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Kalamazoo County foreclosures prompt lawsuit alleging they impact certain neighborhoods

Posted at 4:55 PM, Oct 24, 2016
and last updated 2016-10-24 18:19:45-04

KALAMAZOO COUNTY, Mich. — A lawsuit brought to the attention of the FOX 17 Problem Solvers is aimed at the Kalamazoo County treasurer.

The suit accuses Mary Balkema of 'bad practice' when it comes to foreclosed homes, and 'bundling' properties for land deals. It’s where these homes are located and who used to own them that are bringing questions of race into the equation.  Balkema answered questions for FOX 17 on Monday.

Bundling is when foreclosed properties go to auction as a bundle and no longer are sold separately. The process makes is fiscally impossible for someone to buy their homes back, but it’s legal, and the county treasurer stands behind it.

William Piper, who filed the lawsuit on behalf of Willie Capers in Kalamazoo, told FOX 17 News there are grounds for suing the treasurer's office. “We are maintaining or alleging in this lawsuit that the bundling process has a discriminatory effect on African Americans,” said Piper.

Balkema thinks otherwise. She said it’s her job to do what’s best for the county.

“You can’t make a wild jump to say you foreclosed on this person because of their minority status, or where they live. That is not a valid argument. We foreclose on people based on nonpayment,” said Balkema.

Balkema said bundling is not a discriminatory practice, rather it’s used as a tool for revitalization in the county, and 50 years from now they are hoping to rebuild certain neighborhoods. The biggest factor is hoping property value rises. Balkema said part of the problem is people who were buying homes in the late 90’s and early 2000’s didn't have the means or the money to be buying and banks pushed people into homes that they were "ill-equipped to buy and pay taxes and utilities."

Most of the homes that come to Balkema through foreclosure are worth very little. In the lawsuit filed against Balkema, the owner’s home is worth about $4,000. She said bundling a property like that helps stop a constant foreclosure process.

“Otherwise you get a parcel, and it will sell, and you will get it back three years later, in worse shape, and sell again, get it back and meanwhile no one is paying the taxes on it. It kind of stops the constant churning of some of the lower valued properties,” said Balkema.  Property taxes are used for a wide variety of services throughout the county like law enforcement, roads, colleges, just to name a few.

The particular home in the lawsuit was bundled with about 60 other properties selling for more than $400,000. It was too costly for the former owner to buy back at auction. Balkema said the owner wouldn’t have been able to purchase back in or out of the bundle, because he would have to pay off all delinquent taxes. Balkema said even getting to that point where the house goes to auction doesn’t come without due diligence.

“We get out and personally knock on every single door. We have people sending out notices, we work with people, put them on payment plans,” said Balkema.
The process can take two to four years just to foreclose, and if you don’t have your property taxes paid then you’re out of luck.

“If you’re in the bundle and you have delinquent taxes, you couldn’t have purchased it in the auction. If it wasn’t in the bundle, you couldn’t have purchased it period,” said Balkema.

FOX 17 looked at the foreclosures in Kalamazoo County since 2010, and there were 378. The state equalized value before auction of all these parcels was about $9 million. Only about 100 of these parcels are back into productive use, so the county is only making a third of the money back.

If you plot all the bundled addresses on a map a lot of these foreclosures are in minority neighborhoods like the northern part of Kalamazoo where some areas are 60% African American.

“First of all I have no idea who lives there. We see parcels and addresses. Poverty is sometimes largely concentrated, I absolutely agree with that. Our decision to foreclose is made on payment and nonpayment,” said Balkema.

Balkema said bundling these foreclosed homes into land deals attracts investors who pay the needed property taxes. Also, Balkema pointed out they don’t just foreclose on properties. Sometimes they will rebuild homes, or refurbish homes and sell them.

“Every single house we have taken down where we have had a new build or we have a remodel, we have sold 100 percent of the inventory,” said Balkema.

Balkema said taking away peoples’ homes is never her goal, but when a homeowner can’t pay and the house is not worth, much it’s her job to turn it around adding that 'bundling' sometimes is the best option.

“It’s up to the treasurer what’s in the bundle and what’s not in the bundle, the state statute gives me that authority,” said Balkema.