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Cash-strapped Wayne County leans on foreclosure fees to balance budget

Steve Carmody
Michigan Radio

Joel Kurth is the Detroit Editor for Bridge Magazine. Along with Mike Wilkinson and Laura Herberg, he’s been digging into how Wayne County is fattening its coffers through home foreclosures.

“Misery is monetized by counties all across Michigan, and no government relies on money from tax foreclosures as much as Wayne County.”

That blunt statement leads off a Bridge Magazine and Detroit Journalism Cooperative investigation titled “Sorry we foreclosed your home. But thanks for fixing our budget.”

Kurth says Wayne County is relying on property owners’ misfortune to balance its budget.

“It’s in black and white, in the county’s turnaround plan to the state,” Kurth said. “Basically [Wayne County] has gotten a half billion dollars over the last ten years or so on fees collected through late property taxes.”   

Kurth says when local communities end up with a budget deficit, the Wayne County treasurer sells bonds “to make communities whole through taxes.”

Kruth says the treasurer is able to profit by charging a higher rate for late fees on delinquent taxes for foreclosed homeowners.

“So if your home is foreclosed for $5,000 and you went under a payment plan with the county, you could be paying back, at the end of the day seven, eight thousand dollars in fees and taxes,” Kurth said. “That extra money, what they call the surplus, is controlled by Wayne County and has been used to balance the budget. It got them out of a deficit in 2014.”

Kurth says the county has plans to balance the budget similarly in 2019.

It’s a process that’s working fairly well for government. But Kurth says despite the money being made off the backs of foreclosed homeowners, Wayne County has also lost $100 million in property values, which translates to a loss in annual property tax revenues.

Kurth says this is all part of the aftermath of the housing crash. He says essentially about a third of homes in Detroit have been foreclosed on since 2002.

“I do think we’re going to look back on history, and [the housing crash] is going to be an event similar in scope to the Detroit riots in how this has changed neighborhoods, and has led to the population exodus out of Detroit.”

Listen to Stateside’s entire conversation with Joel Kurth, Detroit editor for Bridge Magazine, above. 

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