Quicken Loans, Home Depot to partner with Detroit on home rehab program
Detroit — A major mortgage lender has partnered with the city and Home Depot to rehabilitate homes in four neighborhoods in Detroit’s northwest side.
The “Rehabbed and Ready” program will provide fully renovated, move-in ready homes for the Detroit Land Bank Authority’s auction website.
Mayor Mike Duggan joined Quicken Loans founder Dan Gilbert, Home Depot and land bank officials in making the announcement Wednesday on Monica Street in the city’s Bagley neighborhood in front of the first house renovated under the program. The home was rehabbed for $60,800.
The homes are being provided by the land bank, while Quicken Loans is supplying $5 million toward rehabilitation and backstop funding as well as home financing options. The Home Depot, officials say, are overseeing the renovation process with the help of local contractors.
Duggan said 20 properties in the project are currently under construction, with plans to auction off two homes each week at buildingdetroit.org.
Duggan noted that low appraisals have been a challenge in Detroit, leading to problems in securing mortgages.
The Crary/St. Mary’s, College Park and Evergreen/Outer Drive neighborhoods will also see homes renovated. The areas selected, officials say, could benefit from additional market-ready home sales to bolster value.
“We’re taking another major step forward in rebuilding the neighborhoods,” Duggan said, adding the city has proved it can demolish properties that can’t be saved and sell off others that can.
“What we haven’t been able to prove so far is that you can renovate a large number of houses and sell them at market rate,” he added. “This is the next step.”
Gilbert, flanked by community members and Duggan at the first project house on Monica, said the effort is designed to bring stability to the marketplace and “get us over the hump.”
“We think this program will get us there,” he said. “Hopefully this is just the beginning. People are going to be very surprised.”
The Quicken-funded rehabilitation isn’t the company’s first involvement with the house on Monica, a tax foreclosure that the county transferred to the land bank last year.
County records show that in July 2007, Quicken Loans issued the home’s owner a $116,500 mortgage, a loan that was eventually transferred to Freddie Mac, a government-controlled mortgage insurer.
Freddie Mac discharged the loan and the home went through tax foreclosure last year after the owner walked away from the mortgage.
“We charged off the mortgage after it was determined that the borrower did not qualify for a loan modification and, given market conditions, it was not cost-effective to take the property through foreclosure,” said Freddie Mac spokesman Brad German. “Freddie Mac is in federal conservatorship and that commits us to minimizing potential losses to U.S. taxpayers.”
Typically, banks and other mortgage companies would file a foreclosure and take possession.
On Wednesday at the press conference, Gilbert said the new program has nothing to do with properties it previously supplied loans to. The selection, he said, was based on neighborhoods where officials felt improvements could have the greatest impact on values.
Aaron Emerson, a spokesman for Quicken Loans, said the credit profile of the borrower on the Monica property was excellent and there was no legitimate reason for Quicken Loans not to provide the mortgage. The lender would make the same loan again under the same circumstances, even with today’s tough lending guidelines, he added.
“Quicken Loans did exactly what a good lender is supposed to do, make solid competitive loans to clients with good credit profiles,” Emerson wrote in an email to The News. “The client’s decision to cease making their mortgage payments on the Detroit property was made after nearly two years without missing a single payment and after obtaining a subsequent mortgage from Quicken Loans to purchase another home in a nearby suburb (which the client also easily qualified for).”
Like other land bank auction efforts, homes auctioned under the Rehabbed and Ready program will be awarded to the highest bidder. Investors are not eligible, only owner occupants.
Opening bids on each property, officials say, will begin at 75 percent of the amount invested for the rehabilitation of the property.
The homes will be on the auction site Sept. 2.
Staff writer Christine MacDonald contributed