Public Date: December 1, 2011
Contact: Andy Meisner
Phone Number: 248-858-0624
Pontiac, Michigan - Oakland County Treasurer Andy Meisner is calling on all Oakland County homeowners who have received notices of impending tax foreclosure to contact his office immediately to set up a Taxpayer Assistance Meeting and save their home from the harsh, state-imposed process of property tax foreclosure.
"State law imposes a very harsh system of property tax foreclosure that I tried to change as a State Representative," said Oakland County Treasurer Andy Meisner. "With the Legislature refusing to provide relief, we are stuck with a system that can lead to the loss of property unless taxpayers contact my office immediately to set up a monthly payment plan."
Under state law, if property taxes are not paid to the local city, village or township, they are turned over to the County Treasurer as "delinquent" on March 1 of the next year at which time the taxes are subject to 1% of interest each month. On March 1 of the following year, the interest rate increases to 1.5% per month or 18% annually. In the third year, a property can be lost to the county for non-payment.
"We offer all taxpayers the chance to sit down with me personally to protect their home with a good-faith payment plan," said Meisner. "However, I believe that it is fundamentally unfair to all taxpayers to shift their burden onto others by refusing to pay".
While a State Representative, Treasurer Meisner introduced legislation to give County Treasurers the discretion to lower the state law imposed interest and fees when a taxpayer shows good faith by entering into a payment plan.
Listen to Podcast: Taxpayer Assistance Meetings with County Treasurer
History of PA 123
Public Act 123 of 1999 was an amendment to the General Property Tax Act making major changes to the property tax foreclosure process in Michigan.
According to several people intimately involved in drafting the legislation, the scope and volume of the mortgage foreclosure crisis and the resulting property tax foreclosure crisis in Michigan was not anticipated at the time. No one dreamed that Wayne County would have over 15,000 tax foreclosures or that Oakland County would have over 1,100 in 2011.
Homes in mortgage foreclosure become at-risk for property tax foreclosure, especially in cases where banks take the homes through mortgage foreclosure, refuse to pay the taxes, and stick local taxpayers with the bill for cleaning up their mess. The correlation between mortgage and tax foreclosure is well established.
In terms of property tax foreclosure, the system developed under PA 123 is extremely harsh. In the first year of a delinquency, delinquent taxes (including any special assessments, water bills or other items added to the bill by the local city, village or township) are subject to a 4% administrative fee. The correlation between mortgage and tax foreclosure is well established.
In terms of property tax foreclosure, the system developed under PA 123 is extremely harsh. In the first year of a delinquency, delinquent taxes are subject to a 4% administrative fee and 1% of interest each month (12% annually) starting March 1 of that year.
In the second year of the delinquency, the forfeiture year, the interest rate increases to 1.5% per month or 18% per year. This happens retroactively so the first year is recalculated at the 18%.
It is during this time that County Treasurers are required to publish the list of all holding an interest in a property with delinquent taxes. A foreclosure petition is filed in the Circuit Court in May of this second year.
On March 31 of the third year of the delinquency, taxpayers can lose their interest in their property if they fail to enter into a payment plan with the County Treasurer or pay off the delinquent amount, interest and fees completely.
Recommended Changes to P.A. 123 of 1999
As a State Representative, Treasurer Andy Meisner introduced legislation (H.B. 6168 passed unanimously 103-0 on September 25, 2008, only to die in the Senate Finance Committee chaired by then State Senator Nancy Cassis) that would give County Treasurers the discretion to provide needed relief for taxpayers from the most oppressive aspects of P.A. 123, lowering the top interest rate from 18% to 12% -- eliminating the "jump rate."
Some relief, or "fee fairness," from these usurious rates is needed. The interest should be high enough to incent prompt payment, but not so punitive so as to put taxpayers in a hole they will never dig out of.
In addition, when taxpayers agree to sign and comply with a monthly payment plan, County Treasurers should have the discretion to suspend the interest and fees.
Lastly, County Treasurers are not supposed to start administrative show cause hearings, or "Taxpayer Assistance Meetings" until within 30 days of the final Circuit Court hearing on the property tax foreclosure. Given the enormous volume of tax foreclosures in the queue, County Treasurers should be permitted to begin these meetings earlier. The result will be an increase in delinquent taxes that are collected through payment plans and fewer property tax foreclosures.