Skillman Foundation Warns Foreclosure of 62K Properties Could Lead to Instability

[Lowell]

The Skillman Foundation, a local philanthropic agency, is warning that the planned foreclosure of 62,000 properties by Wayne County that is coming in a few days could create instability resulting from mass evictions disrupting the lives of tens of thousand of Detroiters and children in particular.

Compare that to 89,000 total tax foreclosures in the decade between 2003 and 2013, Skillman Foundation’s Chris Uhl said, quoting from a Detroit Blight Removal Task Force report—and the size of the wave becomes clearer. “Over 90 percent of those properties turned into blighted structures that we now have to take down,” he said.

And that’s of special concern to Skillman — which has invested $80 million over the past eight years in six Detroit neighborhoods slated to see 14,000 of the foreclosures in the coming year.

In my opinion the optics of this mass foreclosure and resulting evictions will be ugly. I can hear, "First they shut off our water, now we are being thrown out in the winter." Maybe add "just before Christmas" to make the poignancy complete.

Of special concern, Uhl said, is the fact that 37,000 of the properties are occupied, according to data collected through the MotorCity Mapping database developed by Loveland Technologies and Data Driven Detroit...

...We know that’s an issue,” Uhl said. “A lot of times in Detroit, you have a tenant who pays... It’s the landlord who doesn’t pay the city taxes, and unfortunately the consequences fall on the tenant.”

Those owners could come back around and re-buy the house or another one and repeat the process, another issue being looked at, Uhl said.

My guess is that due to the immensity of the action with existing staffing the enforcement of the foreclosures and evictions will have to play out over a long time. More of a drip-drip-drip rather than a bucket water on the head.

What do you think? More trouble than the water shut-off or will the dispossessed meekly fade away?

Read Full article on Crain's Detroit Business

[Scottathew]

They need to spread it out. It could cause rent prices to spike in the area if they don't.

[maverick1]

This is serious blow-back from the glut of single family homes in this city. I believe we need more affordable multi-family units or apartment buildings badly.

[BankruptcyGuy]

The Skillman Foundation, a local philanthropic agency, is warning that the planned foreclosure of 62,000 properties by Wayne County that is coming in a few days could create instability resulting from mass evictions disrupting the lives of tens of thousand of Detroiters and children in particular.



In my opinion the optics of this mass foreclosure and resulting evictions will be ugly. I can hear, "First they shut off our water, now we are being thrown out in the winter." Maybe add "just before Christmas" to make the poignancy complete.



My guess is that due to the immensity of the action with existing staffing the enforcement of the foreclosures and evictions will have to play out over a long time. More of a drip-drip-drip rather than a bucket water on the head.

What do you think? More trouble than the water shut-off or will the dispossessed meekly fade away?

Read Full article on Crain's Detroit Business

Thanks for sharing this. Unfortunately, the author doesn't quite have a good handle on the procedure. Let me lay it out.

Years 1-3, through March 31 of any year: Taxes on a property are not paid. It takes three years of unpaid taxes to trigger a tax foreclosure. To use an example, and because the subject is NEW tax foreclosures, let's say this is nonpayment of 2012, 2013 and 2014 taxes.

April 1, 2015. If the 2012 taxes remain unpaid as of this day, the property is owned by the county or the land bank, depending.

Six-ish months later or more. The county can, but is not required to, sell the property at auction or through another method. In the county I was involved with, the sale was right around labor day.

5 to 30 days later. If the property is purchased at auction, the county/land bank quitclaims the property to the buyer.

[[Note: a very small percentage of homes actually sell at auction. At the auction I attended, my bid was the 2nd actual bid, but the 70th house on the list. 68 of the first 70 received no bids at all.)

Now, once the property has been quitclaimed to the buyer, if there is a tenant in the home, the buyer must file an eviction. That's about 30 days until filing, followed by what can be a long process, depending on the circumstances. If the tenant was paying rent, and has a lease, it's not really that likely that a court is going to allow an eviction.

So while the plight of people who are truly being foreclosed on is sad, the percentage of those people who are renters whose home they are renting has been purchased is a VERY small percentage. And when they do, they have TONS of notice [[three years of tax notices, court hearings, opportunities to appear).

[Shai_Hulud]

I think talking about 62k properties threatens to derail the issue because it makes it sound like 50k families are going to be out on the street. As stated, we're talking about ~35k occupied homes, whether by renters or owner occupants.

I expect the result will be similar to the water debacle in which 50% of those who received shutoff notices immediately paid or got on a payment plan. Considering most of these properties have been delinquent less than the normal three years it takes to go to auction, I think most will make arrangements and the properties that are actually taken by the County/City will be among the least desirable.

[Lowell]

Now, once the property has been quitclaimed to the buyer, if there is a tenant in the home, the buyer must file an eviction. That's about 30 days until filing, followed by what can be a long process, depending on the circumstances. If the tenant was paying rent, and has a lease, it's not really that likely that a court is going to allow an eviction.

Understood. Couldn't the tenants be forced out in other ways. Let's say the new buyer takes over the property, that is 10% occupied with neglected and failing infrastructure. Is the buyer obligated to keep the property active and bring it up to code etc.?

[motz]

I think talking about 62k properties threatens to derail the issue because it makes it sound like 50k families are going to be out on the street. As stated, we're talking about ~35k occupied homes, whether by renters or owner occupants.

