And, if You Make it Through the Mortgage Maze, then There’s Insurance

Indianapolis  Saving money on the ticket I was flying out of Indianapolis and that meant joining the truck drivers and precious few others on the interstates and US highways in the middle of the night linking Detroit and Indianapolis, so I could beat the rain and make the plane.

In one of our last meetings we had met with the directors of Detroit Action Commonwealth at their offices to discuss some collaborations on our organizing programs and staffing to move the ACORN Home Savers Campaign forward along with their anti-eviction and housing work. I got an email adding another mountain to climb for families trying to rebuild their neighborhoods and achieve home ownership in Detroit: insurance.

The message started out as a success story for one of their members being able to buy their house in Detroit, but then it turned dark. When they had to get insurance in order to maintain the mortgage, which is a fairly standard requirement, the only companies that would touch them wanted to charge an annual premium that would be equal to one-sixth of the total value of the property. On a home worth even as little as $30,000, that would mean paying $5000 annually for insurance. The math is fairly simple to follow. If worth, $60,000, insurance would be $1000 per month or $12,000 per year. At $100,000 it would be $16,666.67, although I would bet that at that point it starts to go down, because this predatory pricing to rip off lower income families likely doesn’t extend her up the income scale. Ridiculous! What risk is the insurance supposed to be covering?

Of course if car insurance routinely costs $400 or $500 a month, maybe this all looks like some ol’, same ol’ to both the embattled people in the neighborhood and something that the insurance folks think they can defend, and the big banks can hide behind with their precious few mortgages in the city. Here’s my question. Given the disaster in the Detroit neighborhoods, why aren’t homeowners able to avail themselves of the same governmental insurance pools that are available to cover people in Louisiana and Florida where insurers are unwilling to stand against the risks of hurricanes and flooding? Deindustrialization is a disaster in these neighborhoods, too! Sure, it’s not cheap and, given the federal government’s willful refusal to ignore the consequences of climate change, it’s also somewhat precarious, but since I pay it myself along with most people in live in New Orleans, I can guarantee you its not one-sixth of a home’s appraisal. It’s more in the 3% range. That’s not cheap, but it’s more of a low rise hill to climb, than a Mount Everest of a mountain to scale for homeowners.

But, I understood the message from our colleagues at DAC, no matter what a real solution might be, it would involve the powers that be actually caring about urban America and in the case of Detroit, not walking out of the room every time the city and the problems of its people come up for discussion. Detroiters can’t afford insurance, and it seems they can’t buy a break either.


In Detroit Neighborhoods, Housing is the Center of Every Conversation

Detroit   It’s a good thing that we wanted to talk about housing in Detroit, because no matter the organization or the individual, invariably in Detroit the conversation comes back to housing. Despite all the talk, solutions are illusive, but efforts and ideas are bountiful.

Although, maybe it depends on who you are. One person told us a true story. Neighbors were frustrated at their inability to acquire lots next door, despite maintaining them for years and being subjected to a constant runaround that it could be any day, except that it was a Groundhog Day, and went on for years. A friend called the Detroit Land Bank, which handles these kinds of things and said he was a developer from San Francisco and he wanted to get twenty houses to rehab and rent, and he wanted them for free. The land bank representative on the other end of the phone immediately told him, “we can work with you on that.”

The land bank controls almost 100,000 properties and, depending on who you talk to, maybe it’s 120,000 and maybe it’s only 80,000. It’s very likely that the land bank itself really doesn’t even know for sure. The land bank also doesn’t make it easy for families that might want to acquire the houses. You have to have a credit card that can handle a $1000 charge for example, which ices a lot of lower income families. You only have 90 days to get the house up to code or a little longer if the home is in a historic district. You have to prove that you have no record of property tax nonpayment or tax liens, or if you do, that you are current on the payment plan. It’s like that. The deck almost seems stacked towards developers and speculators. The only meeting that didn’t materialize for the Home Savers Campaign in this quick trip was a hard to get meeting with a representative of the Detroit Land Bank where a series of missed connections led to last minute meeting at the end of the day, but then he couldn’t be found when we arrived, so we had to abandon ship and hoped to connect later.

The tax auctions, which are a hot button issue for everyone, have also gotten more difficult and more slanted towards speculators. The minimum bid has risen to $3000. No previous owner can bid on their own foreclosed property. One nonprofit, a seasoned player in the process, told us that they were lucky to win at all in the most recent auctions, and had only garnered about a third of the homes that they usually were able to win for families.

Meanwhile our list of companies like Detroit Property Exchange, that seem to change corporations in the bidding the way most people change their shirts everyday, are able to escape these kinds of regulations with impunity. One colleague who is an excellent data cruncher had offered to give the Treasurer’s office a list of the front corporations for both DPX, as it’s known, and some other outfits, but found himself, like the Maytag repair man, stuck waiting for a call.

Rent-to-own and lease purchase mechanisms are common in Detroit even for nonprofits, since getting a mortgage from banks almost involves a ski mask and sidearm. Most agreements are short term, one to two years at most. One group, focusing only in one neighborhood, Regent’s Park, is trying to still figure out how to do such an agreement fairly.

It’s not easy we answered, but we were glad to be in Detroit and part of the excitement – and frustration – of trying to do something about housing.