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Detroit Mayor Mike Duggan has unveiled the latest effort to revitalize his city’s beleaguered housing market: Detroit Home Mortgage, a new program designed to solve local appraisal gap problems.
Dubbed a “game-changer” by the mayor, the program enables borrowers to receive a first mortgage for the appraised value of their house (less their 3.5 percent down payment) and a second mortgage up to $75,000 to fill the gap between the appraised value and the sale price and/or the cost of renovations.
The program aims to increase homeownership, property values and reinvestment in any Detroit neighborhood where the appraisal gap exists. The banks participating the Detroit Home Mortgage program—Huntington Bank, Flagstar Bank, Talmer Bank and Trust, FirstMerit Bank, Liberty Bank—will offer loans at the same low interest rates with no bank fees. If the homeowners forced to sell the home, the philanthropic Kresge Foundation will step in to provide financial support to help borrowers repay the second mortgage. The program also provides financial education classes for prospective borrowers prior to any transaction going forth.
Mayor Duggan gave a political hat tip to the Obama Administration’s Detroit Federal Working Group for bringing the program to life. “I credit the Obama Administration with convening the parties, generating new ideas, and supporting the effort to bring this resource to Detroit,” he said.