The Michigan State Legislature has passed a bill, signed by Gov. Gretchen Whitmer, which reduces interest rates on delinquent property taxes and allows county treasurers to work with homeowners and implement payment plans. The law was originally set to expire on June 30, but has now been extended until 2026.
Interest Reduced Stipulated Payment Agreements (IRSPAs) set interest at 6%, while the average interest rate on delinquent property taxes in Michigan are 18%. Wayne County Treasurer Eric Sabree states on Michigan Radio that the law has reduced the amount of tax foreclosures in his county, stating that around 14,000 county homeowners are currently on IRSPAs.
“Wayne County’s not the only county that uses it to help taxpayers, but the majority of taxpayers that take advantage of this plan are from Wayne County,” said Sabree.
Property tax delinquency and foreclosure have been particular issues in Detroit. According to a recent study from Quicken Loans, property tax foreclosures in Detroit are at a 14-year low. In 2018, 2,920 properties faced property tax foreclosure auction, down from 6,052 in 2017, and far below the peak of 15,000 in 2015. Quicken Loans states that, as of last year, 21% of homeowners were unaware their property was behind on property taxes, and another 61% of renters in tax-delinquent properties were unaware of the home’s tax status.
“As Detroit comes back, we need to do everything we can to make sure those who stayed in our city through good times and bad are able to stay in their homes,” Mayor Mike Duggan said. “We are seeing real progress in tax foreclosure reductions that impact all of our neighborhoods, and through programs like Neighbor to Neighbor, we will continue this important work in close partnership with the community.”
Although outreach programs have helped improve Detroit’s tax foreclosure issues, the city still faces other foreclosure-related challenges. According to GOBankingRates and data from Zillow, 34.4% of homes are currently underwater, and the median home value at the Detroit-Warren-Dearborn metro-area level is $161,300, far below the national median of $226,300. GOBankingRates puts Detroit second on its list of U.S. cities most likely to enter a housing crisis.