Leonard N. Fleming / The Detroit News

Detroit — Mayor Dave Bing today announced an unprecedented program to entice police officers to move back into the city by offering ownership of 200 tax-foreclosed homes in two of the city’s most stable neighborhoods.

Flanked by top police brass and administration officials, Bing helped detail the program called “Project 14″ in which foreclosed homes will be available in the East English Village and Boston-Edison neighborhoods. The program name alludes to police code for “back to normal.”

Officers will pay up to $1,000 for the houses and receive up to $150,000 in federal grants to rehab them. City officials said the homes are in good shape for abandoned properties but need some work.

The mayor said that police officers “living in their neighborhoods have the potential to deter crime, increase public safety and improve relations between the community and our sworn officers.”

“Detroiters want to live in safe, stable neighborhoods and they deserve no less,” Bing said. “This is just step one of many things that we think we’re going to have to involve ourselves in as we bring our city back. We hope it’s a model for the nation.”

As more homes have become vacant and crime has been a nagging problem in the city for decades, Bing said this incentive program is critical to bringing people back. The city has lost half its population since it reached a peak of about 1.8 million in 1950. More left after the state Legislature banned municipal residency ordinances in 1999 requiring workers to live in cities that employ them.

The program is centered on the two neighborhoods, but the city also could offer houses in other ones, depending on officers’ needs, city officials said.

The mayor said the program would eventually be opened up to include firefighters and then provide some financial relief to officers who chose to never leave the city once more federal dollars are secured.

The city is partnering with the Detroit Land Bank Authority, the Department of Housing and Urban Development, Michigan State Housing and Urban Development Authority, the Michigan Housing Trust and other private interests.

City officials did not reveal more specifics as to how many officers are interested or what other neighborhoods are being considered as part of the program.

Police Chief Ralph Godbee predicted the program would be a success.

“Our residents have told us loud and clear about the challenges that their neighborhoods face as more homes have become vacant and abandoned, threatening the stability and safety of our community,” Godbee said. “What we’re looking for is moving back to some normalcy in police-community relations.”

At least 53 percent of the city’s 3,000 police officers in Detroit live in the suburbs and the numbers are even higher for firefighters, the mayor said.

One of those is police officer William Booker-Riggs, 37, who lives in Southfield but is now eying a move back to the city as part of the program. He’s a single father of an 11-year-old girl who, in part, left 9 months ago for better opportunities for her.

Councilman Kenneth Cockrel Jr. said he “applauds the mayor’s vision” and believes the incentive program is a “step in the right direction” to turning around Detroit.

“I support anything that can be used as a way to get people to come back to the city,” Cockrel said. “I do think that we can’t lose sight of the fact that the ultimate incentive to get people to come to Detroit and to stay in Detroit is to fix a lot of the issues that are wrong with the city. It’s to improve public safety, it’s to have streetlights which work and are on, it’s to have streets which are clean and safe.”

The city is using $30 million in federal Neighborhood Stabilization Funds to pay for the program. It includes safeguards that would require police to repay money for the house if they sell it to someone other than a police officer.

lfleming@detnews.com

(313) 222-2072

When 700 employees of Quicken Loans arrived for work Monday at the Compuware building, they each found a gift bag stuffed with discount coupons from nearby downtown restaurants and shops very eager to make their acquaintance.

Long-suffering businesses downtown have been eagerly awaiting Quicken’s move from suburban Livonia, seeing it as a sign of better days ahead. Downtown has been suffering a king-sized hangover from the prolonged recession.

Among the restaurant owners contributing discount cards to the gift bags was Jon Grabowski, owner of the Spa 19 24 Grille at the Westin Book Cadillac.

“Any exposure we can give to new businesses coming downtown only helps this idea of a greater Detroit,” Grabowski said Monday.

Employees of Quicken, an Internet-based mortgage lending company, also got a discount coupon from CK Mediterranean Grille & Catering, which by coincidence opened for business Monday in the Compuware complex at 119 Monroe. Owner Ouse Gulli said that when he learned that Quicken was moving downtown, he increased the size of his restaurant space from 2,000 square feet to 2,400 square feet.

“We felt that there was a possibility that the city was turning around and there was some synergy of investment and companies coming downtown, and we wanted to be a part of that,” he said.

