More than one-third of Detroit homes — about 140,000 in total — have been foreclosed because of unpaid taxes or mortgage defaults over the past decade. Michigan received $498 million from the Treasury Department’s Hardest Hit Fund in 2010, but the Detroit Metro Times reports that the money, which was intended to help struggling homeowners, has largely gone towards demolitions instead.
Michigan has received $761 million in Hardest Hit funding since 2010, half of which was committed to demolishing blighted or unoccupied homes. Meanwhile, more than 80 percent of Detroit homeowners earning less than $30,000 a year were denied assistance through the program, compared to an average of 53 percent in other states receiving Hardest Hit funding. The Treasury Department’s website says programs vary across the country, but funding typically goes toward mortgage assistance for homeowners, principal reduction to make mortgages more affordable, blight elimination, and down payment assistance efforts.
In 2013, Michigan became the first state to use these federal funds to raze properties, with local officials claiming that demolitions would revitalize neighborhoods by raising the value of surrounding homes. Since 2013, Detroit has demolished more than 10,000 homes using federal funds, and in the first four months of 2016, the state didn’t have enough money to help new applicants because it had channeled its money into demolitions.
“Many of the houses now being demolished could have been saved if there wasn’t a lack of preventing foreclosures,” Jerry Paffendorf, co-founder and CEO of a local property managing company, told the Times. “If you don't prevent foreclosures, you're going to have more houses to demolish.”