Wayne County is cutting checks to former homeowners whose properties were seized in tax foreclosures, but some claimants say the amounts are coming in below what they were owed, with no breakdown provided. Outlier Media reported the discrepancy as part of its Profits and Losses project tracking foreclosure repayments.
The dispute traces to a wave of tax foreclosures the county carried out after the Great Recession. Wayne County seized homes for unpaid taxes, auctioned them for more than the tax debt, and kept the difference. The Michigan Supreme Court later ruled the practice unconstitutional and required counties to repay the profits from foreclosures between 2015 and 2020. Wayne County is estimated to owe roughly $130 million in excess auction proceeds.
Debbie Jackson lost her home to one of those foreclosures. Based on her tax debt and what the property fetched at auction, she expected around $1,800. The check that arrived was for $1,520, with no explanation of the gap. "I had plans for that money," Jackson told Outlier. "It was quite disappointing." She accepted the lesser amount because she needed the money quickly and didn't know how to contest the calculation. She had been laid off two years earlier.
Other counties settled this more directly. Oakland and Macomb cut checks to former homeowners without requiring them to file claims. Wayne County ran a complex legal claims process that many residents found difficult to navigate without legal help.
State law allows counties to deduct a 5% sale commission from foreclosure repayments. Wayne County Treasurer Eric Sabree's office declined to say what additional fees, beyond that commission, it is deducting, and why it hasn't published its calculations for all claims. Adam Abusalah, Sabree's spokesperson, didn't return a request for comment. In court filings, the treasurer's attorneys argue that producing all calculations would be too burdensome and could be used by attorneys still litigating a class-action lawsuit that would seek larger payouts with interest.
An Outlier analysis of court filings found that dozens of claimants received less than 80% of what they expected. The filings were compiled by Shiva Shahmir, who managed Outlier's effort to notify Detroiters of their potential claims and now works as a paralegal at Street Democracy. Almost every claimant who simply accepted the county's figures received less than the excess proceeds minus the commission.
Donald Visser, a Grand Rapids attorney representing dozens of people in situations similar to Jackson's, said the county is deducting fees without disclosing how it arrived at the amounts. Visser has found "many instances where (a county) improperly calculated" payout amounts. He is asking a judge to require the county to disclose its full calculations for every claim. "The Claimants are attempting to get to the endline so they can receive what they are entitled to," he wrote in a recent court filing.
"If they owe you, they can take their time," Jackson said, "but if you owe them, they threaten all kinds of actions."