Amid the excitement, it helps to remember that the Quicken move reflects a transfer of jobs within metro Detroit, rather than new jobs or growth from outside the region. And it also may bear remembering that when Quicken founder and Chairman Dan Gilbert first announced he would move his headquarters downtown from Livonia, in November 2007, he was projecting bringing 4,000 workers downtown and building his own headquarters skyscraper.

The recession trimmed the size and scope of that dream. Quicken opted to lease space in Compuware’s headquarters and bring about 1,700 workers downtown this month in shifts, with another 900 or so coming next Monday.

But even downsized from the initial dream, the Quicken move is exciting for metro Detroit’s core business district. And it is designed not as an isolated event, but as an example for other firms to follow.

“It can’t be just us. We can be a catalyst,” Quicken CEO Bill Emerson said Monday. “The vision that Dan and we all share is that Web-based business corridor that we think we can build down here.”

He added, “When you really think of an urban setting and getting tech-savvy folks sitting together, talking together, creating together, we think we can really create something special down here, and that’s what the focus is going to be.”

Even Monday, the benefits of Quicken’s move downtown were being felt quickly in the central city. At Canine To Five, a dog day-care operation on Cass Avenue north of downtown, owner Liz Blondy already was caring for three dogs from Quicken employees and had six more dogs scheduled within the next week.

“It is thrilling to see so many people from the suburbs, not only working downtown, but starting to utilize the area’s services,” Blondy said Monday.

After decades of losing people, downtown Detroit had made a comeback of sorts between the mid-’90s and 2006, when Detroit hosted Super Bowl XL. But then the economy crashed in 2007. Condo projects collapsed. Restaurants closed. Downtown’s office vacancy rate soared to more than 30%.

This summer, things seem to be turning around, at least tentatively. Quicken’s move brings 1,700 workers downtown. Blue Cross Blue Shield of Michigan recently announced it would transfer 3,000 workers from its Southfield offices to the 500 and 600 towers of the Renaissance Center. A handful of new shops and restaurants, like Gulli’s CK Mediterranean Grille, are opening.

“There’s some great momentum right now,” Emerson said. “What we want to see is that momentum to continue, businesses really thinking about relocating to downtown Detroit.”

Mayor Dave Bing was among those welcoming Quicken’s employees during a ceremony in Compuware’s lobby Monday morning.

“We are excited to welcome Quicken to Detroit,” Bing said. “We look forward to them working, dining, shopping and living in the city.”

If nothing else, Quicken’s arrival brings a more youthful group of workers downtown than the traditional government, law and bank employees, said Robert Gregory, president of the Detroit 300 Conservancy, which runs Campus Martius Park. “It’ll be a more active and more fun demographic for downtown,” he said.

For Quicken’s workers, there was were the usual moving-day confusion. Painters still had drop cloths spread around some of the hallways, and everybody was learning which way to turn when they got off the elevators. But everyone seemed upbeat.

“The space is incredible,” Emerson said of the new digs in Compuware, where Quicken occupies the ninth through 12th floors of the 15-story office building. “Feedback from everybody so far has been tremendous. They love the way it looks — the colors, the openness, the views.”

Quicken’s move increases the number of people working downtown by 2% to 3%. With the results of the 2010 Census not expected until next year, nobody knows for sure how many people work downtown today, but a 2008 Census estimate suggested about 74,000 workers came downtown every day, although data analysts from the Southeast Michigan Council of Governments suggest that the number is closer to 55,000. Others estimates place the true figure in between those two.

More importantly, Quicken’s move increases the number of downtown workers who eventually might invite friends and family to come downtown for dining, strolling, sporting events and other forms of entertainment and recreation.

“We can go to a game right after work,” marveled a Quicken marketing manager, Mark Smith. “It’s so nice without having to plan and say, ‘Let’s leave early.’ ”

Contact JOHN GALLAGHER: 313-222-5173 or gallagher@freepress.com

By GRETA GUEST
FREE PRESS BUSINESS WRITER

Berry Gordy’s former residence in Detroit’s Boston-Edison neighborhood will go up for sale on Monday.

The asking price: $1.395 million.

The house features nine bedrooms, five full bathrooms and four half-baths plus a five-car garage and a 4,000-square-foot pool house, said Kenan Bakirci, the listing agent who works for Coldwell Banker Weir Manuel in the Birmingham/Bloomfield South office.

The main house is 8,500 square feet.

The Motown mansion was built in 1917 by lumber magnate Nels Michelson. It features Italian renaissance design and old world craftsmanship including a black walnut paneled living room and a marble-columned ballroom.

