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Proposed 'Pay as You Stay' program would wipe out all penalties, interest and fees on back property

DETROIT - Today, Wayne County Executive Warren C. Evans, Mayor Mike Duggan and Wayne County Treasurer Eric Sabree called on the state legislature to implement a sweeping new approach to assist tens of thousands of Detroiters and Wayne County residents who owe back property taxes avoid foreclosure. The plan builds on steps the City and County have already taken to reduce occupied home foreclosures by 94 percent since 2015.

Draft legislation for the "Pay as You Stay" (PAYS) plan, expected to be introduced this week by Rep. Wendell Byrd (D-Detroit), would help approximately 31,000 Detroit homeowners stay in their homes by dramatically reducing the amount they owe on their back taxes and lowering their monthly payments.

How "Pay as You Stay" works

"Pay as You Stay" is a simple, three-part plan:

  1. Once you enroll, all interest, penalties and fees would be eliminated.
  2. To reduce an undue burden on homeowners, the balance due would be limited to back taxes only or 10% of a home's taxable value - whichever is less.
  3. The remaining balance would be paid back over three years at zero percent interest.

Homeowners who qualify for a full or partial Property Tax Exemption and enroll in future years would be eligible for the program. To be PTE-eligible, a household with 1 person could not make more than $19,303 per year; a household with 4 people could not make more than $28,671.

"Since 2015, we've been able to reduce the number of occupied foreclosures by 94 percent, but far too many Detroiters still are at risk of foreclosure," said Mayor Mike Duggan. "Pay as You Stay" would help more than 31,000 Detroit homeowners stay in their homes by eliminating interest, penalties and fees and making payment plans affordable for those who need them."

"Pay as You Stay" is intended to address the remaining Detroit homeowners at risk of foreclosure by reducing the undue burden many residents face.

"As we look to continue Wayne County's rebuild we need to take more steps to address foreclosures and help residents break the cycle of poverty," said Executive Evans. "Over the long term, we are much better off with people in their homes. This legislation reduces the burden on residents in payment plans and better positions them to avoid foreclosure while providing a more achievable path to home ownership."

Today, homeowners are able to qualify for the Interest Reduction Stipulated Payment Agreement (IRSPA) payment plan. Created and then extended by the Michigan Legislature after lobbying by Mayor Duggan and Treasurer Sabree and his predecessor, the program offers a 5-year term and reduces the interest rate from 18 percent to 6 percent.

However, officials recognize that this payment plan, while far better than previous, still results in monthly payments that can be unaffordable for many Detroit residents. To address this, the PAYS plan would restructure the debt, drop the interest rate to zero percent, greatly reducing the monthly cost and the time it takes to become current from five years to three:

Example #1

Resident Income: $814/month

Current Taxable Value: $10,400

Current Tax Debt: $11,700

Current IRSPA: $192/month for 5 years

PAYS Plan: $29/month for three years

Example #2

Resident Income: Poverty Tax Exemption Qualified

Current Taxable Value: $4,971

Current Tax Debt: $990

Current IRSPA: $50/month for 5 years

PAYS Plan: $10/month for three years

The "Pay as You Stay" plan would be administered by the Wayne County Treasurer's Office, and open for enrollment for three years after the program launches.

Approval from Lansing needed to implement plan

The State Legislature will need to act to approve the "Pay as You Stay" plan.

"This proposal is one of many steps being taken in the right direction to help residents be able to afford to stay in their homes," said Rep. Byrd. "It's important that we can retain every resident so we can strengthen our neighborhoods and rebuild our city's population."

Occupied home foreclosures down 94% since 2015; plan will help address remaining homeowners at riskSince 2015, the number of occupied foreclosures in Detroit has dropped by 94 percent, going from 9,111 occupied home foreclosures in 2015 to 514 this year.

The drop is a result of intentional efforts by the City, County and community organizations to keep homeowners in their homes:

  • Payment plans: Led the effort in 2014 to pass HB 5882 to allow delinquent taxpayers to enter into payment plans and avoid foreclosure. 15,000 homeowners signed up in the first year alone.
  • Citywide residential property reassessment: Completed the first citywide residential property reassessment since the 1950s to ensure home assessments are fair and reflect market values. The vast majority of Detroit homeowners saw their property assessments - and property tax bills - drop as a result. Assessments are now based on actual market activity and updated imagery.
  • Make It Home/Right of Refusal: Launched the Make It Home/Right Of Refusal program with the United Community Housing Coalition and Quicken Loans, which allows tenants in non-owner occupied properties to buy back homes at risk of foreclosure for $1,000. Since 2017, 1,142 properties have been removed from the foreclosure auction through this program.
Going door-to-door citywide: Supported Neighbor to Neighbor door-to-door canvassing to every household in Detroit at risk of foreclosure, with the city's Department of Neighborhoods and AmeriCorps VISTA teams recruiting volunteers, knocking on doors and calling residents. 61,029 homes at risk of tax foreclosure were canvassed through this effort.