Less than 20 percent of homes purchased in the city of Detroit have mortgages. It’s currently a cash system where you either have all the money you need for the house, or you can’t buy it. That shuts the door on anyone who doesn’t have the purchase price of a house sitting in the bank – and that means most people can’t buy a house in Detroit if they wanted to.
This happens for a variety of reasons, but the long and short of it means that if the gap is too big, the mortgage doesn’t happen and the house isn’t sold. Currently the city housing market tilts toward speculators who have large sums of money to put into play, with the effect of pushing out middle class buyers out of the market.
To help solve this, the Detroit Home Mortgage program was created last year. It’s a collaboration between foundations, banks and the Michigan State Housing Development Authority (MSHDA) to help raise property values in the city. The program allows borrowers to obtain a second mortgage to help fill that gap, up to $75,000.
Today, Comerica Bank announced it would support the program by committing $5 million toward Detroit Home Mortgage. It joins five other lenders already involved in the program.