The Detroit News reports that some homeowners in the city are letting their houses go into foreclosure over unpaid tax bills and then buying them back on the cheap—legally wiping out what they owe.
The paper finds landlords who can afford to pay them engaging in the tactic. Here’s the lede:
Landlord Jeffrey Cusimano didn’t pay property taxes on seven of his east-side rentals for three years, owing the city of Detroit more than $131,800.
Typically, that would mean losing the properties. But Cusimano not only got to keep them — his debt, including interest, fees and unpaid water bills, was virtually wiped free.
Cusimano and a growing number of Detroit property owners are using a little-known loophole to erase tax debt by letting their properties go into foreclosure and then buying them back a month later at the Wayne County Treasurer’s auction for pennies on the dollar.
Cusimano owns eighty houses. He got his seven houses back for $4,051, or about $579 per house. Such is the apocalyptic state of Detroit’s housing market.
The News is good to point out that the loophole is one way to help struggling homeowners stay in their houses.
— Speaking of apocalyptic, here’s your Quote of the Day, via The New York Times:
“This crisis has the potential to be a lot worse than Lehman Brothers,” said George Soros, the hedge fund investor, citing the lack of an authoritative pan-European body to handle a banking crisis of this severity. “That is why the problem is so serious. You need a crisis to create the political will for Europe to create such an authority, but there is still no understanding as to what the authority will do.”
And no, he’s not exaggerating.
— Here’s a silly bit of he said-she said in the NYT today.
The headline is unpromising:
Democrats Press Obama for New Works Programs; Republicans Say They’ve Failed
House and Senate Democrats are urging President Obama to propose spending on a host of new public works and job programs in his speech to a joint session of Congress on Thursday. But Republicans vowed to resist such initiatives, saying they had been a spectacular failure in the last two and a half years.
And lengthy quotes from the Republicans:
The Senate Republican leader, Mitch McConnell of Kentucky, warned against any initiatives that resembled the economic stimulus legislation passed soon after Mr. Obama took office in 2009. He and other Republicans said an overactive federal government was stifling economic growth.
“The problem with our economy is not that Washington is doing too little, but that Washington is doing too much already,” Mr. McConnell said on the Senate floor. The stimulus package, he said, has been an “epic failure.”
“As government continued to grow, the economy sputtered,” Mr. McConnell said. “And it’s still sputtering. That’s the reason so many people are skeptical of this president’s economic proposals. They don’t work as advertised.”
“In the two and half years since President Obama signed his signature jobs bill, the so-called stimulus,” Mr. McConnell said, “there are 1.7 million fewer jobs in this country.” The Labor Department says that nonfarm payroll employment totaled 131.1 million in August, compared with 132.8 million in February 2009.
Of course, McConnell is misleading people, but the Times doesn’t tell readers that or even point to independent data that would show McConnell is misleading people.
The nonpartisan Congressional Budget Office said last week that the stimulus bill is responsible for saving between 1 million and 2.9 million jobs. In other words, McConnell’s -1.7 million number would be -2.7 million to -4.6 million without the Obama stimulus.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum.
Tags: George Soros, Republicans, Stimulus, The Detroit News, The New York Times