Editor's note: This story is part of Southwest Michigan Second Wave's On the Ground Calhoun County series.

With a March 31 deadline to pay property taxes looming, officials in Calhoun County say they have already been working with residents who may not be able to make those payments. Foreclosure does not have to be a foregone conclusion. 

As of today, the county has 464 properties that are in jeopardy of being foreclosed on, says Melinda Weaver, Chief Deputy Treasurer for Calhoun County. This will not be the final number of properties to go into foreclosure, however. In 2020, she says there were 121 foreclosures — 60 percent of those were vacant properties or land — and the numbers are likely to be the same this year.

“I think there’s going to be more vacant properties or unknown owners or blighted property that will be foreclosed on this year,”  Weaver says. “That’s not going to be different from last year.”

Calhoun County ranks number four on a list compiled by RealtyTrac of the five counties in Michigan with the highest foreclosure rates. According to the list published on Feb. 21, one in every 7,616 properties in the county is in foreclosure with the cities of Albion, Battle Creek, and Marshall having the highest rates within the county.

Weaver says Albion and Battle Creek account for about 80 percent of the county’s total foreclosure activity.

Melinda Weaver, Calhoun County’s Deputy Treasurer, stands near the front of the Treasuer’s office in the county building in Marshall.Given the trickle-down impact of the pandemic which has left many people unemployed and unable to cover the cost of basic necessities like food and utilities, says Brian Wensauer Calhoun County Treasurer and Chairperson of the Calhoun County Land Bank says he thought the current foreclosure numbers would be higher.

“Because of COVID people are unemployed and they’re not getting checks. On the reverse side of that with stimulus money coming in we’ve had people call and say they’re coming down and using that money to pay their taxes,” Weaver says.

She says she’s confident that the county’s current projected foreclosure rate will decrease significantly as a result of the access to those stimulus funds.

In many cases for those who have the financial means to pay, Wensauer says, “Some people will hold off until the last minute to pay.”
 
While it’s not uncommon for people to wait as long as they can, Weaver says she and her staff have already done more than 100 hardship extensions that give property owners who don’t have the resources to pay a one-year extension on the payment deadline.

“We are still doing hardship foreclosures for individuals, working with them on payment plans, and figuring out what got them behind,” Weaver says. “We don’t want to foreclose on them for back taxes. If we can come up with a plan to get them caught up, we will do that. We’re not the bad guys. We want people to stay in their homes, but we know how hard times are for people.”

Brian Wensauer, Calhoun County TreasurerAs a way to get the message that help is available to the people who are facing foreclosure, Wensauer says members of his Foreclosure Prevention Team have been knocking on doors to let people know how to contact his office for assistance and resources, which include information about the Step Forward Michigan Program, also known as Michigan’s Hardest Hit Fund® loan program.

Step Forward is a federally funded loan program designed to help eligible homeowners who are struggling with their mortgage, condo association fees, and/or property taxes retain ownership of their primary residence, according to the Step Forward website.

The Step Forward Michigan Program was established by the Michigan Homeowner Assistance Non-Profit Housing Corporation (MHA) to help Michigan homeowners stay in their homes. The program provides interest-free loans of up to $30,000 to assist with mortgage, property taxes, and/or condominium association fees. These loans are forgivable at 20% each year, as long as the property remains the homeowner’s primary residence. This means that if a homeowner remains in their home for 5 years or more after the loan is granted, they do not have to repay the loan.

Michigan is among five states that saw the greatest monthly increase in foreclosure starts, according to a February report by RealtyTrac’s parent company ATTOM Data Solutions. Michigan foreclosure starts were up by 60 percent. Utah topped the list with an increase of 230 percent, with North Carolina at 73 percent, Georgia at 58 percent, and Mississippi at 54 percent.

Foreclosure filings — default notices, scheduled auctions, or bank repossessions — are down 77 percent from a year ago, the report says. At the same time, the report notes foreclosure filings were 16 percent up from a month ago.

"Extensions to the Federal Government's foreclosure moratorium and CARES Act mortgage forbearance program continue to keep foreclosure activity historically low," said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. "These government actions, and the efforts of lenders and mortgage servicing companies, have helped millions of homeowners avoid foreclosure during a year-long global pandemic and a recession that resulted in 22 million lost jobs."

New faces of foreclosure, new solutions, hidden consequences

Weaver says for the first time this year she is seeing property owners that have never been faced with the prospect of foreclosure.

