Tax Foreclosure Extensions, Exemptions Sought

By: Lisa Brody

August 19, 2009 - The state would standardize the approach to granting tax foreclosure hardship extensions and exemptions for low-income homeowners if legislation that House Democrats are introducing receives the Legislature's approval and Gov. Jennifer Granholm's signature.

Currently, local governments can set their own guidelines for determining who can receive property tax bill exemptions or extensions. Standards vary across the state. Setting common state standards would usurp the local officials' ability to set their own standards.

Additionally, the legislation will specify uniform notification requirements, requiring that homeowners receive notice by mail that their house is in tax foreclosure, telling them how much they owe, and when delinquent taxes are due. Furthermore, the legislation would prevent foreclosure due to unpaid water bills or other municipal utility bills.

"Of course, they sound wonderful, but I'm always leery about Lansing mandating what local governments should do," said state Rep. Chuck Moss (R-Orchard Lake). "It's always great to be Robin Hood, but who's going to pay for it?

"Two bills in the House Democrats' tax foreclosure package have been introduced. The first is House Bill (HB) 4035, sponsored by state Rep. Shanelle Jackson (D-Detroit), specifying tax exemptions. HB 4050, introduced by state Rep. Bettie Scott (D-Detroit), details delinquency of taxes and how those in foreclosure due to water or utility bill delinquency would be exempt.

The bills would also create a hardship extension for households living at or below 200 percent of the federal poverty level, and would allow a tax exemption for those property owners. Currently, for a family of four, the federal poverty threshold is $22,050.

"Two-hundred percent of the poverty level is $43,500," Moss said. "That's nothing. Foreclosures are a bad thing, but do you tell people they don't have to pay their taxes, their water, or their utilities? Municipalities are in trouble, too, and can't afford to give a free ride to all of these taxpayers."

Lisa Brody is a staff writer for the Spinal Column Newsweekly