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News from the City Government

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

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•    NACA , Bank of America and Opportunity Resource Fund team up with the City of Detroit to create unprecedented mortgage program to strengthen city neighborhoods.

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.”

About Bank of America in Michigan
Bank of America is connected to local neighborhoods and communities and we are invested in Michigan’s economy.  From philanthropic and sponsorship support to volunteerism and investing, last year, Bank of America directed more than $3.5 million to help local nonprofits and community organizations address some of Detroit’s most pressing issues and greatest opportunities.  

Recently, and in partnership with the City, Bank of America committed $5 million to the 0% Interest Home Repair Program to provide Detroit home owners with zero percent interest home repair loans.   This solution is one way to support Detroiters who have been here, maintaining property and sustain neighborhoods.  By supporting investments in Detroit’s neighborhoods, this tool will help home owners to increase their property values – ultimately, re-building community and pride in homeownership.

Since 2008, Bank of America has provided home loan modifications to more than 43,000 homeowners in Michigan and since 2011, more than 940 homes were donated to area nonprofits with 100 homes going directly to Michigan military families.  Also in 2011, Bank of America partnered with the city to offer its first responders a call-home, and make Detroit their residence once again.  With the acquisition, rehabilitation and donation of 10 properties, officers, and their families were reunited with their city as residents in great neighborhoods.

Visit the Bank of America newsroom for more Bank of America news.
www.bankofamerica.com

ABOUT NACA (www.naca.com)
The Neighborhood Assistance Corporation of America ("NACA") is a non-profit, community advocacy and homeownership organization.  NACA is the largest non-profit HUD certified counseling agency.  NACA was established in Boston almost 30 years ago and now has more than two million members nationwide.  NACA is the largest and most effective organization in modifying mortgages and provides America’s best mortgage.  NACA has set the standard of providing affordable homeownership making homeownership a reality for many thousands of working people, enabling even those with credit issues to purchase a home or modify their predatory loan on far better terms than those provided even in the prime market.

NACA has been highlighted in the national news and its CEO Bruce Marks was named Bostonian of the Year for 2007 because of NACA’s work in getting the major lenders and servicers to modify home loans often the same day through the extraordinary NACA American Dream Events (over 150 events nationwide).  See Bostonian of the Year.  He has also testified in congress on numerous occasions including on September 12, 2000, being one of the only people to sound the alarm of the pending mortgage crisis.  

ABOUT OPPORTUNITY RESOURCE FUND
Opportunity Resource Fund is a nonprofit 501(c)(3) CDFI with celebrating 30 years of working for social and economic justice. Supporting Michigan’s communities via the creation of decent and affordable housing, jobs and great commercial spaces, OppFund is proud to be a catalyst for positive change.  www.oppfund.org

Media seeking more information should please contact John Roach of Detroit Mayor Mike Duggan’s office at (313) 244-7857, or Bruce Marks, CEO of NACA at (617) 835-4477 or bmarks@NACA.com

Detroit Neighborhood Initiative

Who: Prospective Detroit Home Buyers that complete the NACA pre-purchase home buyer program
What: Can qualify for a new mortgage program that includes
•    No down payment
•    No closing costs
•    No fees
•    Below market fixed rates (3.5% - 30 year / 2.875%  - 15 year)
•    Renovation funding included in mortgage
•    Credit Score never considered in mortgage process
All buyers in Detroit will have access to loans worth up to 110% of the home’s loan-to-value ratio.  For homes bought through the Detroit Land Bank’s site, www.buildingdetroit.org, that loan-to-value ratio increases up to 150%. 

When:  Registration begins April 16, 2015. The first homebuyer workshop will be he held on April 25, 2015 at Pure Word Missionary Baptist Church 20011 Grand River Avenue, Detroit, MI 48219 from 9:30-1:00pm

How:
Interested home buyers must attend a Homebuyer’s Workshop and then undergo homebuyer counseling. More information can be found at: www.naca.com or auctions.buildingdetroit.org/Financing.

Estimated Variables

 

30 year mortgage

15 year mortgage

Purchase Price through Building Detroit

 

$5,000

$5,000

Rehab Costs

 

$55,000

$55,000

Down Payment

 

$0

$0

Closing Costs

 

$0

$0

Total Mortgage

 

$60,000

$60,000

Assessed Value

 

$40,000

$40,000

Fixed Interest Rate

 

3.5%

2.75%

Principal and Interest Payment

 

$218

$414

Taxes

 

$112

$112

Insurance

 

$67

$67

ESTIMATED MORTGAGE PAYMENT

 

$397

$593

 

Detroit Neighborhood Initiative FAQ
Who is eligible to participate?
Everybody.  That includes first time homebuyers, and those that are previous homeowners.   The only limitation is at the time you purchase, you cannot own another property.  

Can I refinance my own mortgage into this program?
No.  However, if you have an unaffordable mortgage, NACA can help to modify your existing mortgage to as low as 2% and/or reduce your outstanding principal.   

Do I have to be employed to participate in the program?
You must have a stable source of income.

Can I participate if I am on a fixed income?
Yes. 

Is there an age limit to the program?
No.

How long does the entire process take?
It depends on how prepared you are.   If you have documents for your income, assets, and other required documents, you can pre-approved in a very short period of time.  Come to the homebuyer workshop on the 25th of April to take the first step.   

What is the process for qualifying?
NACA will verify your income, and will focus on your last 12 months of your payment history on payments you control (i.e. car payments, credit cards, etc.) Payments out of your control, like unaffordable medical bills are not considered.  

Are their limits on the size of the loan?
Yes.  For single family homes in the state of Michigan, the maximum mortgage amount is $200,000.  That number increases for multi-family units.  

 

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