Aiming to help increase the homeownership rate in Detroit, Comerica Bank announced that it is investing $5 million in a unique mortgage program that helps Detroit residents buy a home.
Comerica announced this week that it is investing up to $5 million in Detroit Home Mortgage, a program managed by Community Reinvestment Fund.
Detroit Home Mortgage was introduced last year to help address an appraisal gap that prevents some Detroit borrowers from obtaining a mortgage.
The program was developed with collaboration from government, local banks, foundations and nonprofits, and is designed to make it easier for prospective buyers to finance a Detroit home.
According to Detroit Home Mortgage’s website, some Detroit housing appraises at a lower value than the acquisition and renovation price, so prospective home buyers find it difficult to finance their purchase. The program makes up for the currently low property values by allowing a buyer to borrow up to $75,000 more than the home’s current appraised value.
Here’s how it works: The borrower applies for a mortgage with one of the program’s participating banks. Then, once the appraisal is determined, the bank will split the loan into two mortgages with low, fixed rates.
The first mortgage will be for 96.5% of the appraised value. The second mortgage will be for the amount above the appraised value up to $75,000.
And here’s why it’s important, according to Detroit Home Mortgage: “Many homes do not qualify for a traditional loan to buy them or to fix them up and make them livable. Detroit Home Mortgage allows a qualified buyer to borrow on the true value – not the current appraised value – of their home.”
As for Comerica, it is investing up to $5 million in the program, and plans to become a participating lender in the program in the future.
Currently, Huntington, Chemical Bank, Flagstar Bank, Independent Bank, and Liberty Bank take part in the program as lenders.
“It’s been inspiring to watch the transformation of downtown Detroit over the past several years,” Michael Ritchie, president of Comerica Bank-Michigan said. “Detroit Home Mortgage is helping to push that revitalization out into the neighborhoods and we’re proud to support that effort through our investment in Detroit Home Mortgage.”