Boosting Sustainable Homeownership in Detroit: Adding Financial Counseling to Property Tax Relief Programs to Help Stabilize Low-Income Homeowners

Overview

Key Takeaway

Resident financial stability is inextricably linked with the financial health of cities. Keeping residents in their homes is foundational to resident financial health – and the opportunity to connect financial counseling to sustainable homeownership efforts, and understand the impact of this connection, holds significant promise for the field.

Since it launched in 2020, the City of Detroit’s Financial Empowerment Center (FEC), as part of the CFE Fund’s national FEC Public initiative, has helped homeowners with low incomes avoid property tax foreclosure and stay in their homes. Working with the Wayne County Treasurer’s Office (WCTO) and the Wayne Metropolitan Community Action Agency (Wayne Metro), the City’s FEC joined a property tax relief ecosystem that is complex and constantly evolving, especially in response to the COVID-19 pandemic. Its ability to adapt to changing systems while remaining focused on client services enabled the FEC to help 485 homeowners reduce their overall debt by over $3 million to date.

To study the benefits of the relationship between Detroit’s property tax relief programs and the financial counseling services provided by the FEC, the CFE Fund partnered with the City of Detroit and MEF Associates, with generous support from the Wells Fargo Foundation. This study combines original qualitative research with a unique analysis of administrative data to explore sustainable homeownership outcomes experienced by clients participating in FEC financial counseling, the factors that influence those outcomes, and other questions to inform future programming and the broader field.

This report outlines the challenge of property tax foreclosure in Detroit, the opportunity to connect residents in danger of foreclosure with FEC financial counseling, and findings on how Detroit’s publicly-led financial counseling program supports low-income homeowners with property tax challenges.

Additional Takeaways

At the FEC, homeowners prioritized immediate financial threats - property tax delinquency was typically only one of multiple pressing concerns for FEC homeowners, and tax foreclosure was only one of many threats to their housing stability. FEC can play a valuable role in helping clients understand the
nuances of programs that support sustainable homeownership.

Effective crisis support builds client loyalty and capacity to address financial goals. Once counselors helped clients resolve their housing emergency, some clients’ time and energy were freed up and they had the capacity to focus on other financial issues. Over 85% of Detroit FEC homeowners attended more than one counseling session, a dramatically higher retention rate than the roughly 60% rate that FECs typically see.

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Key Takeaway

Impacts

Projects