Feb. 11–Mayor Mike Duggan said Wednesday that he is working with major investors to create a home-lending program to make it easier forDetroit homeowners to get mortgage-type loans to buy houses.
Such a loan fund could help solve one of Detroit’s major challenges: finding credit for home buyers in an environment when appraised values are too low to support a traditional market-rate mortgage. Thousands of potential home buyers are believed to be in that tough situation, with the value of the house they wish to buy too low to obtain a traditional bank loan.
“Last year in Detroit, 3,500 single-family houses sold and 90% of them were for cash, and it’s entirely because of the appraisals,” Duggan said. “It’s got nothing to do with ability to pay.”
Asked how soon it might happen, Duggan said as soon as the first investor signs up to bankroll the fund.
Such a fund would be different from the home rehab financing program Duggan outlined Tuesday evening in his State of the City address. Both Duggan and his spokesman John Roach said Wednesday it was too early to talk in more detail about the potential new fund to make mortgage-like loans.