The Detroit Mortgage Program recently secured a $5 million investment from Comerica Bank in an effort to boost the infamous appraisal gap conflict occurring in the Detroit area.
In recent years, securing a mortgage in Detroit has been complicated and virtually hard to do, thanks in part to the plummeted values of the homes in the area after the real estate crash of the early 2000s. Detroit is one of the few remaining areas to have yet recovered from this fiasco, seeing major deficits in the purchase price of homes versus the appraisal value of homes currently on the market.
Securing a mortgage for a home has been quite difficult as the national market value does not line up with the current amount owed by the seller.
As mortgage financing became harder to gain, home sales dropped, forcing the market down even lower. To combat this issue, The Detroit Home Mortgage Program was instituted in 2015.
The program grants home buyers a second alternative for financing, filling in the gap between the appraised value and the sales price.
Five banks originally kickstarted the program, granting over $40 million into an investment pool to provide the gap coverage to home buyers. The banks which initially signed on for the program included institutions such as the Troy-based Flagstar Bancorp Inc. and Grand Rapids-based Independent Bank Corp.
In 2017, Comerica Bank—based out of Dallas–joined the program’s roster with an additional investment of $5 million.
Six months prior, in January of 2017, the bank announced a $3 million investment to open new locations across the Detroit area and relocate several existing chapters.
“Our investment is being made to assist the city and its residents in overcoming the current challenges of home mortgage financing due to low appraisal values,” Kathleen Patton, spokeswoman for Comerica Bank, said. “Unlike traditional investments, the return we expect is the ability of Detroiters and prospective Detroiters to successfully finance the purchase of their homes in Detroit.”
News Source: http://www.crainsdetroit.com/article/20170616/NEWS/170619903/comerica-bank-to-invest-5-million-into-detroit-mortgage-program