WAYNE COUNTY – A federal judge ruled Tuesday that Wayne County failed to notify tens of thousands of homeowners of its involvement in a pending federal class action lawsuit alleging “gross governmental abuse” in the county’s foreclosure process.
The lawsuit, filed in the U.S. District Court for the Eastern District of Michigan in October 2020, names Wayne County and County Treasurer Eric Sabree, arguing that the county illegally seized surplus proceeds from foreclosure sales, often resulting in significant losses for the homeowners.
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The injunction issued on Tuesday found that the county’s failure to notify past homeowners of the pending class action lawsuit — combined with the county’s practice of having tax foreclosure claimants sign waivers that deny their right to any surplus proceeds in the sale — constituted a “material omission,” as they may be eligible to join the action.
“When Wayne County sells a foreclosed property for more than what is owed, the homeowner is entitled to all the surplus proceeds under the law. That’s not a gift; it’s their money,” said Jason Thompson, interim co-class counsel in the case. “The court found that Wayne County was not telling homeowners the full story or that the federal lawsuit was on file.”
As part of the ruling, the county must contact the tens of thousands of homeowners who entered into a foreclosure process to notify them of the pending litigation. It also requires the county to notify any future homeowners entering foreclosure agreements of the case so they can make an “informed decision regarding whether to proceed with a settlement, join this putative class, or pursue another option,” the ruling said.
The injunction, filed by U.S. District Court Judge Linda V. Parker, will be valid as long as the class action lawsuit is pending.