Mayor Mike Duggan announced the Detroit Home Mortgage program today, which aims to increase home ownership thoughout Detroit. This initiative is a collaboration between the Obama Administration's Detroit Federal Working Group, Clinton Global Initiative, Huntington Bank, Flagstar Bank, Talmer Bank and Trust, FirstMerit Bank, Liberty Bank, the Ford Foundation, The Kresge Foundation, and the Michigan State Housing Development Authority.
"This is a game-changer for Detroit," said Duggan "We are confident that Detroit Home Mortgage will increase homeownership in the city of Detroit. This initiative is critical to rebuilding Detroit's neighborhoods. With an opportunity to get a home mortgage, qualifying homeowners and homebuyers have a real opportunity to buy and renovate a house in the city and make it a home."
Last year there were only 500 mortgages in the city and it was depressing.— Mayor Mike Duggan (@MayorMikeDuggan) February 18, 2016
The credit score didn't matter it was all about the appraisal value to get a mortgage and it was a problem.— Mayor Mike Duggan (@MayorMikeDuggan) February 18, 2016
Banks will now be able to lend qualified homebuyers the full amount needed to purchase a renovated home, or to buy and rehabilitate homes anywhere in the city of Detroit, added Duggan.
Previously, federal lending guidelines did not clearly allow banks to loan borrowers enough money to cover necessary repairs because the loan amount was limited to the low, appraised value of a house.
Many potential homebuyers have good credit scores and stable incomes, but could not get a large enough mortgage because the appraiser could not find a similar home nearby with a comparable sales price.Houses across Detroit remain inexpensive to purchase relative to homes outside the city limits, but the lack of financing forced many families either to pay cash or to rent. Renovations can take years because of lack of funding or using credit cards to pay for them.
The Ford Foundation made a $400,000 grant and Kresge a $475,000 grant to support the start-up operations of the fund. The Michigan State Housing Development Authority has committed $1.5 million for the first year and will look at additional funding of up to a total of $6 million in the future.