Homeowners in Detroit are experiencing a severe tax foreclosure crisis, with many losing their homes based on their inability to pay taxes that never should have been assessed in the first place. Even though taxes in Michigan must be based on the true cash value of a home, the City of Detroit failed to reduce the tax assessments to match plummeting property values following the Great Recession. Also, although homeowners who meet the federal poverty guidelines are excused from paying property taxes, Detroit’s process for obtaining the poverty exemption became so convoluted that few people who qualify could actually receive the benefit. These policies have a grossly disparate impact on African American homeowners, who are ten times more likely to lose their homes than non-African Americans.
In 2016 the ACLU of Michigan, NAACP Legal Defense Fund (LDF), and the Covington & Burling law firm filed a lawsuit asserting violations of the Fair Housing Act and due process. In July 2018 we reached a historic settlement agreement with Detroit that has the potential to save the homes of thousands of low-income residents. Under the terms of the settlement, homeowners who qualify for a poverty exemption can buy their homes back for $1000, and Detroit created a streamlined, user-friendly poverty exemption application process. Detroit also paid damages to the named plaintiffs and contributed $275,000 to a fund that will help low-income homeowners.
In 2019 and 2020 we continued to work with the city and community partner organizations to make sure that the settlement is properly implemented through a three-year enforcement period.
(MorningSide Community Organization v. Wayne County Treasurer; ACLU Attorneys Michael J. Steinberg, Bonsitu Kitaba-Gaviglio, Dan Korobkin, and Mark Fancher; Coty Montag and Ajmel Quereshi of LDF; and Shankar Duraiswamy, Amia Trigg, Donald Ridings, Wesley Wintermyer, Sarah Tremont, and Jason Grimes of Covington & Burling.)