Tax Foreclosure Research Articles

Judged by Their Deeds: Outcomes for Properties Acquired by Contract Sellers Following the Foreclosure Crisis in Detroit

Prior research has documented the reemergence of predatory land contracts in majority-Black neighborhoods in the wake of the foreclosure crisis. Though land contracts facilitate property transfers involving lower-value properties and credit-constrained households, they are less regulated and often include risky terms. This paper investigates outcomes associated with properties sold using land contracts signed between 2008 and 2015 in Detroit, leveraging real estate transaction, tax foreclosure, and eviction and land contract forfeiture records. We also assess outcomes for the broader portfolio of properties purchased by large contract sellers. We find that sales by large contract sellers are generally associated with higher odds of near-term failure. We also find that investors using contract sales withheld property taxes on much of their inventory, consistent with a short-term triage-based business strategy. Conversely, the single large non-profit contract seller in our study had a far higher rate of success compared to all other contract sales. These results provide evidence of negative outcomes for sales initiated by problematic entities and supports arguments for stronger regulation of land contracts and upstream interventions to prevent predatory investors from acquiring discounted homes from public and institutional sources.

Fatores que aumentam o tempo do processo judicial no Brasil

Abstract Judicial delay in Brazil is a severe and persistent problem. This work helps to understand the causes of this issue, by identifying and discussing 12 factors that increase the length of the judicial process in the country. These factors were identified through content analysis of interviews with 15 key players in the Brazilian justice system, including judges, prosecutors, and lawyers. Each factor was discussed based on academic literature, official reports, and performance indicators. The research findings show that factors such as the low cost of filling, the absence of punishment for repetitive litigants, and tax foreclosures promote an overload of processes in the courts. The Judiciary also seems to be burdened with attributions beyond the jurisdictional function, such as collecting evidence and locating debtors and assets. The excess of disputes and assignments has made the Brazilian judicial machine large, slow, and expensive. Public policies to reduce judicial delays in the country are suggested.

Effects of building demolitions on firearm violence in Detroit, Michigan

Former industrial cities facing economic challenges and depopulation often experience high levels of firearm and other forms of violence. Within these cities, violent crime often clusters in neighborhoods affected by high levels of vacant and abandoned housing.This study estimates the effects of building demolition in Detroit, Michigan on the subsequent risk of violent crime using property-level data and longitudinal targeted maximum likelihood estimation. The primary outcome is violent Crime Index crimes (homicide, rape, robbery and aggravated assault). We estimate effects for this category of crimes as a whole and for the subset involving firearms. Drug and other lower-level crimes are included as secondary outcomes. We compare the risk of experiencing each crime type following building demolition in Census blocks and block groups to an estimate of the risk had there been no demolition in the 1–3 quarters prior in 2017.There were >2600 total demolitions in about 1700 blocks in 2017 in Detroit. Nearly all demolished buildings were sourced from tax foreclosures. Estimates suggest the risk for all crime types tested would have been statistically indistinguishable from the observed crime risk had demolitions in the prior 1–3 quarters of 2017 not occurred.Our results run counter to most previous research on this topic, which tends to show a protective effect of demolition on violent crime. Understanding why our results differ may provide important insights into the types of demolition programs with the greatest potential to reduce violent crime.

Threats to and Opportunities for Low-Income Homeownership, Housing Stability, and Health: Protocol for the Detroit 2017 Make-It-Home Evaluation Study.

Few studies have examined the combined effects of affordability, housing conditions and neighborhood characteristics on the housing stability and health of low-income homeowners. We begin to address these gaps through a mixed-method study design that evaluates the Make-it-Home program (MiH) in Detroit, Michigan, aimed at helping low-income tenants become homeowners when their landlords lose their homes to tax foreclosure. We compare the ‘intervened group’ of MiH homeowners to a ‘comparison’ group of similarly situated households whose homes experience property tax foreclosure at the same time. The comparison group represents the likely outcomes for the participants had they not participated the program. Participants will be surveyed twice (intervened group), or once (comparison group) per year over a three-year period, regarding their housing and neighborhood conditions, health, life events, and socio-economic status, including income and employment. We will use property and neighborhood census data to further examine the conditions experienced. The findings for policy and program development from this study are timely as the nation faces a chronic shortage of affordable housing for both purchasers and renters. The results suggest ways to improve the MiH program and lay out approaches for researchers to navigate some of the complexities associated with this type of research.

