From REO to Ruin: Post-Foreclosure Pathways and the Production of Decline in Detroit, Michigan

Although much has been written about the localized impacts of foreclosed properties, few studies have examined the role of the main actors handling mortgage-reverted properties, particularly the parties responsible for their disposition. Fewer still have examined these trends in historically stable but hard-hit neighborhoods where owner practices are implicated in current conditions. This study examines the likelihood of the U.S. Department of Housing and Urban Development and the government-sponsored enterprises selling real estate owned homes in the historically stable neighborhoods of Detroit, Michigan, to investors, as well as the likelihood of tax foreclosure following sales to homebuyers and investors. Whereas federal entities were less likely to sell homes to investors, all parties sold a high percentage of homes to investors. Once sold to an investor, the probability of tax foreclosure is extremely high. These results suggest federal and non-federal entities alike are associated with destabilizing and dispossessory outcomes that irreversibly altered these neighborhoods.