Motown greats including Smokey Robinson, Diana Ross and The Supremes, Billy Dee Williams, Stevie Wonder, Aretha Franklin, The Jackson 5, The Four Tops, The Temptations and others were visitors to the house.

Determining a sales price in today’s housing slump wasn’t easy, Bakirci said.

“Wow, that is the toughest thing on earth,” he said. “It is 10 cents on the dollar for what it would cost to replicate this house today. It has a crazy pool house that is 4,000 square feet with bowling lanes and a billiard room. So how do you price it?”

Bakirci said the house might have been able to sell for closer to $2 million during the market peak.

The current owner, Cynthia Reaves, president and CEO of Jackson Gates Associates Inc., restored the home over the past five years, Bakirci said.

Article From:

http://www.freep.com/article/20100708/ENT04/100708034/1017/Business04/Berry-Gordys-former-residence-goes-on-sale-for-1.395M

Michigan’s plan to spend $154.5 million in federal funds to help those hardest hit by the economy has gained federal approval and will be available starting July 12.

The funds – targeted at helping borrowers facing pay cuts or job losses keep their homes – are expected to aid more than 17,000 Michigan households.

Until then, Michigan State Housing Development Authority officials will educate banks and credit unions about the process of evaluating borrowers for the program. Borrowers must apply with their lenders to take advantage of the lifeline, which will be awarded on a first-come, first-serve basis.

• FAQs: Answers about the new homeowner help.

State officials say they’ll tell borrowers within 48 hours if they qualify for one of the program’s three options:

• Mortgage payment assistance for homeowners now receiving unemployment compensation. The state would provide half of the monthly mortgage payment up to $750 a month for a maximum of 12 months.

• Rescue funds for homeowners who have fallen behind on their mortgage payments because of a temporary layoff or medical emergency and have overcome this obstacle. The state will provide up to $5,000 to families in this situation.

• Federal matching funds for principal reductions for homeowners who can no longer afford their mortgage payments as a result of reduced income. This will allow up to a $10,000 principal reduction from the state that will be matched by the lender.

Gov. Jennifer Granholm and the Michigan State Housing Development Authority announced a plan to spend the money in April – two months after President Barack Obama announced that the five states hardest hit by the housing crisis would share $1.5 billion in funding.

Michigan will be the first of those five states – ahead of Nevada, California, Florida and Arizona — to implement its program.

“We will invest the resources provided by the Obama administration as quickly and efficiently as possible to help Michigan homeowners avoid the devastation of foreclosure,” Granholm said in a statement.

The program does not make participation mandatory.

Michigan’s unemployment rate of 13.6% is one of the highest in the nation. The state has had a 35% decrease in average home sale prices since 2005.

Previous government programs designed to help distressed homeowners required that they had income. So many were left out.

While 17,000 represents a small percentage of Michigan homeowners in need, the plan will still help shrink the problem, according to GreenPath Debt Solutions, a Farmington Hills-based counseling firm.

Last year, GreenPath counseled 76,645 homeowners who were delinquent on their mortgages because of job loss or reduced pay, adjusted mortgages and other unforeseen changes.
Article from:

http://www.freep.com/article/20100623/NEWS06/100623004/1017/Business04/Michigan-to-offer-154M-in-aid-to-homeowners

Chris Hansen Goes Home To Detroit

Cleaning Up Detroit From The Bottom Up

Detroit Parent Keeps Kids On The Right Track

In Detroit, “The Best Is All Gone”

Kid Rock On Detroit The “Ghost Town”

Artists Transform Detroit Neighborhood

Detroit’s Mayor “Toughest Sell of My Life”

Starving For Something New In Detroit

A Family Scrambles To Keep It’s Home

Hansen Talks To His Mom About Changing Times

The Regrets Of A Detroit Political Insider

Closing schools creates a smaller, modernized school system

In a sweeping 5-year, $1-billion plan, 41 school buildings and 1 support building are slated for closure in June, with another 13 to be closed by 2012. DPS officials based this redesign in part on Detroit’s changing neighborhoods, comparing areas of growth to areas of abandonment. Here is a look at how those buildings fit onto a map of Detroit’s most vacant areas.

The plan: A smaller but dramatically better system under control of the mayor, with a Standards and Accountability Commission reviewing every school; 54 buildings closed by 2012, 22 new or renovated opening; 70 new schools by 2020, 35 of them charters; a 90% graduation rate by 2020 and 9 in 10 graduates going on to advanced education.