“We have seen some adult foster care operations that are having trouble getting caught up and we’re putting them on payment plans and we’ve never done that before,” she says. “This year we are also working with a landlord who owns more than 20 rental properties. He’s never been in trouble before for back taxes, but his renters aren’t paying so he doesn’t have money coming in.

“Landlords are struggling too. Most of them that I talk to frequently are always behind on getting rent payments, but none of them have evicted tenants.”

This “stay” on evictions is likely to remain for the short-term because of a rental assistance program which was announced on March 15 by the Michigan State Housing Development Authority (MSHDA). The $282 million COVID Emergency Rental Assistance (CERA) program will help tenants facing pandemic-related hardships avoid eviction while also ensuring landlords can recoup owed rent. Another $340 million is available to be appropriated by the state legislature, bringing the program to $622 million. 

CERA replaces the Eviction Diversion Program (EDP) that MSHDA launched in July 2020. That program helped about 16,000 households across the state avoid eviction and get current on rent.

“MSHDA anticipates being able to assist between 50,000 and 55,000 families, or 140,000 individuals, this year through CERA (COVID Emergency Rental Assistance),” says Kelly Rose, MSHDA's Chief Housing Solutions Officer, in a press release. “The average rental assistance payout through CERA could be as much as $10,000, versus $3,300 per household under the EDP (Eviction Diversion Program).”

Funding for CERA comes from the federal coronavirus aid package passed in December 2020. Of the $622 million allocated to Michigan as part of the package, $560 million will be used directly on rental and utility assistance, with the remaining $62 million set aside for case management, administrative and legal services.

Calhoun County property that is in foreclosure.But, assistance programs like this don’t help the county recoup lost property tax dollars as a result of foreclosures. In 2020, the county took in just over $1 million in property taxes from those who are not behind in their taxes and annually collects on average between $10 million and $11 million in delinquent property taxes. 
 
This has potential financial consequences for local jurisdictions and entities within them including, libraries, police and fire departments, ambulance services, and schools, which rely on those tax dollars to function. Wensauer says this is an impact very few people are aware of unless they head up one of these jurisdictions or service providers.

Weaver explains it like this: “You get a tax bill in July from your local unit (of government) and another one in December. If you don’t pay it by February 28 (which was extended to March 31 this year), it comes over to the County Treasurer as delinquent. We pay the local units and entities anyway and then try to collect those taxes for 2½ years through a property auction. If it doesn’t sell at auction every local unit has to pay back the money we originally gave them. They get charged back that money and have to pay us.”

The county currently is looking at payouts of close to $5 million to multiple jurisdictions and entities and this number is expected to increase as the numbers come in for jurisdictions like Battle Creek and Albion.

“It’s a lot and it’s money we don’t really have,” Weaver says.

Wensauer says the county has about $26 million in investments and uses that money to keep borrowing levels down. This coupled with the sale of 95 percent of the properties that go up for auction has enabled Wensauer to keep from charging back lost property tax revenues to local jurisdictions and those public service entities.

Minimum bids at these county auctions total the last three years of unpaid property taxes. In the majority of cases, the properties are rehabbed and sold. Those that aren’t sold are demolished using surplus funds generated through these auctions.

How does the county realize a surplus? “You owe $10,000 for three years’ worth of taxes and that’s what we call the minimum bid and then the property is sold for $40,000. We’ve made a profit of $30,000 and that’s the surplus portion of it,” Wensauer says.

Those properties and vacant parcels of land that don’t sell either go back to the local unit of government or to the Calhoun County Land Bank, which will cover the cost of demolition.

Wensauer says the three-year waiting period can mean further dilapidation of some vacant properties and land.

“We don’t get the best properties,” he says. “We have walked into homes that were filled with feces, garbage, and in one case a dead animal tied to a chain,” he says. “We had one house that was full of tires. They were in every room including the living room and the basement. We got a grant for tire removal and parked three big semi-trailers in that yard and filled them.”

Property neglect like this is not good for any local jurisdiction where it’s located, Wensauer says.

“We’ve got three years of people not taking care of their property and letting it fall down. Roofs are caving in and there’s garbage everywhere,” he says. “You’re living next door and your property value goes down. Our team goes out and mows the lawn and cuts trees down and holds open houses so that people will at least pay the minimum amount at auction.

“We are doing more than the state statutes require to work with people. We want the residents of Calhoun County who think they may be facing foreclosure to reach out to us because we want to keep them in their homes.”