On February 25, 2026, the U.S. Supreme Court heard oral argument in the matter of Pung v. Isabella County, Michigan (No. 25-95.) This was the only matter on the Court’s calendar for the day, and the case received the Justices’ undivided attention. The hearing continued for nearly 2 hours. After the petitioner opened the session, the Justices questioned the counsel on many issues. Among those were, why his client did not sell the property on his own terms to avoid foreclosure; what is the so-called “fair market value” in the foreclosure context; should the government become the petitioner’s agent to obtain for him the highest possible value for the property, despite his default in paying taxes; and what statutory tax lien foreclosure scheme would accommodate the petitioner’s position. Most Justices sympathized with the petitioner’s legal plight but appeared skeptical of his claims under the Fifth and Eighth Amendments (especially Justice Ketanji Brown Jackson).

The United States, represented by the Office of Solicitor General, argued that the petitioner’s claims cannot be sustained under the Fifth and Eighth Amendments but recommended a remand to the lower courts to examine transparency of the foreclosure auction where the property was sold. 

The respondent, Isabella County, argued that the highest bid at a foreclosure auction is a fair price in the foreclosure scenario; that prices for distressed assets are unavoidably depressed by underlying tax disputes, the foreclosure process itself, and the resultant title defects. The counsel demonstrated that no reasonable bidder would bid at a foreclosure auction an amount close to a pre-foreclosure tax assessment, which is why such an assessment cannot be used to determine a fair market value.

After rigorous examination of relevant case law and consideration of fairness to taxpayers and local governments, the Court marked the case as “submitted for consideration.” All interested parties should be following up for the verdict as its significance for the national foreclosure framework cannot be underestimated.      

Prepared by Bronster LLP with contributions from Leonid Krechmer, Of Counsel, and Andrew Kazin, Partner. This material is provided for informational purposes only and does not constitute legal advice or representation.