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Photo and caption accompanying a city news release.
Mayor Mike Duggan unveiled a program Thursday he hopes will make it easier to get mortgages in the city and help rebuild neighborhoods.
The Detroit Home Mortgage program takes effect immediately to guarantee 1,000 mortgages in a city where banks hesitate to loan money because of deeply depressed property values, Matt Helms writes for the Free Press. Funds come from five banks ($28 million total), supplemented by $12 million from the Ford Foundation, the Kresge Foundation and the Michigan State Housing Development Authority.
"This is a game-changer for Detroit,” says Duggan in a prepared statement. “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.”
Helms writes:
Called the Detroit Home Mortgage, the program will offer traditional first and second mortgages from five banks that lend to home buyers in metro Detroit. The mortgage program is designed to address one of the biggest hurdles to home ownership in the city: home sale prices that are higher than appraised values, a gap that makes it difficult for people to get mortgages, no matter their income or credit score, Duggan said at a news conference also attended by Gov. Rick Snyder.
Initial reactions include these details from BLAC Detroit magazine editor Aaron Foley:
- Credit score cutoff: "640. That's higher than a conventional loan, which requires a 620 FICO score, and higher than a FHA loan, which requires a 580 FICO score if you're looking to put down a minimum down payment of 3.5%."
- Down payment: Set by participating banks: Huntington, Flagstar, Talmer, FirstMerit and Liberty.
- Two mortgages involved: "The Detroit Home Mortgage program gives two loans to borrowers to finance a home purchase: One to cover the appraised cost of the home, and one to cover the 'appraisal gap.' "
"The second mortgage is also intended to cover the costs of needed renovations," Kresge Foundation communications officer Krista Jahnke notes in a Facebook discussion on Foley's page. "So your second mortgage could actually be larger than just the appraisal gap. So many homes in Detroit are in need of major renovations to make them worth buying, so the second mortgages help with that issue as well."
More details are at detroithomemortgage.org.
