Detroit homeowners, joined by the American Civil Liberties Union of Michigan and the NAACP Legal Defense and Education Fund, filed the lawsuit more than a year ago against the city and county treasurer.
They argue the county’s auction violates the federal Fair Housing Act by disproportionately foreclosing on black homeowners, a process fueled by inflated city tax assessments and an inaccessible tax exemption for the poor.
The city taxed the home of one ACLU client at risk of foreclosure last year as if it was worth $40,000, while a private appraisal paid by the ACLU valued it at $9,000.
Wayne County Judge Robert Colombo last fall dismissed the county from the lawsuit because he ruled that the case should have been brought in front of the Michigan Tax Tribunal. Lawyers for the ACLU and LDF appealed, arguing Tuesday that their Fair Housing claim against the county should be heard in state court.
The ACLU and NAACP say they want the sale stopped until the auction can be reformed and tax assessments corrected.
“The tax foreclosure crisis is a government-created catastrophe that is destroying communities in Detroit,” said Michael Steinberg, legal director of the ACLU.
County officials argued Tuesday that they aren’t responsible for Detroit assessments and can’t know if homes are overvalued.
“We have to rely on city numbers,” said Davidde Stella, an assistant corporation counsel for the county.
The county foreclosed on 1 in 4 Detroit properties for back taxes between 2011 and 2015, according to a study by Bernadette Atuahene, a law professor at Illinois Institute of Technology’s Chicago-Kent College of Law who has studied the impact of the city’s over assessments on homeowners.
Tax foreclosures are down countywide from 14,300 in 2016 to about 8,000 as of last week, according to the treasurer’s office.
Of those 8,000 properties, about 930 are owner-occupied Detroit homes. Another 1,414 are occupied by Detroit renters.
A year ago about 1,500 owner-occupied homes went into foreclosure. The county generally forecloses after owners owe three consistent years of back taxes.
“The issue of past foreclosures is old news,” Treasurer Eric Sabree said in a written statement. “The Wayne County Treasurer’s office is focused on reducing foreclosures.”
More than 31,200 properties are now on county payments plans for back taxes. The deadline to enter into payment plan is Friday.
Housing advocates have predicted that many owners will default in coming months without more help. The News found last summer that owners of about 6,000 occupied properties in Detroit owed tax debt that’s a quarter or more of what the houses are worth.
Christine MacDonald, The Detroit News