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Warren floats program to promote home ownership

February 19, 2014

WARREN — Warren officials want to promote home ownership by buying tax-reverted properties in bulk from the county and selling them through an investor to people who actually plan to live there.

“Past purchases of these tax-reverted properties have been sold largely as rentals to private investors,” Warren Mayor Jim Fouts said in a statement announcing the Home Ownership Priority program in January. “Unfortunately, these foreclosed homes become rentals because of the tight money policies of lending institutions. We have to head off the trend of rentals and increase home ownership.”

Warren Public Service Director Richard Sabaugh said Warren currently has about 6,800 licensed rental properties. The city also reportedly has about 5,000 vacant homes.

Previously, large numbers of tax-foreclosed properties — sometimes even the entire lot — have been purchased by investors at the county auction, who in turn sell the properties to individuals or companies who then rent them.

Sabaugh said if a suitable deal can be reached in the weeks and months to come, the city could buy a “couple hundred” homes in bulk at the county tax auction this summer by exercising its option to purchase them before the public bid. The properties would then be sold through a broker to an investor under a contract that requires the owner to occupy the homes.

The city is currently accepting proposals from interested brokers and plans to seek investors later this year. 

“In some ways, we’re paying ourselves, but the next step is important,” Sabaugh said. “We don’t want to get into the real estate business. That’s the last thing we want to do. We want to do it so we can control how these properties are sold.”

The end result, officials hoped, would be a higher percentage of owner-occupied homes in Warren, and a higher number of properties on the city tax roll.

“The only money we exchange is the money we give to the county for back taxes. We, in turn, get an investor to pay us. We’ll make out on this thing, if it flies,” Sabaugh said.

The Warren City Council voted unanimously Jan. 14 to approve the formation of a committee to oversee the search for a broker and an investor for the tax-reverted properties.

According to a timeline for the program obtained from the city, the plan calls for a broker that would create a market for Warren’s tax-reverted properties. Investors would then buy all of the properties from the city within a few days of Warren’s purchase from the county.

Counties in Michigan must handle the sale of tax-delinquent homes through bids, according to state law, if the city does not purchase the properties.

The timeline would seek council approval in March for a broker and in June for an investor, followed by notification to the office of the Macomb County Treasurer Ted Wahby of the city’s intent to exercise its purchase option.

About the author

Staff Writer Brian Louwers covers the cities of Warren and Center Line. He has worked for C & G Newspapers since 1998 and is a graduate of the University of Michigan-Dearborn. In his free time, he participates in the Michigan State University Extension Master Gardener Volunteer Program and conducts interviews with military veterans for the Veterans History Project at the Library of Congress.

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