Property Tax Foreclosure, Spatial Effects, and Neighborhood Racial Demographic Change: Examining Data From Detroit.

In recent decades, the city of Detroit has experienced the greatest population loss of any major American city. Applying Event History Analysis methodology to a large dataset containing information on all properties in Detroit between 2002 and 2013, I examine how Property Tax Foreclosure spatially perpetuated itself in Detroit, finding evidence that the number of past but recent Property Tax Foreclosures in a localized area significantly predicts the likelihood of a future foreclosure. I extrapolate these findings to mathematical simulations and find evidence that suggests that initial Property Tax Foreclosures played a significant role in cascading many later on. Finally, building off past research that suggests neighborhood blight disproportionally affects white residential preferences and patterns, I perform an empirical analysis that examines how the initial distribution of Property Tax Foreclosures in Detroit neighborhoods played some role in determining how those neighborhoods have experienced racial demographic change.

Urban regeneration: Community engagement process for vacant land in declining cities

Vacant land presents many challenges for older financially distressed cities. Community engagement is a very important element to solve the urban vacant land problem and assist in long term regeneration. This paper reviews what plans, policies, implementation methods, and community engagement process were developed to overcome barriers and challenges to vacant land projects. Most studies reveal that the importance of community engagement process in terms of understanding the problems and potential value of vacant land, redevelopment process, financial support, regulation, and neighborhood organizations participation for vacant land projects. To encourage community engagement to repurpose vacant land, municipalities should have to provide adequate information about vacant land conditions and their potentials in terms of ecological and social value. Code enforcement and tax foreclosure are efficient ways to control vacant land and the abandoned building problem. Tax incentive systems, such as high taxation rates on land but a low rate or no tax at all on infill development on vacant land, tax credits on vacant land forest structure, and rehabilitation abatement on abandoned buildings can increase public investment in vacant land. Local governments should support such efforts by creating community involvement groups, such as neighborhood coordinators, civic leaders, CDCs (Community Development Corporations), and other community-based nonprofit organizations. Community engagement is not specific planning, but it is part of an ongoing process in planning strategies to urban regeneration and renewal vacant land.

From REO to Ruin: Post-Foreclosure Pathways and the Production of Decline in Detroit, Michigan

ABSTRACTAlthough much has been written about the localized impacts of foreclosed properties, few studies have examined the role of the main actors handling mortgage-reverted properties, particularly the parties responsible for their disposition. Fewer still have examined these trends in historically stable but hard-hit neighborhoods where owner practices are implicated in current conditions. This study examines the likelihood of the U.S. Department of Housing and Urban Development and the government-sponsored enterprises selling real estate owned homes in the historically stable neighborhoods of Detroit, Michigan, to investors, as well as the likelihood of tax foreclosure following sales to homebuyers and investors. Whereas federal entities were less likely to sell homes to investors, all parties sold a high percentage of homes to investors. Once sold to an investor, the probability of tax foreclosure is extremely high. These results suggest federal and non-federal entities alike are associated with destabilizing and dispossessory outcomes that irreversibly altered these neighborhoods.

