Property Tax Delinquency Auctions as Ghetto Creators and People Removers

Harbour Portfolio Advisers houses boarded and abandoned in suburban Atlanta

Atlanta  Two of the most heartbreaking and moving injustices we stumbled on when the ACORN Home Savers Campaign teams were doorknocking families in contract buying agreements in Detroit involved property tax delinquency auctions. It was a scam facilitated directly by the Wayne County Treasurer’s office and other government officials.

The easiest case for me to describe was on a door hit by the team I was on, though the other case was virtually identical. On our list we had the woman recorded as a contract buyer through one of the many subsidiaries of Detroit Property Exchange or DPX as locals call the company. When she answered the door she told us she was now the full owner of the property and rid of DPX. It seemed she had formerly held a conventional mortgage and was paying the mortgage servicer directly. Fairly typically, she was making a bundled payment to the bank’s mortgage servicer which included her insurance and property tax payments. She had gotten a call “out of the blue” from DPX some four years previously informing her that they now owned her home because they had bought it through a tax delinquency auction for $6000 in back taxes, because her servicer had gone bankrupt with no notice to her. They were calling to evict her, but they offered her a deal. She could pay the $6000 to DPX from the auction price, and the remainder of her mortgage obligation, some $15,000 to them, in monthly payments over a period of years, and she would own the house. Miraculously, she was able to do this by taking advantage of several “matching” offers DPX had made, mostly during tax refund time, where if you made accelerated payments of $1500 or more they would apply that payment and “match” it by deducting a similar amount from your obligation. She felt her story had a happy ending. We of course were horrified that she had been scammed by both DPX and that it had been enabled by the Wayne County Treasurer!

another home abandoned to tax auction

A brilliant op-ed in the New York Times entitled “Don’t Let Detroit’s Revival Rest on an Injustice” by professor and legal researcher, Bernadette Atuahene, argues that this kind of situation is not only typical of the crimes being preformed by the Wayne County treasurer and the assessment procedures, but the tip of a deeper and longstanding illegal ripoff of home purchasers that has been a huge factor in ghettoizing Detroit. Assessments for years have routinely disregarded the legal limits set by the Michigan constitution that no assessment can be listed at more than 50% of the homes evaluation. Additionally, there are limits for lower income households which are ignored with impunity with the treasurer and assessor saying plainly that they would keep stealing the homes from people, because it was up to the victims to appeal their assessments and that if they didn’t, then it was fair for Wayne County to grab the house and auction it.

The Home Savers Campaign has asked FNMA to bar various rent-to-own property companies like Detroit Property Exchange, Harbour Portfolio, and others from its auctions, and we are working with allied organizations like Detroit Eviction Defense and Detroit Action Commonwealth to demand that such companies be barred from Wayne County tax delinquency auctions as well. Reading Atuahene makes us wonder whether they are all in cahoots, making justice even harder to win, since state laws and the Constitution seem to have given them so little pause.

unique home a Vision Property Management contract buyer is making his own

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Building a Fighting Force to Stop Evictions and Win Affordable Rents

ACORN Bristol

New Orleans    Tenancy is rising, and it’s expensive. People are being pressed up against the walls. The old rule of thumb that rent and housing costs should not be more than 30% of income, similar to the old Brooke Amendment named after the legendary African-American Senator from Connecticut, has long been in ruins.

This is a global issue.

ACORN affiliates in Scotland amassed to fight evictions in both Glasgow and Edinburgh in recent weeks. ACORN in Bristol is currently involved in a rent strike and has beaten back numerous evictions.

When we were recently in Detroit, we met with a very active and effective organization there called the Detroit Eviction Defense. The group meets weekly and was diversely populated with younger activists, retired union professionals, lawyers, former journalists, professors, and of course tenants. The actions and victories on their website is impressive.

Evictions are a growing issue.

Researchers, Joshua Akers and Eric Seymour in Detroit shared with us soon to be published data on evictions which were eyeopening to us. In a data set they had accumulated over the decade between 2005 and 2015, these University of Michigan whizzes had separated the nearly 7500 contract “purchases” from the total of 80,000 total acquisitions involving tax delinquency or foreclosure auctions. Although we had thought a primary part of the business model for contract pushers was evictions and indeed they generate more, but it was a matter of degree at 1 out 3 compared to 1 out of 4, between the two, with both at outrageous levels.

A paper by the researchers connected to the Federal Reserve Bank in Atlanta, led by Flora Raymond (and shared with us by our wolverine comrades) notes that Atlanta is out of the box compared with other cities and no small part of this issue is driven by the increased corporate ownership of rental units and businesses that make evictions and the collection of late fees a fundamental part of their business model, similar to the recent news reports of the Kushner operation’s methods in the Baltimore area. The paper notes that,

In Fulton County, an average of 107 eviction notices are filed each day, for a yearly total equal to 22 percent of all rental households. In Milwaukee … 16 percent of all rental families are evicted. A similar rate occurs in Fulton County, where 15 percent of all rental households are evicted. Eviction rates are highest among multifamily rentals, but they are also prevalent in single-family rentals. We find that large corporate owners in the single-family rental business are more likely than small landlords to evict tenants, even after controlling for parcel level and neighborhood-level factors.

Our Home Savers Campaign is finding that our members are frequently entering the predatory land installment contracts not because they are wide-eyed about becoming home owners, but even more frequently because they are desperate for affordable housing regardless of condition, if they think they can manage the lower monthly payments, regardless of the predatory scam.   Something is happening here, Mr. Jones!

It’s been widely reported and at the grassroots level, painfully realized, but Raymond and her co-authors state it plainly,

The number of renters with high housing cost burdens has reached record levels in the United States. Over 21 million households spend more than 30 percent of their income on rent; 11 million of those spend more than 50 percent, which is considered severely cost burdened. Much of the increase in households reporting housing insecurity can be attributed to soaring rents as demand for rental housing climbs (Joint Center for Housing Studies of Harvard University, 2016).

Add it up and the numbers are staggering. About 27,000 evictions in Atlanta’s Fulton County every year, and eviction rates in Milwaukee at 16%, Chicago 7%, Cleveland 11%, and the beat goes on and the family and community tragedy it represents increases. Take 21 million paying more than 30% of income on rent and another 6 million contract buyers, and millions of renters facing the street over and under these figures who are facing eviction, multiply them by all members of their households, and we have a huge constituency that would seem to be ripe for both organization and action.

Like the old buffalo hunters, I’ve got my ear to the ground to see if I can hear a movement coming.

Please enjoy Blackleg Miner by Offa Rex (The Decemberists & Olivia Chaney).

Thanks to KABF.

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