing Units Owned Free and Clear,
http://www.datadrivendetroit.org/web_ftp/Data_Mapping/Maps_8-712/Housing1/BG_PctHUOwnedFreeClear.pdf
8. Sarah Cox, Aug.18, 2014. There Are Some New Squatters Laws on the Books in
Michigan, Curbed Detroit http://detroit.curbed.com/archives/2014/08/there-are-somenew-squatters-laws-on-the-books-in-michigan.php
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9. CBS News, Occupied Detroit Land Bank Homes Pose Challenge

http://detroit.cbslocal.com/2014/07/23/occupied-detroit-land-bank-homes-posechallenge/
10. Steve Neavling, Nov. 5, 2013. Whos buying up cheap houses in Detroit? 10 leaders
at tax auction
http://motorcitymuckraker.com/2013/11/05/whos-buying-cheap-houses-detroit-10leaders-tax-auction/
11. Ninth Amendment to Commitment to Purchase Financial Instrument and HFA
Participation Agreement
http://www.treasury.gov/initiatives/financial-stability/TARPPrograms/housing/Documents/Redacted%20MI%209th%20Amendment%20to%20HPA.pdf
12. Michigan 2nd Quarter 2014 Performance Report (April-June)
http://www.michigan.gov/documents/mshda/HFA_MI_Q2201 and 4_470016_7.pdf

13. MSHDA Quarterly Perfomance Reports for Step Forward Michigan

http://www.michigan.gov/mshda/0,4641,7-141-45866_62889_47905-250571--,00.html
14. Steve Neavling, Oct. 10, 2014. Wayne County begins foreclosure process on a
whopping 80,000 properties
http://motorcitymuckraker.com/2014/10/10/wayne-county-begins-foreclosure-process-onwhopping-80000-properties/
15. Ryan Harte, May 2014. Detroit, tres Brooklyn! Examining gentrification in Detroit
http://www.infinitemiledetroit.com/Detroit,_tres_Brooklyn_examining_gentrification_and_
Detroit.htm

Appendix A
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A summary of guidelines for Step Forward Michigans Loan Rescue Program in the Ninth
Amendment to Commitment to Purchase Financial Instrument and HFA Participation
Agreement (11)

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Presented by Pat Driscoll

(313 -452-9993) or pdondrisco@gmail.com
member of Detroit Eviction Defense.
Detroit Eviction Defense is a non-profit network
of home-owners, community activists & other
volunteers working to save our neighborhoods &
keep families in their homes.

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