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Lawsuit accuses Wayne County, Detroit suburbs, and developers of foreclosure-for-profit scheme

Eighteen people are suing Wayne County and several Detroit suburbs, alleging their homes were illegally taken in a tax foreclosure process that amounted to a “thinly veiled scheme” for “private profit.”

All the homeowner-plaintiffs in this case had their properties foreclosed by Wayne County over back taxes.

And in each case the cities they lived in, exercising their “right of first refusal” under Michigan tax law, reclaimed the properties before they could go to auction. The cities then sold the homes to developers.

In a federal lawsuit filed Monday, the plaintiffs’ attorneys claim to have discovered a “conspiracy to intentionally deny required notices and optional payment plans…and then deceive many of these owners into “default” for the specific purpose of transferring their properties to the cities and then the developer.”

In affidavits, the plaintiffs claim the county wrongly told them they had more time to make payments on their back taxes, that their homes would not be sold, and that they were never notified that the cities had reclaimed their homes or sold them off.

The defendants include the Wayne County treasurer’s office and several individual county officials; the cities of Dearborn, Lincoln Park, Garden City, Redford Township, and Wayne along with a number of city officials; and a number of developers and their firms, among them Enterprising Real Estate, HP Snap Investment and Global Realty.

The case seeks class-action status for as many as 800 similarly-situated property owners. The plaintiffs also want the court to step in and protect them from eviction while the case goes forward.

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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