Detroit — Mayor Mike Duggan on Friday detailed a new initiative designed to help city workers buy and renovate homes in Detroit.

The pilot mortgage loan program is available for active and contract employees who buy houses via the Detroit Land Bank Authority’s home auction program. The loan program is being offered in partnership with Flagstar Bank to provide eligible Detroit workers 15-year, fixed-rate mortgages at up to 300 percent of the home’s value to cover renovations.

Only about half the city’s employees currently reside in the city. Residency requirements are illegal in Michigan.

“We want to find constructive ways to get folks back,” Duggan said during a news conference at City Hall. “This is what we are going to continue to do. It’s our way of saying thank you to the employees.”

The mayor introduced a 50 percent employee discount program earlier this year for houses purchased through the Detroit Land Bank Authority’s home auction.

The program is open to employees, retirees and their families. It was also extended to contract workers and workers for various city authorities including Cobo Center, the Detroit Zoo, public library and lighting.

Since it launched in February, 348 city employees and their relatives have registered for the home auctions, Duggan said. So far, 44 houses have been bought.

The Flagstar program, he added, provides another opportunity for workers to obtaining financing.

To apply, city employees must have a minimum credit score of 620 and participate in home buyer counseling. Purchasers also have to rehabilitate and occupy the property within six months, or nine months for a historic property.

Besides the city’s 50 percent discount, Flagstar will offer five-year $15,000 forgivable grants of up to $3,000 per year. Another $10,000 grant will be available for first-time homebuyers, officials said.

Sandro DiNello, CEO of Flagstar Bank, said if successful, the program could be expanded in Detroit.

“This isn’t about publicity. This is about getting something together that works,” DiNello said, adding if it doesn’t, the program will be modified. “It’s important that we provide this little boost to getting these neighborhoods back on their feet.”

City employees who have already cast winning auction bids but haven’t secured financing are able to apply for the Flagstar loan program, DiNello added.

Carolyn Abney, a contract employee for the income tax division of the city’s Finance Department, was the first to register for the mayor’s employee discount program, first to bid on a property and first to win a house.

The former Detroiter expects to close on the East English Village property that she won with a bid of about $56,000 later this month — and she intends to apply for the Flagstar loan.

“It was the kind of house I always wanted to live in,” she said. “Most of my family and friends live in Detroit. They are very happy that I’m coming back.”

The program is among several initiated in recent months to get residents into land bank homes.

In April, Bank of America and Neighborhood Assistance Corporation of America announced a low-interest, zero-down loan program for homebuyers.

Separately, Liberty Bank committed to financing up to $20 million in residential loans and Talmer Bank allocated up to $1 million in forgivable grants for qualified bidders to renovate auctioned homes in the Marygrove area.

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