LANSING – Speaker Pro Tempore Pam Byrnes (D-Lyndon Township) today announced a plan that will help keep residents in their homes and add new protections against foreclosure amid one of the worst recessions in memory. The Homeowner Protection Plan creates new tools to protect homeowners from property tax foreclosure, especially seniors and working families that are hurting in this economic downturn.
"Foreclosures don't just hurt families – they hurt entire communities," Byrnes said. "Blighted homes invite crime and put our children at risk, bring down property values and chase away the small businesses that are so vital to successful local economies. By helping residents avoid foreclosure, we can keep families in their homes and help build thriving neighborhoods across Michigan and boost our economy."
The plan builds on the mortgage foreclosure legislation that took effect in July. That law grants a 90-day lifeline to homeowners facing foreclosure who commit to working with their lender and a housing counselor to reach a solution. The new Homeowner Protection Plan aims to help people who have lost their jobs or face other hardships in this economic downturn and are unable to keep up with their property taxes. The plan specifically targets struggling homeowners whose income has fallen to 200 percent of the poverty line or below. The new plan protects struggling homeowners from property tax foreclosure by:
- Creating hardship extensions on property tax payments for households with an income that is equal to 200 percent or less than the federal poverty guidelines.
- Making homeowners eligible for an exemption from property taxes if their income is at or below the poverty level and they are unable to pay.
- Strengthening notification requirements to ensure that homeowners facing property tax foreclosure have time to work with local governments to save their homes.
- Strengthening protections against foreclosure as a result of unpaid water and municipal utility bills.
The plan helps more homeowners avoid foreclosure by allowing local governments to grant hardship extensions to people whose income is double the federal poverty level or lower and by making property owners whose income is at or below the federal poverty level eligible for property tax exemptions. Under current law, local governments can use their own guidelines to decide whether a person at the poverty level is "poor enough" to be unable to pay.
The legislation also maximizes the time that local governments and property owners have to work out a plan to avoid property tax foreclosure by requiring notices to specifically identify the time and date by which property owners must pay their taxes in order to avoid foreclosure.
Property tax foreclosure affects thousands of people in Michigan every year, forcing many seniors and other low-income or fixed-income residents from their homes.
"This plan is not a bailout for homeowners who are shirking their responsibilities," Byrnes said. "This plan is for our residents who have worked hard and played by the rules – only to find they might lose their homes to foreclosure. Helping Michigan families hold onto their piece of the American Dream will help keep our community and state a great place to live, work, do business and raise a family."