A property tax relief program credited with helping 13,000 Detroit families avoid foreclosure is set to expire in June, raising fears that one of the city’s most effective foreclosure-prevention tools could disappear.
The program, known as Pay As You Stay (PAYS), was designed for homeowners already in a precarious position: people who had fallen behind on property taxes but qualified for an income-based property tax exemption.
Under the law, eligible homeowners could have penalties, interest, and fees wiped away, often cutting their back-tax burden by about half. Then, through the Detroit Tax Relief Fund, the Gilbert Family Foundation and Rocket Community Fund helped pay off the remaining balance, giving families a clean slate.
The impact is hard to overstate. From 2021 to 2025, the fund erased $52 million in property tax debt and helped 13,000 Detroit families avoid foreclosure, according to the Gilbert Family Foundation.
But now that off-ramp is in limbo, drawing renewed attention to the state's practice of shadow home equity theft.
How small tax bills can become foreclosure threats
In Michigan, unpaid property taxes move through a three-year forfeiture and foreclosure process: Taxes become delinquent in the first year, the property can be forfeited to the county treasurer in the second year, and if the debt remains unpaid by March 31 of the third year, the property can be foreclosed.
That timeline gives homeowners time to catch up, but it also gives the debt time to grow.
Once taxes become delinquent, Michigan adds a 4% administration fee and interest at 1% per month. When the property is forfeited in the second year, the county treasurer adds a title fee, and redemption requires an additional 0.5% monthly interest, along with recording, service, and notice fees.
For a homeowner already struggling to pay the base tax bill, those added expenses can turn a short-term hardship into a much larger debt problem.
It's a risk especially present in Detroit, and especially for senior homeowners—31% of whom are cost-burdened by housing, nearly twice the statewide rate of 16%, according to recent research from Poverty Solutions at the University of Michigan.
Part of the issue is the tax property tax burden itself.
The median senior homeowner in Detroit pays $1,963 in property taxes, roughly on par with the statewide median of $1,955. But those Detroit seniors are paying that amount while owning homes worth less than half the statewide value and living on incomes well below the statewide median ($35,831 compared with $52,764, respectively).
That’s why PAYS mattered so much for the city. By giving homeowners both time and meaningful debt relief, it created real stability for people in a vulnerable position.
Just ask Darius. After losing his job, Darius fell behind on his property taxes. As the debt grew to nearly $16,000, so did the fear that one financial setback could cost him his home.
"Because of my loss of income, I couldn't make the tax payments consistently and I was very worried I would lose my home," he told Wayne County in 2021.
After reaching out for help, Darius was referred to PAYS. The program helped reduce his balance, and he was able to resolve the debt for just $332.
The intervention did more than shrink Darius' bill. It helped him hold on to the independence and stability he had spent much of his life trying to build.
"My mom died when I was a child, and my father wasn't there for me, so I was determined to be self-sufficient," he said. "My drive to have my own place was part of that."
In Michigan, tax foreclosure can put more than the home at risk
Darius' story makes the possible expiration of PAYS all the more heartbreaking. Because in Michigan, falling into tax foreclosure can mean more than just losing a place to live—it can also mean losing all your remaining home equity.
Under state law, a homeowner who wants to preserve a right to claim any surplus funds after their home is sold at auction must submit a notarized notice of intent to the foreclosing authority by July 1 in the year of foreclosure.
The timing is notable—homeowners must file before they know whether the eventual sale will generate any surplus funds at all. And if they miss the deadline or fail to follow the process correctly, they can lose the chance to recover the equity that may have taken years—or generations—to build.
It's what the Pacific Legal Foundation calls "shadow home equity theft."
“In Michigan, less than 5% of owners navigate the claim process properly and are able to get payment for the excess value of the property taken from them," Christina Martin, a lawyer with the PLF who is fighting the practice, told Realtor.com® in July.
It’s exactly the process that the PAYS program helped more than 13,000 Detroit families avoid. But as its future hangs in the balance, so does one of the city’s clearest safeguards against turning tax debt into displacement.
Allaire Conte is a senior advice writer covering real estate and personal finance trends. She previously served as deputy editor of home services at CNN Underscored Money and was a lead writer at Orchard, where she simplified complex real estate topics for everyday readers. She holds an MFA in Nonfiction Writing from Columbia University and a BFA in Writing, Literature, and Publishing from Emerson College. When she’s not writing about homeownership hurdles and housing market shifts, she’s biking around Brooklyn or baking cakes for her friends.
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