Challenges for Low-Income Housing Tax Credit Projects at Year 15 and Beyond in a Weak Housing Market: The Case of Detroit, Michigan

ABSTRACTProjects financed through the Low-Income Housing Tax Credit (LIHTC) program, the largest producer of affordable housing in the United States, face ownership transition after 15 years in service when tax-credit investors leave. In Detroit, Michigan, projects whose transitions were complete but that were subject to additional affordability restrictions fared much worse than national surveys showed. Many projects continued to provide affordable housing, but a share experienced mortgage or tax foreclosure, and many units became permanently uninhabitable, increasing disinvestment in neighborhoods. Projects reaching year 15 from 2016 through 2022 were under considerable financial stress as of 2015 and would likely need financial restructuring. Few high-capacity nonprofit developers existed to assume property ownership. The intervention of mission-driven syndicators helped stabilize numerous projects. Detroit’s experience illustrates the challenges LIHTC projects are likely to face in weak-market cities. Additional studies should investigate the year-15 challenges in diverse housing markets and the efforts to address those challenges.

Broke: Hardship and Resilience in a City of Broken Promises by Jodie Adams Kirshner

198 The Michigan Historical Review the dark side,” readers can come to a greater appreciation of the team’s glories. (8) Hunter’s book represents a worthy contribution to Detroit’s baseball history, and likewise belongs on the shelf of any true crime fan. Scott Ferkovich Detroit, Michigan Jodie Adams Kirshner. Broke: Hardship and Resilience in a City of Broken Promises. New York, NY: St. Martin’s Press, 2019. Pp. 368. Notes. Index. Hardcover: $28.99. The City of Detroit’s trip through municipal bankruptcy in 2013-14 is generally hailed as a great success. The process wiped $7 billion in debt from the city’s books. It gave Mayor Mike Duggan fiscal running room to expand programs like city planning. And it allowed the city to modernize its woefully inadequate city services. But as author Jodie Adams Kirshner points out in Broke: Hardship and Resilience in a City of Broken Promises, bankruptcy left important players in Detroit untouched—the ordinary residents mired in poverty and joblessness. Broke thus provides a needed corrective to the current image of Detroit as a “comeback city.” While great advances have been celebrated, particularly in the newly fashionable downtown, Midtown, Corktown, and other districts, vast areas of the sprawling city remain virtually untouched by any improvements. Kirshner’s pointillist approach follows several Detroiters identified by their first names—Joe, Miles, Cindy, Lola, among others—as they scrape out an economic existence in a city beset with high unemployment and little opportunity. Among other woes, the city’s housing market virtually collapsed during the Great Recession, and much of Broke follows Kirshner’s actors as they try to buy or hold on to a house facing tax foreclosure, vandalism, and heartless speculation by real estate vultures. The accumulation of detail creates a portrait of despair. At an ice cream parlor, workers dish up scoops from behind bullet-proof glass. A long-ago brush with the law that never leaves his record endlessly dogs the character Miles. Joe, a handyman, hires an ex-convict to help with some work and “the man agreed but told him robbing houses and selling drugs paid better.” (101) “Bankruptcy could not provide new remedies against financial problems,” Kirshner writes. “It could not directly reverse the population loss, employment loss, or property value loss that contributed to the Book Reviews 199 shrinking tax base, nor could bankruptcy bring back lost federal and state support to offset pressures on public welfare.” (xix) That last point about the loss of federal and state aid is a key to the puzzle. As Kirshner writes, assistance to cities peaked in 1978. Since then, Detroit and other cities have lost out on untold billions in dollars that were once promised but never delivered. “We have overestimated the ability of cities and their residents to combat powerful forces like automation, suburbanization, the recent financial crisis and deindustrialization,” she writes. (xxii) A reader might quibble that all cities suffer many of the same problems as Detroit. But, as Kirshner asserts, the Motor City may represent the extreme end of the scale of urban distress. And she is certainly on target that the highly touted bankruptcy—one of the transformative events in Detroit’s recent history—did little or nothing for many of the city’s struggling residents. “The lives that Broke chronicles show us what bankruptcy cannot accomplish,” she concludes in a downbeat cod. “They show us the hard work of combating individual poverty must take precedence over facile, short-term urban fixes.” (283) That’s a lesson of special relevance for Detroit. As Miles, one of the people Kirshner profiles, tells her in the book, “Detroit’s a good thing when it’s going good.” (xv) But no city can prosper if it’s at its best only when the going is good. John Gallagher Author and journalist William D. Lopez. Separated: Family and Community in the Aftermath of an Immigration Raid. Baltimore, MD: Johns Hopkins University Press, 2019. Pp. 232. Works cited. Hardcover: $27.95. William D. Lopez’s Separated details how mixed-status families navigate everyday life and institutions by focusing on a Midwestern county in Michigan. Mixed-status families are those that have a...