What has to happen: Education reform is critical to the city’s ability to attract and retain families. Basically, the community has to rally around its children. Parents, teachers and other school employees must be engaged to become part of the overhaul. Voter and legislative approval is needed to abolish the school board in favor of mayoral control. Beyond foundation money, Detroit voters will be asked to pass another $500-million bond issue.

Former casino may be new police headquarters

Mayor Bing hopes to move Detroit Police Department headquarters staff out of the antiquated 1300 Beaubien building that dates to 1923 and into a new or renovated structure. At this writing, the best guess among real estate professionals is that Bing will choose the former MGM Grand casino site near Third and Michigan as the new headquarters. That structure has been awaiting a new use since MGM Grand opened its new casino a block to the north in 2007.

Foundation investments

The plan: The philanthropic community is investing tens of millions of dollars in projects for the betterment of Detroit, including schools, neighborhood revitalization, cultural institutions, the riverfront and greenways.

What has to happen: The philanthropic cooperation must be maintained, old issues of distrust between city and suburbs must be erased for the good of both, and some projects have to show results fairly soon to be catalysts for further investment. The nonprofits and nongovernmental organizations willing to put time and money behind their commitments to a better Detroit also have to engage city residents in their plans at every step.

Light rail to link downtown

In an attempt to link the New Center Area with Midtown and Downtown, a light rail streetcar is proposed for Woodward Avenue.

The plan: Light rail on Woodward, from Jefferson to 13 Mile. Private interests are already lined up for a total of $120 million to build the first leg — 3.4 miles from Jefferson to the New Center. Express buses on Gratiot, Michigan and to the airport. Commuter rail from Ann Arbor to Detroit, possibly from Detroit to Pontiac and even Port Huron and Mt. Clemens. Better basic bus service, with extended routes and increased frequency.

What has to happen: The Legislature must approve a regional transit authority as the governing agency for SMART, DDOT and any rapid-line operations. Washington won’t help unless the region speaks with one voice on its transit needs. An RTA then will have to win a local financial mechanism to operate the system — most likely some kind of regional sales tax that would also require an amendment to the state Constitution.

The demolition plan to improve neighborhoods

Detroit Mayor Dave Bing highlighted his plan to demolish 3,000 dangerous residential structures by year’s end, and 10,000 total by the end of his four-year term. Bing said demolition is only part of a larger plan to strengthen city neighborhoods and improve the use of Detroit’s 140 square miles.

The plan: The city has 78,000 vacant houses, nearly one in five. With population likely to be down around 700,000 by 2020, they aren’t needed. Mayor Dave Bing hopes to have 10,000 demolished by the end of 2013.

What has to happen: Develop a realistic land-use plan that could help secure money from Washington to do even more. Otherwise, target demolition efforts to shore up eroding middle-class neighborhoods, such as Palmer Woods, North Rosedale Park, the University District and Boston Edison.

Greening the city with urban farms

The city is studying multiple proposals to expand urban agriculture in Detroit, using some of the city’s vacant land. The three areas on the map show some of the areas suggested as possible locations for larger scale food production in the city.

The plan: The city, private foundations and community activists are all studying how to expand food production within Detroit. Urban farming is one of many ideas for filling up and greening Detroit’s desolate expanses of vacant land.

What has to happen: City Council needs to create a new zoning class for urban farms. Other changes — such as taxing agricultural land at a lower rate than other property — also would boost the idea.

New sports arena

The plan: The Ilitch family, owners of the Red Wings and Tigers, would like to replace 30-year-old Joe Louis Arena with a new home for the Wings and maybe even attract the Detroit Pistons.

What has to happen: Find a site — suggestions include behind the Ilitch-owned Fox Theatre and across Grand River from the Ilitch-owned MotorCity Casino. Then the Ilitches and various levels of government must figure out how to pay for it.

Cobo Center

The plan: A $280-million retrofit and expansion under a five-member regional authority created last year to run the convention center.

What has to happen: Cobo has to be a better facility by the 2011 Auto Show and state of the art by 2015, when it will host an influential convention of association executives who have a lot to say about where other conventions are held.

$850 million to be used for capital improvements to DMC

Vanguard Health Systems has signed a letter of intent to buy the Detroit Medical Center, assume $639 million in debt and pension contributions and another $850 million in capital improvements. Here’s how the money would be spent.

