By Elena Durnbaugh
Gongwer News Service
Lawmakers discussed legislation aimed at protecting homeowners facing foreclosure from quick claim deeds in a committee last week, along with a bill that would make changes to how short-term rentals are taxed.
Rep. Brad Paquette, R-Niles, and Rep. Joey Andrews, D-St. Joseph, testified on HB 5152 and HB 5153 before the House Economic Competitiveness Committee, which would modify provisions related to the sale of a property on which the mortgage is being foreclosed.
“There are some shady practices that happen out there where they target homeowners who are facing foreclosure, and they show up right before public auction, and they pressure people, especially struggling homeowners or grieving families who inherited a house and quickly signing quick claim deeds,” Paquette said. “These companies often pay a little sum of money, but the homeowner ends up giving away important legal rights without really fully understanding it.”
Among the rights homeowners give up under quick claim deeds are the right to buy their home back after auction through redemption, the right to stay in their house for a time after the auction, the right to any money that the house sells for that was owed or surplus proceeds.
“This is a form of equity stripping, and people lose tens or hundreds of thousands of dollars in home value through this deception,” Paquette said.
The bills would require clear notice before anyone signs away their rights, with a separate and easy to understand document that explains what rights they are signing over, including redemption, occupancy and surplus money. The bills would also require the buyer to provide information about how much equity is being lost, and a seven-day cooling off period before the homeowner is required to sign. Andrews said this was something that happened often in his district in Benton Harbor.
“A lot of homeowners during the last decade have lost property to this exact tactic,” he said. “And it’s probably unsurprising that the targets for this are often elderly, extremely poor, and don’t know what their rights are.”
Thaddeus Hackworth, corporate counsel for Berrien County, also provided testimony on the bills.
He explained that in mortgage foreclosure, the bank can foreclose by advertisement, meaning that they publish notice in the newspaper. If a homeowner doesn’t catch up on payments, the property goes to a sheriff’s auction.
At the auction, the bank bids what it’s owed, and if no one bids higher, then the bank takes the property. If other bidders drive the price above what the homeowner is owed, the excess is surplus proceeds, and that money belongs to the homeowner.
Additionally, the homeowner has a redemption right, which means they typically have between six months and a year to buy the property back from whoever won the sale by paying the winning bid amount.
“These are significant legal rights, and many homeowners in foreclosure have no idea that they exist,” Hackworth said. “Imagine you’re 70 years old. You’ve lived in your home for 32 years. You fall behind on your mortgage maybe by a few thousand dollars. The bank starts foreclosure. You’re terrified.
“Then a stranger calls. He says he knows about your situation, and he says he can help you keep your house. He's reassuring. He sends someone to your home with paperwork. Fifteen minutes later, you've signed a deed transferring your house to him. You didn't understand what you signed. You weren't given time to read it, and you certainly weren't given time to call a lawyer. You relied entirely on what you were told, driven to act by fear and a manufactured urgency.”
Hackworth said that exact situation has played out in Berrien County and across Michigan, and most people never see justice because they don’t have a lawyer.
“It requires witnesses, documentation, resources and years of litigation,” he said. “Most victims of this scheme will never see the inside of a courtroom.”
These bills would change the math for victims, Hackworth said.
“They require disclosure before the harm occurs rather than waiting for litigation after,” he said.
The bills do not currently include criminal penalties, but both Andrews and Paquette said they may be open to future legislation.
Rep. Jay DeBoyer, R-Clay, recommended that the legislation also take into consideration tax foreclosure because similar situations can arise.
Paquette and Andrews said the legislation was still being worked on to tighten up some of the language and make improvements.
Rep. Kristian Grant, D-Grand Rapids, asked if there was any way for homeowners to get their property back if they were victims of this scheme. Hackworth said, unfortunately, there was no straightforward way for someone to get back into a home without hurting people who had purchased it in good faith.
“It’s an unfortunate consequence of fraud,” Andrews said.
The committee also heard testimony on HB 5139, sponsored by Rep. John Roth, R-Interlochen. The bill is intended to simplify how tax is collected on short-term rentals by expanding the definition of “marketplace facilitator” under the Use Tax Act.
“Michigan already requires marketplace facility facilitators to collect and remit sales tax on many transactions, but short-term rental platforms are treated differently,” Roth said. “That inconsistency creates a confusion and results in similar transactions being treated unequally.”
Roth said the bill would simplify and modernize the collection of sales tax on short-term rentals by shifting responsibility for collecting sales tax from the host to the platforms, which would eliminate confusion and increase overall sales tax collection.
Austin, Texas, moved from host collection to mandatory platform collection in 2025, and on a month-over-month basis, they went from collecting $1.67million to $6.4 milliom, said Travis Creel, with Airbnb, who also testified in support of the bill.
Roth said it was important to take some action on short-term rentals because the state was leaving tax dollars on the table.
“My six years here in Lansing, we've talked about Airbnb, short term rentals. If we can get a long-term, short-term rental deal down the road with bed tax and CVV issues, I'm all for it.
But I've been part of that conversation. I've also been slammed by being part of that conversation,” he said. “My worry is that while we wait to get that done, we don't collect the taxes due to Michigan.
