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 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 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 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% [footnoteRef:1] of the homeowners in Detroit had a housing-related loan or mortgage.[footnoteRef:2] [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)]

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

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

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.

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

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).

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.

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.

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.

2010-2013 Tax Foreclosures Skyrocket

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 non-profits, 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 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 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.

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.

2014 and Beyond The Tragedy Deepens

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

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 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

Tax Repayment Plans, Reassessment and Exemptions

Investigative journalist Steve Neavling wrote (14): We have decided to foreclose oneverything, Chief Deputy TreasurerDavid 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 (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 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 TreasurerDavid Szymanski that, We have decided to foreclose oneverything (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 ahome, (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:

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 36th 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 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 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

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

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

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

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.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 makebanks, 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!13). Rescind all laws directed at limiting the due process of homeowners in foreclosure, tenants and so-called 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_8-7-12/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_8-7-12/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-some-new-squatters-laws-on-the-books-in-michigan.php

9. CBS News, Occupied Detroit Land Bank Homes PoseChallengehttp://detroit.cbslocal.com/2014/07/23/occupied-detroit-land-bank-homes-pose-challenge/

10. Steve Neavling, Nov. 5, 2013. Whos buying up cheap houses in Detroit? 10 leaders at tax auctionhttp://motorcitymuckraker.com/2013/11/05/whos-buying-cheap-houses-detroit-10-leaders-tax-auction/

11. Ninth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement http://www.treasury.gov/initiatives/financial-stability/TARP-Programs/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 Michiganhttp://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 propertieshttp://motorcitymuckraker.com/2014/10/10/wayne-county-begins-foreclosure-process-on-whopping-80000-properties/

15. Ryan Harte, May 2014. Detroit, tres Brooklyn! Examining gentrification in Detroithttp://www.infinitemiledetroit.com/Detroit,_tres_Brooklyn_examining_gentrification_and_Detroit.htm

Appendix A

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)

Presented by Pat Driscoll (313 -452-9993) or pdondrisco@gmail.commember 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.2