Michigan Property Owners Re-Buying Homes at Foreclosure Sales
As the foreclosure crisis shows no signs of abating and the economy is not rebounding, more homeowners in Michigan are struggling to meet their mortgage payments and pay their property taxes. Some homeowners in Detroit are taking advantage of a loophole in the law and avoiding their tax liabilities by letting their properties fall into foreclosure and then buying them again at the Wayne County Sheriff’s sales. While this may seem like an appealing solution to debt problems, there are drawbacks and homeowners may want to consider alternatives for saving their homes.
The Popularity of Re-Buying Foreclosed Properties
More property owners seem to be taking advantage of the quirk in the law to eliminate their tax burdens. The original owners bought about 200 of the almost 3,700 foreclosure properties that the Sheriff auctioned in 2010. Some properties sell for as little as $500.
The total debt that the sales eliminated was over $1.8 million. Experts suggest that figure will increase in 2011, as they estimate auctioning 14,300 properties in 2011.
Some attorneys who work with low-income clients have used this technique to help low-income people stay in their homes. The executive director of the United Community Housing Coalition helped 140 families re-purchase their homes at Sheriff’s auctions in 2010 and anticipates surpassing that figure in 2011.
Problems with Re-Buying Foreclosed Properties
The practice of homeowners re-buying at foreclosure auctions is legal but there are some drawbacks. Many in the community view it as unfair, as they struggle themselves to pay their taxes and they see others walking away from their tax responsibilities yet still keeping their property.
Another problem is that many who own investment properties are using the technique to get rid of tax debt when they have the capacity to pay, which results in lost revenue for the state.
Some lawmakers are proposing legislation that would not prohibit homeowners who owe taxes from buying the properties at the auctions. Wayne County already has a mechanism for stopping the former owners from buying their old properties at the auction, but County officials called it “a nightmare” to try to enforce and argued that it could end up hurting poor families too much.
Alternative Solutions to Foreclosure Problems
There are other options for those who are facing foreclosure. Some possibilities include:
- Loan modifications
- Filing bankruptcy
If you are overwhelmed financially and are afraid of losing your home, contact an attorney knowledgeable in debt relief matters who can inform you of possible solutions to your financial problems.