The Increase in House Repossession Due to Unpaid Property Taxes

House repossession due to non-payment of property taxes is on the rise in several municipalities in Michigan.

The economic downturn that has swept the country since December 2007 has severely affected Michigan's economy, leaving some of its communities scrambling to reduce their budgets, find additional revenue sources and implement measures to survive the current economic crisis.

Most local governments in Michigan derived their revenues from property taxes. The state's property tax revenues are based on millage rates and a property's taxable value. However, revenues from property taxes are slow to rise than they were used to because of the declining property values.

Non-payment of mortgages or property taxes by homeowners resulted in house repossession. As more and more house repossession occur in a neighborhood, the assessed home values of surrounding properties are lowered, thereby reducing the total tax revenue that local governments may collect.

Adding to the problem of dwindling revenues due to property tax declines, municipalities in Michigan are also experiencing difficulties due to reductions in the revenue sharing payment program of the state.

Under the revenue sharing program, the state distributes a share of the collected sales tax to local government in the form of unrestricted revenues. The constitutional portion of the revenue sharing accounted for 15 percent of the nearly 4 percent total state sales tax collections. In addition, the statutory revenue sharing is derived from 21.3 percent of the established 4 percent total state sales tax collections.

Under the current troubled economic times, consumers tend to spend less, yielding low revenue from sales tax and resulting to reductions in payments of statutory revenues to local municipalities. In addition, the state's financial difficulties have forced lawmakers to reduce revenue sharing payments given to local governments.

Meanwhile, Oakland County Treasurer Andy Meisner explained that reduced revenues may directly and severely affect the ability of the local community to provide necessary services for its residents.

Data released by the Oakland County Equalization Division showed that many communities in Michigan lost millions due to low taxable value of properties.

Currently, there are 550 properties that have reverted to county ownership because of non-payment of property taxes. However, the total number of house repossession due to unpaid property taxes represented only a small portion of the number of home loan foreclosures in Oakland County

Joseph B. Smith has been educating buyers on the finer points of House Repossession at Repo-Homes.com for over five years.

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