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Why Quicken Loans’ philanthropic arm is down in the weeds of property tax foreclosure laws

Crain’s Detroit Business: To start, tell me about the army you’ve been building to try to educate homeowners who are behind on their taxes, about how they can get on a payment plan or get exempt from paying property taxes and stay in their home.

Grannemann: Anyone who lives in the city of Detroit or has friends in the city of Detroit is very likely to know or have personally encountered the tax foreclosure crisis themselves. We’ve had about 150,000 property tax foreclosures just in the last 15 years. To put that number in perspective, that’s about one-in-three properties in the city of Detroit. So it’s clearly a huge scale that this crisis has impacted in our city.

For us, we really saw this trend that we were getting a lot better as a community at keeping people away from the technical auction for foreclosure. But we saw a lot of people who were chronically behind on their property taxes. And that’s a really fragile position to be in because if you lose your job, if there’s an economic shift, if anything happens in the city … you’re one of the first people to potentially be at risk of losing your home. So we really wanted to get ahead of this issue.

By doing that, we saw that a lot of people had gone door-to-door at the last minute. Right before the tax foreclosure auction, we saw outreach efforts to try to get people to pay the minimum amount to stay out of the tax auction. But we wanted to do was, again, really get ahead of it and start the first moment you miss your first tax bill, we should be reaching out to you and talking directly about what resources are available to help you stay out of tax delinquency. So what we did was start by reaching out to our local community development corporation, church, block club, anyone who has some organization in the city. … We ended up working with 32 different organizations from across the city of Detroit … to hire about 150 Detroit residents going door-to-door and knocking on each of the doors of homes that were behind on their property taxes. So it didn’t matter if you were a renter, homeowner or land contractor, we wanted to talk to you so we could try to connect you with the right resources and also get a better sense of who was experiencing this crisis and how could we make some recommendations, some policy changes, some philanthropic investments that would, once and for all, really address the root cause of this issue.

In that first survey, you did from late 2017 into the winter of 2018 — not exactly a great time to go door-to-door in Detroit.

Really smart. Yes.

But you made contact with 65,000 homeowners or occupants of the houses. What did you find in that survey as far as how many were behind on their taxes or had entered into some kind of payment plan?

The most compelling thing that we found was that 75 percent of the homeowners that we talked to in the first year self-identified as being in an income bracket in a household size that would have qualified them for a complete property tax exemption. So in other words, I’ll say it differently: people who were living in a property behind on their property taxes that never should have been taxed in the first place because they should have been able to qualify for an exemption.

Legally, if you earn less than 130 percent of the poverty level you can get exempted from paying property taxes and you only pay the waste disposal fee for the city.

That’s exactly right. And the city of Detroit has a very generous policy on these exemptions. They’re the only municipality in the state that has a 100 percent exemption. But it’s really important that everyone across the city of Detroit know about the exemption and know how to apply for it in a way that’s accessible so that they can stay in their home sustainably.

The foreclosure crisis in Detroit has been hitting the city for well over a decade now. In late 2014, Mayor Mike Duggan went to the Legislature and got lawmakers to create a payment plan system for a five-year payment plan that essentially allowed county treasurers to cut interest rates to a 6 percent rate. In the past, people would get behind on their taxes and would get assessed an 18 percent interest rate — plus various fines and penalties tacked onto the bill — and they would get to the point where they would have literally tens of thousands of dollars of tax debt on a house that was worth $10,000, $15,000 dollars. Where does that process stand with the first cohort of 31,000 homeowners who got into the payment plans in 2015?

In many cases, the folks who signed up for a payment plan that first year, they had five years to pay off their tax debt and in some cases, they haven’t been able to do that successfully. … Those folks would, theoretically, be at risk of re-entering the tax foreclosure process next year, which would be a huge influx in occupied foreclosures for Detroit next year — and no one wants that.

The city and the county have worked together to create a new policy proposal … to continue to reduce those interest, penalties and fees so that folks who are low-income homeowners and can apply for that exemption are not only exempt for their current year taxes but also have a lessened burdened for their back taxes.

What’s the next step for this program and why is Quicken Loans knee-deep in these kind of tax policy issues in the city of Detroit?

That’s a really good question. The Quicken Loan Community Fund is the philanthropic arm of Quicken Loans and the family of companies in Detroit. And we care immensely about the city of Detroit. It is our hometown. It’s where our team members live. So we feel a real responsibility, especially as the nation’s largest residential mortgage lender, to invest specifically in the housing stability space. We have a ton of talent here in the family of companies around housing stability and we knew we could bring a lot to bear on this issue. We saw it as a crisis and we felt we could do something about it. We felt we had the philanthropic capital, the government affairs abilities, the team member talent, the technology, to be able to really start to reach the root causes of this crisis. That’s what we’ve been really passionate about doing ever since, especially since Dan Gilbert co-chaired the (2014) blight removal task force. That was really our first foray into this challenge and really gave us a sense of just how tax foreclosure and blight are connected. And if we are ever going to see a total solution for blight creation in the city of Detroit and all of the negative effects that it has for displacement and homelessness and eviction and all of these things, that we needed to, again, reach the root causes of those issues — and that really was tax foreclosure. We saw an 86 percent correlation between the tax foreclosure system and blight creation in the city of Detroit. So to us, it was just a really logical next step to dive into this issue and make sure we were taking care of long-term Detroit residents, especially those who are most vulnerable and experiencing poverty.

I imagine you’d like to get this legislation passed so you can go door-to-door next summer and provide some new information so that people have a pathway out of this tax debt.

That’s right. This legislation allows us an opportunity to add another tool in our toolkit. One of the pieces I really want to make sure to touch on is that when we go door-to-door, we really want to do everything that we can to help homeowners apply for the exemption. And hopefully, we’ll be able to help them apply for this payment plan as well.