‘It’s like they make it difficult for you on purpose’: barriers to property tax relief and foreclosure prevention in Detroit, Michigan

All U.S. states permit local governments to recover unpaid property taxes through a tax lien foreclosure process. Tax relief policies can reduce household tax burdens and prevent the foreclosure of owner-occupied homes, but little is known about their use and effectiveness. Like other cities, Detroit, Michigan, experienced a rise in tax foreclosures following the 2008 deep recession. Michigan law requires cities to exempt low-income homeowners from some or all of their property tax obligation. Implementation of this policy, the Poverty Tax Exemption, nevertheless failed to protect many low-income homeowners from dispossession through tax foreclosure. State-mandated and locally-determined procedures placed the burden of learning about and applying for the exemption on financially stressed homeowners, restricting widespread access to this critical tax relief. Eliminating institutional barriers to tax relief can prevent many owner-occupied tax foreclosures, especially in cities where a high need for tax relief occurs under local conditions of fiscal austerity.

Toward a Politics of Accountability: Feminist ethics of care and whiteness in Detroit's foreclosure crisis

In the decade since the 2008 mortgage crisis, residents of Detroit, Michigan have continued to sustain anemic levels of preventable foreclosures by tax delinquency. The city’s decades-long over assessment of property values and proceeding windfall of tax foreclosures are happening amid a post-bankruptcy governance regime to remarketize housing and land that has been accumulated by the city through forfeitures and seizures. Over 50% of the city’s households, rented or owned, are led by African American women. Growing economic inequality and community efforts to keep Detroit a majority black city have roused organized responses against territorial reconfigurations that could drive further political-economic division and displacement. The Tricycle Collective, a woman-led non-profit that assisted Detroit households in avoiding tax foreclosure, will be examined here for their use of a feminist ethics of care in their approach to foreclosure prevention. This article considers the potential for harm in exercising an ethics of care within a deeply racialized housing market, without the intention of constructing next steps for advocates and activists to direct opposition toward the ongoing crisis of racialized dispossession. Speaking through critical race studies, urban geography and feminist theory, a feminist ethics of care will be deconstructed alongside what I call a “politics of accountability”, as a framework for action and analysis.

Neighborhood Tax Foreclosures, Educational Attainment, and Preterm Birth among Urban African American Women.

Ecological evidence suggests that neighborhoods with more tax foreclosures also have more adverse birth outcomes. However, whether neighborhood-level tax foreclosures impact individual-level risk for adverse birth outcomes is unknown. We assessed whether living in a neighborhood with high tax foreclosures is associated with a woman’s preterm birth (PTB) risk and tested for effect modification by educational attainment, among urban African American women from the Life Influence on Fetal Environments Study (2009–2011; n = 686). We linked survey and medical record data to archival, block-group level tax foreclosure data from the county treasurer. We used Modified Poisson regression with robust error variance and included a foreclosure X education interaction in adjusted models. In the overall sample, neighborhood tax foreclosures did not predict PTB (adjusted relative risk: 0.93, CI: 0.74, 1.16), but the association was modified by educational attainment (interaction p = 0.01). Among women with lower education (n = 227), neighborhood tax foreclosures did not predict PTB risk. The association for women with higher education (n = 401) was statistically significant for a reduction in risk for PTB (adjusted relative risk: 0.74, CI: 0.55, 0.98) among those who lived in neighborhoods with high versus low tax foreclosures. Future studies should seek to identify the mechanisms of this association.