I expect the result will be similar to the water debacle in which 50% of those who received shutoff notices immediately paid or got on a payment plan. Considering most of these properties have been delinquent less than the normal three years it takes to go to auction, I think most will make arrangements and the properties that are actually taken by the County/City will be among the least desirable.

I really hope the county looks at these foreclosures and tries to work with occupants in these houses. I can't imagine how terrible it would be to be a renter and be evicted, all because your landlord is a tax-dodging pile of garbage.

Does anyone think a system where the renters in single family homes that are in tax foreclosure could possibly end up paying off and owning the house would work? I'm also curious if something like that is legal. I feel it'd avoid the pain of disrupting someones life because of anothers inability to meet their obligations.

[compn]

delta city isnt going to build itself!

[ndavies]

I really hope the county looks at these foreclosures and tries to work with occupants in these houses. I can't imagine how terrible it would be to be a renter and be evicted, all because your landlord is a tax-dodging pile of garbage.

Does anyone think a system where the renters in single family homes that are in tax foreclosure could possibly end up paying off and owning the house would work? I'm also curious if something like that is legal. I feel it'd avoid the pain of disrupting someones life because of anothers inability to meet their obligations.

There is a group trying to raise money to buy houses at foreclosure and give them to the current tenants. https://www.indiegogo.com/projects/t...cle-collective
I have no affiliation to this group and don't know if they are having any success. However if the tenants are good at paying their monthly rent, They could us that money to maintain and pay the taxes on the house they now own.

[BankruptcyGuy]

Understood. Couldn't the tenants be forced out in other ways. Let's say the new buyer takes over the property, that is 10% occupied with neglected and failing infrastructure. Is the buyer obligated to keep the property active and bring it up to code etc.?

Not sure I understand what you mean by "other ways." Two different issues:

1. Can a tenant break a lease on a building that's not up to code? Absolutely. It's called "constructive eviction" but it's instituted by the tenant. If the building doesn't have sufficient heating, working bathrooms, etc., then the tenant can leave at any point. Most tenants don't realize that owners can be subject to damage awards as well.

2. Is the buyer obligated to keep the building up to code? Yes and no. The general rule is that, if the owner wants to lease the tenant to a third party, it must be up to the rental code. If the owner wants to live there, it still has to be up to a code, but it's generally a lower standard. But if neither is to happen, then the answer is not really--code violations are an "in rem" matter, meaning they attach to the home, not its owner. The city can't go find the buyer and sue them for money damages.

I hope I understood the question. If not, ask it again and I'll try to answer it more clearly.

[bailey]

Originally Posted by Lowell
Understood. Couldn't the tenants be forced out in other ways. Let's say the new buyer takes over the property, that is 10% occupied with neglected and failing infrastructure. Is the buyer obligated to keep the property active and bring it up to code etc.?

Not sure I understand what you mean by "other ways." Two different issues:

1. Can a tenant break a lease on a building that's not up to code? Absolutely. It's called "constructive eviction" but it's instituted by the tenant. If the building doesn't have sufficient heating, working bathrooms, etc., then the tenant can leave at any point. Most tenants don't realize that owners can be subject to damage awards as well.

2. Is the buyer obligated to keep the building up to code? Yes and no. The general rule is that, if the owner wants to lease the tenant to a third party, it must be up to the rental code. If the owner wants to live there, it still has to be up to a code, but it's generally a lower standard. But if neither is to happen, then the answer is not really--code violations are an "in rem" matter, meaning they attach to the home, not its owner. The city can't go find the buyer and sue them for money damages.

I hope I understood the question. If not, ask it again and I'll try to answer it more clearly.

While Bk is accurately stating the law there, I'm guessing that many who would be affected by this are renting these places on a month to month basis with no written lease, pay in cash, and the units haven't been issued a CofO in years if not decades.

[SWMAP]

WC, for the last several years, has been offering the homes that didn't sell at the November auction [[which are most of them) to the tenants for a flat $500. Many, many homes in SW Detroit were offered to the tenants over the last several years. WC delivers a letter to the address with the offer.

But everything devolves and all is worse. The tenants/now owners don't pay the property taxes - why should they? AND, they aren't used to paying property taxes and don't have enough to pay property taxes- that is why they were renters.

They can't maintain the properties - old gutters, fences, porches, steps, railings, shingles, etc - and so the property under the new, really poor owners who got the place [[sometimes big brick houses) for $500 let it degrade to fire tinder. That is the story over the last seven years in my neighborhood.

[maverick1]

WC, for the last several years, has been offering the homes that didn't sell at the November auction [[which are most of them) to the tenants for a flat $500. Many, many homes in SW Detroit were offered to the tenants over the last several years. WC delivers a letter to the address with the offer.

But everything devolves and all is worse. The tenants/now owners don't pay the property taxes - why should they? AND, they aren't used to paying property taxes and don't have enough to pay property taxes- that is why they were renters.

They can't maintain the properties - old gutters, fences, porches, steps, railings, shingles, etc - and so the property under the new, really poor owners who got the place [[sometimes big brick houses) for $500 let it degrade to fire tinder. That is the story over the last seven years in my neighborhood.

This is what I've experienced. An apartment works best for some people. Living in a house is more than just paying the tax. Where are these people that can't maintain a house supposed to live? We've basically eliminated public housing. There aren't many apartment complexes in the neighborhoods.

[1953]

Maybe if Skillman stopped wasting its money on bad investments, it could help.