A settlement in a class action lawsuit over how counties use proceeds from foreclosure sales means 43 Michigan counties, including Berrien, will have to pay back a portion of those dollars to the former property owners. At issue is when a foreclosed property is sold for more than what the former owner owed on it. The amount each county will have to pay back won’t be known until late summer. Former Berrien County Treasurer Bret Witkowski tells us Berrien always kept revenues from foreclosure sales in a separate Foreclosure Fund, which was used for blight removal at the properties in question. He says when some counties started putting those dollars in their general funds, he thought there would be trouble.
“In the early 2010s, there was a push by the Michigan Association of Counties that this money should not just sit in a segregated fund to be used for improvements or blight or whatever a county wanted to do, that after two years, it should just go into the general fund,” Witkowski said. “When that started, I warned counties that this is going to open Pandora’s box and a lot of problems are going to come up.”
As a result of the lawsuit, counties since 2020 haven’t been able to keep all proceeds from foreclosure sales, and therefore, there’s been less available in Berrien and others to remove blight. Under the settlement reached in March, 43 counties will have to pay back 80% of the surplus from foreclosure sales to the parties who seek those dollars.