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Lawsuit challenges foreclosure profits going to counties

Posted at 7:05 AM, Dec 18, 2020
and last updated 2020-12-18 07:39:26-05

KENTWOOD, Mich. — Kentwood law firm Visser and Associates is filing class-action lawsuits all across the state to stop counties from profiting off of foreclosure sales.

If the lawsuit succeeds in court, it would give clients a way to stay off the streets after losing their homes. It would also prevent any county in the state from collecting a surplus on foreclosures.

Counties have profited from foreclosures for years. Once foreclosed land is auctioned off, county governments keep all the gains and use them for operational costs.

The Michigan Supreme Court has ruled in the past that counties owe only the difference between the taxes owed to the counties and what the properties sold for. Clients in Visser's lawsuit have seen these differences range anywhere from $25,000 to $350,000.

Mindy Calkins, one of the 140 clients in the class action lawsuit, lost her 40 acres of land to foreclosure. The land had been in her family since the 1800s. The county made $144,000 after the auction of her land, and she was left with nothing.

When Calkins received the foreclosure notice, she gathered the $8,100 needed to save her property and brought it to the county. The county turned her away, saying they could not accept the money. "We didn't owe a whole lot of money on it, and then they sold it for a lot of money," Calkins said. "They made a huge profit by the time they paid the back taxes, and they kept all the extra money."

Situations like Calkins' is what Donald Visser of Visser and Associates hopes to stop from happening again in the future. They have filed in 10 counties so far.

"The statue has been in many regards very unfair and it has been unforgiving," said Visser. With regards to the money going back to the owners, Visser said that "some of these people will use it to get restarted. Some of them have significant health bills that they have expressed they would like to pay. They just feel overwhelmed with debt. The funds will hopefully try and let them get restarted."

If the class is certified, it could lead to thousands of people getting paid for the profits their foreclosures generated.