Deadline Detroit | Whitmer signs debt relief bill to help Detroiters avoid lockdown


Whitmer signs Pay As You Stay. (Photo: City of Detroit)

There is now a debt relief program for low-income Detroit homeowners at risk of tax foreclosure.

Governor Gretchen Whitmer signed into law the so-called “Pay As You Stay” bill on Monday, paving the way for tax-delinquent homeowners to enroll in a program that could reduce their debts and eliminate additional fees and interest.

Despite a significant reduction in tax foreclosures in recent years, thousands of Detroit homeowners are still struggling to pay their bills. About 30,000 properties with more than two years of overdue bills are noticed for foreclosure every year. Over 11,000 homeowners have overdue debt payment plans.

The Pay As You Stay program is available to Michigan residents with a poverty tax exemption. That’s about 7,600 owners in Detroit now, though many more are eligible. Homeowners can qualify for Pay As You Stay through 2023.

Here’s how it works, according to the governor’s office:

The program is a three-part plan. Once registered, all interest, penalties and fees would be eliminated. To reduce an undue burden on homeowners, the balance owing would be limited to back taxes only or 10% of a home’s assessed value – whichever is lower. The remaining balance would be repaid over three years at zero percent interest.

Homeowners who qualify for full or partial property tax exemption (PTE) and enroll in future years would qualify for the program. To be eligible for the PTE, a household with 1 person cannot earn more than $19,303 per year; a household of 4 could not earn more than $28,671.

The bill was introduced by Rep. Wendell Byrd (D-Detroit) and seconded by Wayne County Executive Warren Evans, Wayne County Treasurer Eric Sabree and Detroit Mayor Mike Duggan.

It was created after Detroit News inquiries about a separate low-interest payment plan, according to paper reports, have in many cases pushed participants into more debt. That plan — the Interest Reduction Stipulated Payment Agreement, or IRSPA — was created by state law in 2015.

The news review last September found nearly 40% of early IRSPA registrants – nearly 4,700 homes – were either foreclosed or out of their plans and at risk of foreclosure this fall. Another 23% had more debt than when their payment plans started.

Housing advocates fear the new Pay As You Stay payment plan is another half-measure that doesn’t adequately address the problem. Pay As You Stay fell short of a bolder, more direct debt elimination bill previously proposed by Byrd. This plan had the support of housing advocates, but did not move forward because it lacked support from Duggan and Sabree, who said it would not have been “fair” to landlords paying their bills.

A separate Detroit News A survey has since found that the city overtaxed Detroit residents by at least $600 million between 2010 and 2016 and that 90% of homeowners with overdue debt were overtaxed by an average of $3,700, more than the average debts due.

City information site

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