Utilizing data-driven technology tools for community-led solutions to vacant properties and urban blight

As a city that has lost more than 1/3 of its population over the past 6 decades, some Baltimore neighborhoods suffer from a disproportionate number of vacant and abandoned properties, mired in issues of unclear ownership and “under-water” lien burdens. Cloudy legal and financial restrictions cause properties to cycle through a speculative system that strips them of all equity, and causes them to move out of reach for redevelopment. Evidence suggests that existing processes for addressing these issues, such as tax lien sales and foreclosures, can actually play a role in increasing vacancy rates and amplify neighborhood disinvestment (Dewar, Seymour, and Druță, 2015). Policies aimed at real property tax reform and foreclosure prevention can improve conditions, yet communities, non-profits, and city agencies in Baltimore lacked a unified data system to guide their reform and outreach efforts. One challenge is that property data are housed at various agencies, each using its own system of data storage and dissemination, making it difficult to use different datasets for a single property. The Baltimore City Open Land Data (BOLD) web application arose out of the need to streamline the data gathering process by integrating various datasets for easier use by stakeholders working to stabilize their communities, preserve homeownership, and break the cycle of vacant properties. This presentation will give an overview how BOLD was designed, a short demonstration of the application, and show how it can be used to further research the impact of tax sales and foreclosures in Baltimore City.

Taxed Out: Illegal Property Tax Assessments and the Epidemic of Tax Foreclosures in Detroit

Detroit is experiencing historic levels of property tax foreclosure. More than 100,000 properties, or one-in-four throughout the city, have been foreclosed upon for nonpayment of property taxes since 2011. Simultaneously, there is strong evidence that the City is over assessing homeowners in violation of the Michigan Constitution, calling into question the record number of property tax foreclosures. This Article is the first attempt to measure the impact of unconstitutional tax assessments on property tax foreclosures. Controlling for purchase price, location, and time-of-sale, we show that residential properties with higher assessment ratios sold in Detroit since 2009 were more likely to experience a subsequent tax foreclosure We estimate that 10 percent of all these tax foreclosures were caused by illegally inflated tax assessments. Moreover, since lower priced homes were over assessed at a greater frequency and magnitude than higher priced homes, we estimate that 25 percent of tax foreclosures among homes in the bottom price quintile (less than $9,000 in sale price) were due to unconstitutional property tax assessments. Consequently, property tax malfeasance has unjustly displaced thousands of Detroit homeowners, most of whom are African-American. While the numbers in Detroit are extreme, there is reason to be concerned that similar practices are widespread.

Housing Market Activity is Associated with Disparities in Urban and Metropolitan Vegetation

In urban areas, the consistent and positive association between vegetation density and household income has been explained historically by either the capitalization of larger lawns and lower housing densities or landscaping and lifestyle districts that convey prestige. Yet cities with shrinking populations and rising land burdens often exhibit high vegetation density in declining neighborhoods. Because the observed associations do not directly address the causal connection between measures of social privilege and vegetation in urban landscapes, it is difficult to understand the forces that maintain them. Here, we compare patterns of household income with new measures derived from housing market data and other parcel-level sources—sale prices, tax foreclosures, new housing construction, demolitions, and the balance of construction and demolition. Our aim is to evaluate whether these spatially, temporally and semantically finer measures of neighborhood social conditions are better predictors of the distribution of urban vegetation. Furthermore, we examine how these relationships differ at two scales: within the City of Detroit and across the Detroit metropolitan area. We demonstrate, first, that linear relationships between income or home values and urban vegetation, though evident at broad metropolitan scales, do not explain recent variations in vegetation density within the City of Detroit. Second, we find that the real estate and demolition records demonstrate a stronger relationship with changes in vegetation density than corresponding changes in US Census measures like income, which suggests they hold at least as much interest for understanding how the relationships between biophysical changes and neighborhood change processes come about.

