Detroit Homeowners Targeted by Firm seeking Cut of Tax Foreclosure Refunds
An Ohio-based company, Gap Recovery, is under scrutiny for attempting to take a significant portion of tax foreclosure refunds owed to Detroit homeowners. these refunds stem from a Michigan Supreme Court ruling that determined Wayne County unconstitutionally withheld profits from foreclosed properties. Cynthia Wheeler,who is owed $42,900,was offered assistance in claiming her money,but the $15,015 fee charged by Gap Recovery raised immediate red flags.
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The Offer That Seemed Too Good to Be True
Cynthia Wheeler was certain that Wayne County owed her $42,900 for the Detroit home her parents formerly owned. The three-bedroom colonial, complete with a finished basement, was seized in 2016 due to a $9,100 tax bill. However, the offer from Gap recovery to help her claim the money came with a catch: a $15,015 fee.
“They started reaching out to my brother and my sister-in-law, and we all thought it was a scam,” Wheeler recalled.
Her suspicions were further fueled when she received a call from a volunteer working with Outlier Media and a coalition of nonprofits. This coalition is dedicated to helping Detroiters recover tax auction profits that were unconstitutionally withheld during the foreclosure crisis.
A Simple Process, a Steep Price
Wheeler learned that the initial step in claiming her refund involved completing a straightforward, one-page form. She was assured that she would receive detailed instructions and that, if her claim was approved, the entire process should require minimal legal expertise and cost next to nothing.
Outlier Media provided step-by-step guidance on initiating a claim and even offered free notary services. this starkly contrasted with gap Recovery’s proposed fee.
donovan McCarty,a staff attorney at the Detroit Justice Centre,a partner in the Outlier media effort,described Gap Recovery’s attempt to profit from the claims process as “gross.” He emphasized, “It’s a simple form. There’s no need to pay a lawyer to fill it out.”
Gap Recovery Defends Its Fees
According to its Better Business Bureau page,Gap Recovery is an Ohio-based asset recovery company founded in 2023 and owned by Jesse Peters. The company defended its fees in an email, stating that claims are “often far more complex than they may initially seem.”
The company warned that claimants could face unexpected hurdles “including liens, judgments, competing claims … and even possible opposition from the county.” Gap Recovery also noted that homeowners would not pay anything if Wayne county did not owe them money.
the Foreclosure crisis and the Fight for Justice
Gap Recovery’s actions come at a time when Detroiters are finally able to recover some of the wealth they lost during the city’s tax foreclosure crisis. In the wake of the Great Recession,Wayne County foreclosed on one-third of all Detroit properties for unpaid taxes.
These properties were frequently enough sold for more than the taxes owed, generating a “windfall profit” that the county used to “balance its budget.” However, the Michigan Supreme Court ruled that these profits rightfully belong to the former homeowners.
A subsequent decision made it possible for Detroiters to file retroactive claims for foreclosures that occurred between 2015 and 2020. While this ruling is a victory, it ”doesn’t come close” to making peopel whole, as the payouts will fall far short of the current value of the properties.
according to public records compiled by Alex Alsup, vice president of research and progress at the data firm Regrid, even if former owner-occupants in Detroit recover every cent they’re owed, they’d only get about 10% of the current value of their former homes.
Homeowners Express Outrage
Former homeowners who already viewed Wayne County’s payouts as inadequate were outraged by Gap Recovery’s efforts to take a cut. Tanya Thompson, who was contacted by the company about her 2015 tax foreclosure, stated, “I don’t think it’s right that Wayne County took people’s money, and now (Gap Recovery) is taking people’s money.”
Donald Visser, an attorney who represented Thompson in an earlier auction profits case, agreed with her concerns about the “significant fee” charged by companies like Gap Recovery. However, he pushed back on the idea that the claims process could be handled without legal help.
Visser wrote in an email that after the initial form is submitted, “our experience is that the counties are then defending the claims with any excuse that they can come up with.”
McCarty acknowledged that some claims could face challenges, but said the Detroit Justice Center may be able to help. He added that if claimants do need an attorney, they will have time to find one, stating, “I’d bet that (attorneys) will still take their money.”
High-Pressure Tactics and Hidden Contracts
Maria Poland, who along with her husband is owed an estimated $13,300 from Wayne County, described the high-pressure approach used by Gap Recovery. “We wanted to know how this works,” she recalled. “He said, ‘first sign the contract, and then someone will call you back and give you more details.’”
The contract Gap Recovery shares with former homeowners resembles an intake questionnaire but includes hidden contract language at the bottom. potential customers must click a button to view the full contract.
Adding to the pressure, Gap Recovery also offers to pay former homeowners an advance on their claim. The contract does not specify what they’re owed or why, but it clearly states the price: Gap Recovery clients who are owed less than $20,000 pay 40% of their claim to the company, while those in line for more than $20,000 pay 35%.
The contract includes a retainer for Morris Lefkowitz, an attorney in Southfield, Michigan. It states that Lefkowitz will receive a fee from Gap Recovery but does not specify how he’ll help them recover their money. Lefkowitz declined to comment.
