Home foreclosures are rising dramatically in Oakland County either due to people choosing not to pay or not being able to pay their mortgages, according to county officials. However, the number of properties which have been foreclosed on due to failure to pay property taxes has remained largely stable, according to Oakland County Treasurer Pat Dohany.
Delinquent tax and mortgage foreclosures are entirely different matters. A tax foreclosure occurs when an individual doesn’t pay property taxes on a parcel, while a mortgage foreclosure occurs when mortgage payments aren’t made.
There are essentially two types of mortgages — escrow, and non-escrow mortgages. With escrow mortgages, property taxes are paid off on a monthly basis with the borrower’s mortgage payments. That, in a sense, puts the typical property tax bills out-of-sight and out-of-mind for property owners. With non-escrow mortgages, borrowers pay property taxes directly to their municipality.
An arrearage occurs when taxes are delinquent but have not yet attained the threshold by which the property can be foreclosed. Upon foreclosure, the property then comes under temporary ownership of the county. Foreclosure occurs when taxes have been delinquent for 25 months. After that, the county can sell the property.
When property tax collection is shifted to the county, there is a one-time 4 percent administrative fee that’s added, as well as a 1-percent per month interest rate effective the first day of each month. These fees can’t be waived pursuant to law, according to the treasurer’s office.
On Oct. 1, a $15 fee is added to each delinquent parcel on which property taxes have not been paid for the previous year. If the 2006 taxes are not completely paid off by Feb. 28, 2008, a $195 fee — $175 plus a $20 recording fee — will be added to each parcel, and a certificate of forfeiture (lien) against that parcel is recorded at the Register of Deeds Office.
Kirk Pinho, Spinal Column Newsweekly