Use Federal Hardest Hit to Funds to Stop Thousands of Tax Foreclosures and Water Shutoffs
1. The State of Michigan has received $761 million in federal Hardest Hit Funds since 2010, with $263 million allocated in 2016 alone.
2. The Hardest Hit funds are targeted to aid families in areas especially hard Hardest Hit by the housing crisis that began in 2007 particular with foreclosure prevention and neighborhood stabilization efforts. (U.S. Dept of Treasury website)
3. The Hardest Hit Funds come out of the Troubled Asset Relief Program. The Treasury Department allocated $7.6 billion in TARP funds for the Hardest Hit program, compared to $250 billion to bail out banks, $82 billion to bail out the auto companies, and $70 billion to bail out AIG which insured the banks.
4. Detroit was especially hard Hardest Hit by the housing crisis created by the fraudulent practices of the banks from 2010 to the present. According to a special report prepared by Detroit News reporters Christine McDonald and Joel Kurth published in 2016:
- Detroit experienced 65,000 mortgage foreclosures since 2005. 56 percent of mortgage foreclosures are now blighted or abandoned. Of those 36,400 homes, at least 13,000 are slated for demolition at a projected cost of $195 million, seized for nonpayment of taxes.
- Detroit had one of the highest rates of subprime lending in the country: 68 percent of all city mortgages in 2005, compared to 27 percent statewide and 24 percent nationwide, according to federal records. Designed for those with damaged credit, the loans have higher interest rates than traditional mortgages and were at least four times more likely to default, according to federal records. Nearly $4 billion of the high-cost loans were written in Detroit in the four years before the 2008 real estate crash.
Up to 78 percent of foreclosed homes financed through subprime lenders are now in poor condition or tax foreclosed.
- Foreclosed homes were sold for a quarter of what city assessors said they were worth. The cheap prices made it less likely for buyers to maintain properties or pay taxes.
- When tax foreclosures are included, more than 1 in 3 city properties have been foreclosed in the past 10 years.
5. According to a Detroit News article written by Christine McDonald on September 8, 2016, 14,300 properties in the city of Detroit are going up for auction after tax foreclosures this month. 23,000 other homes have temporarily avoided tax foreclosure by being placed in payment plans many of which are doomed for failure due to the fact so many Detroit homeowners are paying back property taxes on homes whose values have decreased tremendously, with 6000 homeowners owing back taxes that amount to at least 25% of what their homes are worth.
6. Detroit homes account for a little more than half of the Detroit Water and Sewerage Department $119 million in delinquent bills, but nearly all the shutoffs. Since April of this year 13,750 residences and only 369 businesses have had their water shutoff. Another 11,000 homes were 60 days overdue and eligible for shutoff. The city has disconnected nearly 65,000 homes since it began targeting homes for shut-off with delinquent water bills as low as $150 in 2014. Detroit News, Joel Kurth, August 25, 2016.
7. Despite the fact that massive numbers of Detroiters face eviction due to tax foreclosure and constructive eviction due to water shut-offs, of the $278 million in Hardest Hit Funds remaining in Michigan, only $47 million are available to help families by paying off delinquent property tax bills or mortgage arrearages, while $231 million is targeted for blight removal.
8. The Hardest Hit funds need to be redistributed to save people from losing their homes, not tearing them down. Federal funds being used for blight removal are being turned over to same Detroit Land Bank and Blight Taskforce that are being investigated by the federal government for criminal fraud in connection with the blight removal program.
9. If the funds were used to pay delinquent property tax and water bills, it would actually increase the funds for both the city government and water department, to provide for blight removal, infrastructure repair, etc.
10. Snyder’s Michigan State Housing Development Authority (MSHDA) which sets the rules for how the Helping Hardest Hit Funds are distributed, has created so many impediments as to make the funds that are there inaccessible to homeowners who need them. The rules need to be rewritten so every family who needs access to Hardest Hit Funds to save them from evictions caused by foreclosures has easy access.
11. The rules need to be rewritten to allow the Hardest Hit Funds to be used to pay delinquent water bills which amount to a constructive eviction, especially in light of completely inadequate funding to help pay delinquent water accounts in the WRAP and similar “assistance” programs.
12. There should be an immediate moratorium placed on all tax foreclosure related evictions and all water shut-offs while MSHDA is compelled to reallocate the Hardest Hit Funds and make them fully accessible to prevent the humanitarian crisis in our city which will intensify with thousands of Detroiters about to lose their homes.
13.The leading mortgage foreclosure entities includes:
- The federal government through Fannie Mae: 5,540 foreclosures, 46 percent are blighted or abandoned, Freddie Mac: 2,197 foreclosures, 56 percent blighted or abandoned and HUD 2,453 foreclosures, 50 percent blighted or abandoned. The government backs up bank foreclosures which default because of their predatory nature.
- Bank of America: 2,183 foreclosures, 47 percent blighted or abandoned, and its subsidiaries, First Franklin Financial Corp.: 767 foreclosures, 58 percent subprime, ABN Amro Mortgage: 731 foreclosures, 50 percent subprime and Countrywide: 1,218 foreclosures, 52 percent subprime.
- JP Morgan Chase: 2,017 foreclosures, 54 percent blighted or abandoned, and its subsidiaries
- Washington Mutual: 1,322 foreclosures, 70 percent subprime and Chase: 802 foreclosures, 59 percent subprime.
- Argent and Ameriquest: 2,502 foreclosures, 70 percent are blighted or abandoned
- Wells Fargo: 3,100 foreclosures, 46 percent blighted or abandoned
- Ocwen Financial Corp.: 1,800 foreclosures, 64 percent subprime.
- Deutsche Bank: 2,392 foreclosures, 53 percent subprime
- US Bank: 2,027 foreclosures, 48 percent subprime
- New Century Financial: 1,255 foreclosures, 67 percent subprime
- Quicken Loans: 1,058 foreclosures, 52 percent subprime (These numbers vastly understate Quicken’s role, because it mainly underwrites loans which it immediately sells to a large bank or subprime lender.
14. The banks and financial institutions should be made to pay to remove the blight and destruction of our neighborhoods which they created through their criminal lending practices.