Bringing Fresh Produce to Corner Stores in Declining Neighborhoods: Reflections from Detroit FRESH

The paper reports and reflects on an action research project to increase availability and sales of fresh produce in 26 neighborhood corner stores in Detroit, Michigan. Through analysis of neighbor­hood, store-related, and supply-chain character­istics, I identify factors in successful operations as well as challenges confronted by stores between 2009 and 2012, when many Detroit neighborhoods lost population due to tax foreclosure and aban­donment. Neighborhood distress was reflected in challenges experienced by a majority of stores, including those that dropped out of the project prematurely (five out of seven), or participated only inconsistently (seven out of 10). Nine stores supplied fresh produce consistently. Operators with high levels of performance tended to be in zip codes experiencing population losses at a lower rate than the citywide average, be more committed to their store-neighborhood, have more experience with fresh produce sales, and be more willing to test alternatives. This paper reflects on the chal­lenges of implementing corner store strategies in rapidly depopulating neighborhoods without ongoing subsidy. It also demonstrates the lessons in implementing them as action research projects including with students and community partners.

Here in Detroit: Transcending the Narrow Viewpoint of Property and Reviving the Soils

Here in Detroit: Transcending the Narrow Viewpoint of Property and Reviving the Soils

Disinvesting in the City

Tax foreclosure offers an opportunity to investigate processes of disinvestment in the city. Prior research has not considered how tax foreclosure administration protects or further damages neighborhoods where foreclosure occurs. Detroit’s loss of households led to disinvestment in housing and demolition of structures. In addition, at each of the three stages of property foreclosure and disposition, implementers took actions that promised to encourage disinvestment in property by facilitating the spread of blight and encouraging negative externalities. This occurred because (1) foreclosures took many owner-occupied properties; (2) the sale of properties to government entities was small and did not promote reuse; and (3) the foreclosure auctions disadvantaged purchasers who would become owner-occupants, channeled properties in strong neighborhoods to investors at low prices, and sold properties disproportionately to destructive buyers.

Just, Smart: Civil Rights Protections and Market-Sensitive Vacant Property Strategies

This essay, prepared for and published by the Center for Community Progress, a national, non-profit intermediary dedicated to developing effective, sustainable solutions to turn vacant, abandoned and problem properties into vibrant places, examines the legal and normative implications of local governments' use of neighborhood real estate market data to strategically focus vacant property remediation tools. I and other writers, such as Frank Alexander, Alan Mallach and Joseph Schilling, have argued for the importance of understanding the economic feasibility of market-based rehabilitation of derelict, vacant houses in making decisions as to how and when to use a variety of code enforcement, tax foreclosure and land banking mechanisms. Part I of this essay explains how treating vacant properties in similar states of disrepair differently because of the condition of the properties around them appears to constitute, at least in the short term, vigilant support for healthy neighborhoods and acquiescence to continuing decline in more distressed areas. Because the distressed areas in many of the cities dealing with long-term vacant property problems are far more likely to have high percentages of African-American residents, the first part examines the scope and evidentiary standards of the relevant civil rights law, including the Fourteenth Amendment's Equal Protection Clause, 42 U.S.C. §1982 and the Fair Housing Act. Part II concludes by outlining recommendations for local jurisdictions looking to create a substantively just and legally compliant approach to vacant property remediation that takes advantage of market-sensitive strategies.

Unit Cost of Tax Foreclosure Proceedings in the Brazilian Federal Justice

This study presents the results of a research on the “Unit cost of tax foreclosure proceedings filed by the Government”, developed by the National Institute for Applied Economic Research (IPEA) and the Brazilian National Justice Council (CNJ). Through analysis of the Government’s foreclosure proceedings, which respond for approximately 37% of the Federal Justice’s case stock, this study intends to determine the duration of tax foreclosure proceedings and its stages, thus building a methodology to generate quantitative and qualitative data that may be applicable to other legal proceedings. On the analytical side, this study intends to contribute subsidies to a debate about productivity and the rather slow pace of the Brazilian Judicial System, in addition to proposing criteria to evaluate proposals of management and process reform.