“They would have just robbed us,” Poland said. “I think they’re taking advantage of people and rushing them to make these speedy decisions,and making it seem like it’s the only decision they have.”
Poland and her husband say they unwittingly signed Gap Recovery’s online form, given the hidden contract language. After they complained, Gap Recovery agreed to cancel the contract. “He said, ‘Oh, I’m sorry for the miscommunication,’” Poland said.
McCarty reviewed the contract and said it allows former homeowners to cancel the agreement simply by emailing Gap recovery.
Detroit Homeowners Beware: Navigating the Murky Waters of Tax foreclosure Refunds
Is it ethical for companies to profit from the misfortune of homeowners struggling to reclaim funds unjustly withheld? The recent case of Gap Recovery in Detroit raises serious questions about predatory practices and the exploitation of vulnerable individuals.
Interview with Professor Anya Sharma, Legal Expert on Property Rights and Consumer Protection
World-Today-News.com Senior Editor (W): Professor Sharma,thank you for joining us today. The recent controversy surrounding Gap Recovery and its aggressive solicitation of Detroit homeowners seeking tax foreclosure refunds has sparked outrage. Can you give our readers some background on this situation?
Professor Sharma (PS): certainly. The issue centers on the unconstitutional withholding of surplus funds from tax foreclosures in Wayne County, Michigan. The Michigan Supreme Court ruled these funds belonged to the former homeowners rightfully. The problem is not the refunds themselves; it’s how certain companies like gap Recovery are trying to capitalize on the situation by charging exorbitant fees for assistance in the claims process. This highlights the broader issue of predatory practices targeting vulnerable populations during times of economic hardship or legal complexities.
W: Many homeowners, understandably, are experiencing a sense of injustice. They already feel cheated by the county; now, they’re facing possibly high fees to reclaim their money. How simple is it really to file these claims? Is professional legal assistance actually necessary?
PS: Filing the initial claim is relatively straightforward; it involves completing a one-page form. However, navigating the complexities of potential legal challenges, such as liens, competing claims, or county objections, requires considerable expertise. While some homeowners might manage independently, many will struggle to navigate the bureaucratic hurdles, potentially losing their share of the refund if they don’t understand the process or timelines fully. It’s crucial to understand that while the form itself is simple, the underlying legal processes are far from it. Thus, while not mandatorily required for the submission of basic details, seeking legal advice is frequently enough highly beneficial.
W: Gap Recovery defends its fees by citing the potential complexities of claims. But the charges seem disproportionately high, ranging up to 40% of the refund in some cases! Are such fees justified? What ethical considerations should be examined?
PS: The significant fees charged by Gap Recovery raise serious ethical concerns surrounding unconscionable contracts and exploitative business practices. This is especially true considering the frequently enough vulnerable financial situations of the homeowners. While there may be instances where professional help is needed, to charge such a significant percentage of the refund, an already insufficient compensation by the county, for a relatively simple procedure, smacks of predatory behavior. This scenario is comparable to ambulance-chasing lawyers who prey during crisis situations. A major factor to account for is the fact that the county already benefited enormously from excess tax revenues. One must ask if this is the best use of the county’s budget – to assist homeowners who have been through foreclosure or to pay lawyers to file complaints. The fees should be transparent, reasonable, and fully disclosed before any agreement is signed.
W: What steps should homeowners take to protect themselves from companies like Gap Recovery?
PS: Here’s what Detroit homeowners should focus on to avoid such issues:
Scrutinize any contract meticulously, paying close attention to the fine print. Many hidden clauses or confusing wording may exist; never hesitate to contact a lawyer who can clarify the implications of such clauses. Note: This does not preclude the need to use professionals who might provide additional aid. Avoid rushing into any binding contract due to high-pressure tactics; take your time to assess the situation.
Seek free legal resources: Nonprofit organizations often provide free guidance and assistance with navigating the process of recovery. Always get multiple opinions on the matter and don’t be afraid to seek second opinions.
* Report suspicious practices: If you encounter any unethical or misleading business tactics, report them promptly through the relevant channels. This is key to protecting not only yourselves but also others from scams or other dubious tactics.
W: professor Sharma, what is the overall message you’d like to leave with our readers in Detroit who are trying to navigate the complex process of tax foreclosure refund claims?
PS: This is a critical moment for Detroit homeowners to reclaim some financial stability. The unconstitutional practices of Wayne County have already caused great financial hardship. Therefore, you must be incredibly vigilant about avoiding additional exploitation of a tough situation. Be informed, exercise caution, and don’t hesitate to seek assistance from reputable, free resources to avoid predatory companies that might try to exploit your situation.Remember this: getting an additional opinion from another professional is never a bad thing. Remember your rights. Be informed and stay cautious!
W: Thank you for your insights, Professor Sharma. This was incredibly important data.
End Note: the experience of Detroit homeowners highlights the crucial need for transparency and ethical conduct in the legal and financial assistance sectors. Readers are encouraged to discuss this issue in the comments section and share any related experiences on social media using #DetroitTaxRefunds.