Foreclosure settlement could net former homeowners thousands of dollars

Some former homeowners in Kent County could be getting thousands of dollars after the government took their houses for late taxes and sold the properties for a profit.

In a federal court settlement, Kent County will return surplus funds from the sale of foreclosed homes to former owners. The deal comes years after the Michigan Supreme Court ruled the state law that called for counties to keep all proceeds of a foreclosure sale was unconstitutional .

The case that sparked the ruling came out of Oakland County, where a homeowner lost his house over an $8.41 tax bill. In that case the property sold for $24,000.

The FOX 17 Problem Solvers brought attention to the issue of foreclosures over tiny tax bills . State lawmakers started looking at changing the law , but that did not happen before the Michigan Supreme Court's ruling.

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In a release Wednesday, Kent County says most foreclosed properties do not sell for the amount of taxes owed. The few that do would help cover the expense of other foreclosed homes that sold below their outstanding taxes.

Now counties across Michigan will have to turn over any surplus back to the former owners. Some counties were facing more than $100 million in surplus funds that would have to be paid back. The settlement reduces the amount, but exact numbers were not disclosed.

“This settlement resolves significant pending litigation in Kent County while providing an avenue for taxpayers to reclaim their surplus proceeds,” said Kent County Treasurer Peter MacGregor. “We’re thankful for the court’s decision, which helps bring this issue closer to complete resolution.”

In order to qualify for the settlement, former homeowners had to file claims in the spring and summer of 2023.

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