Michigan Senate OKs tax foreclosure bidder ban

The looming tax-foreclosure crisis in the state has led to lawmakers passing a law that better regulates foreclosure auctions.

The Michigan State Senate passed a bill last week to prevent those with delinquent property tax payments to bid in foreclosure auctions. The bill, known as Michigan SB 295, is aimed at preventing homeowners from intentionally allowing their homes to go to foreclosure and buy them back in an auction for a lower price.

This year Detroit has experienced 22,000 foreclosures on properties where the owner failed to pay property taxes for three consecutive years. Out of this year’s foreclosed properties about half are estimated to still be occupied.

 Additionally, in the next few months, Wayne County will serve more 75,000 foreclosure notices, 62,000 of which are located in Detroit and half of those are estimated to be occupied, according to the media outlet. Tax-delinquent residents currently occupy more than half of the city’s properties.

"Our tax foreclosure auctions are currently being abused by tax-dodgers, slum lords and schemers that are letting their properties fall into foreclosure rather than paying their property taxes, and this bill will go a long way toward cleaning up our neighborhoods and creating safe communities," said Michigan State Senator Tupac Hunter, minority floor leader and sponsor of the bill, in a statement.

The new bill requires prospective foreclosure auction bidders to register with the foreclosing governmental unit at least 14 days prior to the auction, and any person or entity who has had a property go into tax foreclosure in the previous three years or has unpaid blight or nuisance property violations is prohibited from bidding in tax foreclosure auctions, according to Hunter's website.