New Mortgage Program to Give More Detroiters Access to Loans for Home Purchases, Renovations

Excerpted from article by Forrest Johnson on City of Detroit website - see full article and accompanying video

Detroit Mayor Mike Duggan, along with representatives of Bank of America and National Assistance Corporation of America (NACA) today announced a ground breaking mortgage program that will directly address one of the key limiting factors to homeownership in the city of Detroit: the inability to obtain a mortgage.    

People interested in finding out more about the Detroit Neighborhood Initiative and how to qualify should go to www.NACA.com or contact NACA at (425) 602-6222.   In addition, all interested homebuyers should attend the Homebuyer’s Workshop, the first step in becoming a homeowner.  The next one is as follows:
When:  Saturday April 25
Where:  Pure Word Missionary Baptist Church
20011 Grand River Avenue, Detroit, MI 48219
Time:    9:30 AM - 1:00 PM
To register: Go to www.naca.com/register 
For more information, contact NACA at (425) 602-6222


Last year, only 10 percent of the approximately 4,000 completed home sales were financed.  The rest were all cash purchases.  That’s because the bank-recognized value of most homes is less than 80% of the actual sales price.  This means that a lot of Detroiters who rent and have the ability to pay a mortgage, as well as people wanting to purchase a home and move into the city, are unable to get approved for a traditional mortgage. 

Duggan said the issue came to light soon after launching the BuildingDetroit.org auction website.  Winning bidders, he discovered, often were unable to obtain financing due to traditional banking industry loan-to-value guidelines.  

After months of research and planning, the city has teamed up with The Neighborhood Assistance Corporation of America (NACA) and Bank of America to create the “Detroit Neighborhood Initiative,” a program for qualified homebuyers in Detroit.  

The program combines a zero down, low interest fixed mortgage with rehabilitation dollars necessary to rebuild Detroit’s classic houses and neighborhoods.   Most importantly, all buyers in Detroit will have access to loans worth up to 110% of the home’s loan-to-value (LTV) ratio.  

For homes bought through the Detroit Land Bank’s site, www.buildingdetroit.org, that loan-to-value ratio increases up to 150%.  Bank of America will provide the mortgages up to 150% LTV through NACA and Opportunity Resource Fund for borrowers who complete the NACA pre-purchase counseling.  This will allow buyers to qualify for mortgages in a market that has been hard hit by the decline in property values in the wake of the recession. 
 
“We know the desire to renovate these houses and rebuild our neighborhoods are there” said Mayor Duggan.  “What we haven’t had is enough lenders willing to take a chance on our city to show what’s possible.  This program will make homeownership in Detroit accessible to many more people.”   

The Detroit Neighborhood Initiative is a collaborative effort of NACA, Bank of America and Opportunity Resource Fund.    Borrowers that complete the NACA pre-purchase home buyer program can qualify for a mortgage, which includes:
    
•    No down payment
•    No closing costs 
•    Below market fixed rates 
•    Renovation funding included in mortgage

NACA CEO and founder Bruce Marks says the Detroit program, including the up to 150% loan-to-value ratio is unprecedented.   “With this program, we’re recognizing an opportunity to help stabilize neighborhoods in Detroit by offering borrowers a path toward homeownership.”   

“While this may sound too good to be true, it is a game changer, which has never been done in the history of mortgage lending.   The mayor of Detroit, Bank of America, and NACA are supporting neighborhood stabilization in Detroit, to help homeowners.  It shows a path forward for how hard hit communities can truly be revitalized.”   

“Our ties with the people and businesses of this community are deep and longstanding,” said Matt Elliott, Michigan Market President, Bank of America. “The addition of this homeowner program gives us another tool to help play our part in Detroit’s resurgence.”   That sentiment was echoed by Christi Coady Narayanan, CEO, Opportunity Resource Fund.   “We’re pleased to work with the City, NACA and Bank of America to make homeownership a reality for even more Detroit residents.  We’ve always believed that investing in Detroit – for the long term – is good for the community, its residents and businesses.”

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