December in Michigan. Whoopie.
About as depressing as a place can be in the dead of winter, what with joblessness, auto company failures, low retail sales figures, falling home prices, and snow, snow and more snow, now there appears to be yet another deadly ripple in the housing crisis.
For three consecutive Thursdays in December, beginning with the 11th, 18th and the 25th, the Detroit News published an additional section to its already slim journalistic offering. This section, in actuality a legal notice, was devoted to Oakland County property tax foreclosures.
For reference, the majority of the Detroit area is made up of three counties: Oakland (northwest suburbs), Wayne (Detroit), and Macomb (northeast suburbs). My residence is in Oakland County. Back in Michigan’s heyday, Oakland County was once considered one of the wealthiest areas in America, home to Aretha, Lee Iacocca, the Taubmans, assorted ball players and captains of industry. People strove to build bigger, better and farther out, and Oakland County was the place to be. For a time, it was boom, boom, boom, baby. Obviously, in the ensuing years, we have fallen from that distinction.
I had ignored the “special” section of the News on December 11 and 18, but seeing as I had the holiday off for the third notice, I decided to peruse the listings. There I was treated to 28 full size tabloid pages, with a page and a half alone devoted to my city. Listed by address, name and amount of tax money owing, one could identify the delinquent payers. All told, there were approximately 10,000 homes, a record number, in danger of tax foreclosure, or about one in 50. Some were jointly held by homeowner and bank, likely in a mortgage situation, but a disturbing number listed only the property owner name, meaning these homes were paid for and there was no outstanding mortgage. The struggling homeowners have until March to pay up before the county comes in to seize the properties.
Merry Christmas to us all.
I’ve already heard plenty of anecdotal stories from local real estate agents who have seen people in enormous debt pick up their belongings and walk away. Even our water meter reader had a tale to tell. Some troubled homeowners took out home equity loans beforehand (back when you could still get one) and bought vehicles, furniture or big screen TVs before getting out of Dodge. Others stripped their soon-to-be foreclosed homes of kitchen cabinets, appliances, even light fixtures, wood molding and copper.
It only makes sense that state and local governments would be the next to suffer from the trickle down effects of the financial crisis. If mortgage holding homeowners are defaulting on their payments, that means there is no escrow money to pay for taxes or insurance. If you’re a retired senior on a fixed income, living on dividends from a tanked stock market, you also have no money to pay taxes. I didn’t tally up the outstanding tax debt, but it has to be a pretty hefty sum. Without revenue, we can only expect that basic public services will be reduced or cut completely.
That could explain why many communities were loath to get the salt trucks and plows out during our huge December snowfalls. If you only have so much salt to last you through a season (which here usually means end of March or early April), you might not want to use it all before the first of the year.
I don’t hold out much hope for these people, or for my county. The credit lines have dried up and haven't loosened even with a bailout package. This is our Dust Bowl of the New Greater Depression. As an example, we’ve been trying to refinance our home since September, and even with excellent credit, have been unsuccessful. That’s because like many others, our home is teetering on the brink of not being worth what we owe on it.
It would take a smarter person than I am to figure a way out of this mess. Needless to say, I have little confidence in our government to do the job.
Before the naysayers bleat “That’s just Michigan; it can’t happen here!” just remember that this state is two years ahead of the curve when it comes to the recent financial meltdown. Not that I want it to, but what happens here will eventually visit the other communities in America.
Here’s hoping the ripple doesn’t become a tsunami.