Gongwer News Service
Lawmakers discussed legislation aimed at protecting homeowners facing foreclosure from quick claim deeds in a committee last week, along with a bill that would make changes to how short-term rentals are taxed.
Rep. Brad Paquette, R-Niles, and Rep. Joey Andrews, D-St. Joseph, testified on HB 5152 and HB 5153 before the House Economic Competitiveness Committee, which would modify provisions related to the sale of a property on which the mortgage is being foreclosed.
“There are some shady practices that happen out there where they target homeowners who are facing foreclosure, and they show up right before public auction, and they pressure people, especially struggling homeowners or grieving families who inherited a house and quickly signing quick claim deeds,” Paquette said. “These companies often pay a little sum of money, but the homeowner ends up giving away important legal rights without really fully understanding it.”
Among the rights homeowners give up under quick claim deeds are the right to buy their home back after auction through redemption, the right to stay in their house for a time after the auction, the right to any money that the house sells for that was owed or surplus proceeds.
“This is a form of equity stripping, and people lose tens or hundreds of thousands of dollars in home value through this deception,” Paquette said.
The bills would require clear notice before anyone signs away their rights, with a separate and easy to understand document that explains what rights they are signing over, including redemption, occupancy and surplus money. The bills would also require the buyer to provide information about how much equity is being lost, and a seven-day cooling off period before the homeowner is required to sign. Andrews said this was something that happened often in his district in Benton Harbor.
“A lot of homeowners during the last decade have lost property to this exact tactic,” he said. “And it’s probably unsurprising that the targets for this are often elderly, extremely poor, and don’t know what their rights are.”
Thaddeus Hackworth, corporate counsel for Berrien County, also provided testimony on the bills.
He explained that in mortgage foreclosure, the bank can foreclose by advertisement, meaning that they publish notice in the newspaper. If a homeowner doesn’t catch up on payments, the property goes to a sheriff’s auction.
At the auction, the bank bids what it’s owed, and if no one bids higher, then the bank takes the property. If other bidders drive the price above what the homeowner is owed, the excess is surplus proceeds, and that money belongs to the homeowner.
Additionally, the homeowner has a redemption right, which means they typically have between six months and a year to buy the property back from whoever won the sale by paying the winning bid amount.
“These are significant legal rights, and many homeowners in foreclosure have no idea that they exist,” Hackworth said. “Imagine you’re 70 years old. You’ve lived in your home for 32 years. You fall behind on your mortgage maybe by a few thousand dollars. The bank starts foreclosure. You’re terrified.
“Then a stranger calls. He says he knows about your situation, and he says he can help you keep your house. He's reassuring. He sends someone to your home with paperwork. Fifteen minutes later, you've signed a deed transferring your house to him. You didn't understand what you signed. You weren't given time to read it, and you certainly weren't given time to call a lawyer. You relied entirely on what you were told, driven to act by fear and a manufactured urgency.”
Hackworth said that exact situation has played out in Berrien County and across Michigan, and most people never see justice because they don’t have a lawyer.
“It requires witnesses, documentation, resources and years of litigation,” he said. “Most victims of this scheme will never see the inside of a courtroom.”
These bills would change the math for victims, Hackworth said.
“They require disclosure before the harm occurs rather than waiting for litigation after,” he said.
The bills do not currently include criminal penalties, but both Andrews and Paquette said they may be open to future legislation.
Rep. Jay DeBoyer, R-Clay, recommended that the legislation also take into consideration tax foreclosure because similar situations can arise.
Paquette and Andrews said the legislation was still being worked on to tighten up some of the language and make improvements.
Rep. Kristian Grant, D-Grand Rapids, asked if there was any way for homeowners to get their property back if they were victims of this scheme. Hackworth said, unfortunately, there was no straightforward way for someone to get back into a home without hurting people who had purchased it in good faith.
“It’s an unfortunate consequence of fraud,” Andrews said.
The committee also heard testimony on HB 5139, sponsored by Rep. John Roth, R-Interlochen. The bill is intended to simplify how tax is collected on short-term rentals by expanding the definition of “marketplace facilitator” under the Use Tax Act.
“Michigan already requires marketplace facility facilitators to collect and remit sales tax on many transactions, but short-term rental platforms are treated differently,” Roth said. “That inconsistency creates a confusion and results in similar transactions being treated unequally.”
Roth said the bill would simplify and modernize the collection of sales tax on short-term rentals by shifting responsibility for collecting sales tax from the host to the platforms, which would eliminate confusion and increase overall sales tax collection.
Austin, Texas, moved from host collection to mandatory platform collection in 2025, and on a month-over-month basis, they went from collecting $1.67million to $6.4 milliom, said Travis Creel, with Airbnb, who also testified in support of the bill.
Roth said it was important to take some action on short-term rentals because the state was leaving tax dollars on the table.
“My six years here in Lansing, we've talked about Airbnb, short term rentals. If we can get a long-term, short-term rental deal down the road with bed tax and CVV issues, I'm all for it.
But I've been part of that conversation. I've also been slammed by being part of that conversation,” he said. “My worry is that while we wait to get that done, we don't collect the taxes due to Michigan.
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