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.

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Detroit Paradox: People Who Need Houses and Houses that Need People

abandoned housing in Detroit

Detroit    Rarely is there a day in organizing when each meeting seems to be with one person after another who is smart as a whip, committed all in, and shoulder to the wheel, as we found in Detroit, but rarely is there also a day in which each story sometimes seemed a version of Sisyphus pushing the rocks up the hill and watching them roll down again.

Some of the rocks were avalanches I knew too well. Ted Phillips, director and litigator of the United Community Housing Coalition, stepped into a meeting that our ACORN Home Savers Campaign was having with Michele Oberholtzer, the shrewd, brilliant, and tough-as-nails director of the UCHC Foreclosure Project. Ted has years in the saddle and though we were deep in the weeds with Michele on potential strategy and tactics to allow lower income families to own – or keep – their homes, I couldn’t resist asking him what had happened to the old Detroit homesteading program that ACORN had fought and won over a decade of struggle. Ted knew exactly what I was talking about and quickly responded that it “had died because of governmental incompetence.” What we had won, only after Coleman Young left as Mayor after years of fights and squatting, was a compromise where a family would indeed get the house for $100 or so, but it required sign-off from several levels of government including the city, county, and possibly the state on adjudicated property, and essentially government writ large and small couldn’t effectively coordinate. Michele shook her head in disbelief, saying that could have been great. I thought to myself that perhaps we could have saved it if, big if, we would have had the resources to keep someone on staff who was bird dogging the bureaucrats 24/7. Michele had been telling us the complex lengths her program went in order to navigate the obstacles to allow people to keep their houses from auctions to governmental first refusals, so she knew what she was talking about.

In another meeting we got a short course in municipal and state financing that forced so many homeowners into auction because of the byzantine costs of living in Detroit. Property taxes, he told us, were the highest percentage to value in the country, but because of various austerity measures imposed by the state when Detroit when bankrupt, there is also no practicable way forward immediately to abate the levels without toppling the fragile city financing structure. We raised the questions of how it was possible to justify either spending Community Development money by the city or banks getting Community Reinvestment Act credits for developments in the downtown corridor while the neighborhoods starved, and heads nodded on the waivers that made it happen. Others talked to us about the unsustainable cost of even living in Detroit when property taxes were added to the cost of home insurance, water bills were soaring under new regulations, and in Motor City car insurance is easily $400 per month we were told. One person told us of being responsible for a city program design where the city lacked the money to actually implement any of the design she was producing.

On our pursuit of rent-to-own companies we found more names to add to our rogue’s gallery. We also heard of some promising handles that might save some owner-occupants in such agreements if we could get them into the landlord-tenant court where they could make the case that they had a land contract under Michigan law.

Rocks might be rolling down some of the hills, but the more we talked to people, the more we were on the team that was trying to mine those rocks to make a difference in Detroit.

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