The plan: DMC hopes to finalize by June a $1.5-billion deal with Vanguard, a for-profit system that plans to invest $850 million into upgrading and expanding DMC facilities. The investment is expected to create 5,000 jobs.

What has to happen: DMC must secure a state renaissance zone designation for 12 years free of local and state taxes. The city and Wayne County also have to sign off, and the state attorney general has to approve the sale, based on whether DMC will maintain its charitable service mission.

Second span to Windsor

At this writing, there are two proposals to build new bridges linking Detroit and Windsor. One would create a second span next to the Ambassador Bridge. The other would create a new publicly-owned bridge downriver near Zug Island.

The plan: Detroit-Windsor could, by 2020, be linked by either one or both of two new bridges over the Detroit River — a privately owned span next to the Ambassador Bridge and a publicly owned one 2 miles west. Or ongoing lawsuits and bickering could stymie both and reduce Detroit to a second-rate border crossing.

What has to happen: For the privately owned Ambassador Bridge to build its second span, the company needs permits from the U.S. Coast Guard and environmental clearance from Canada. Neither will come easily. For the Detroit River International Crossing project to become reality, the consortium of four governments involved needs to resolve several lawsuits filed by the Ambassador owners to stop the project, persuade the Legislature to authorize money for further work, and get the Canadian government to acquire land and do preconstruction work on its side of the river.

Aerotropolis

The plan: An $11-billion investment to turn the area around Metro Airport into an “airport city” hub of commerce and logistics, potentially employing 64,000 people and including a rail line from the airport into Detroit.

What has to happen: Zoning and planning are actually complete at the local level in a rare example of intergovernmental cooperation. Wayne and Oakland counties also have reached accord on using tax-free renaissance zones to help attract businesses to the aerotropolis district. The Legislature has to complete action.

RiverWalk will stretch over five miles, from bridge to bridge

The Detroit Riverfront Conservancy has mapped plans to extend the RiverWalk more than five miles from the Ambassador Bridge to beyond the MacArthur Bridge to Belle Isle. At this writing, a little over half has been completed.

Citywide paths designed for cyclists and walkers

The city plans to put up about 30 miles of bike lanes and more than 12 miles of routes designed for cyclists starting in September in southwest Detroit, near Wayne State and on the east side. The aim is a network of hundreds of miles of biking and walking paths connecting neighborhoods and attractions across the city.

RiverWalk, bike trails, green space

The plan: Completing a pedestrian walkway along the Detroit River from the Ambassador Bridge to the MacArthur Bridge at Belle Isle; connecting that to many more miles of bike and pedestrian-friendly routes throughout the city.

What has to happen: The Detroit RiverFront Conservancy will have the eastern section of the RiverWalk completed in 2012 if contamination issues at the former Uniroyal property are addressed. The west riverfront plan is on a five-year schedule; it depends on fund-raising and addressing a few remaining ownership issues. Greenway projects elsewhere are proceeding in sections — groundbreaking is set for April 15 on the Midtown loop — and would require roughly $50 million to complete in full.

New life for Fairgrounds

A repurposed State Fairgrounds would be open year-round as a Metropark.

The plan: Convert the property closed down by the state in 2009 into a year-round urban park.

What has to happen: The Huron-Clinton Metroparks board is considering the idea, which could cost from $15 million to $50 million. The state, which had hopes of selling the property to a developer, would have to agree to lease the site for $1 a year.

]]> http://www.detroitprogress.com/2010/04/05/big-plans-for-the-future-detroit/feed 2 http://www.detroitprogress.com/2010/03/27/u-s-to-increase-housing-loans http://www.detroitprogress.com/2010/03/27/u-s-to-increase-housing-loans#comments Sat, 27 Mar 2010 13:30:18 +0000 admin http://www.detroitprogress.com/?p=2924 $14 billion to help jobless owners refinance via FHA

BY GRETA GUEST
FREE PRESS BUSINESS WRITER

The Obama administration said Friday that it would widen the reach of its home loan modification program, which could help thousands of unemployed and underwater Michigan homeowners.

The Home Affordable Modification Program, criticized for its slow pace and low number of modifications, would put $14 billion toward the program by helping those who owe more on their homes than they’re worth get new loans backed by the Federal Housing Administration. Unemployed people would get a temporary break, with lowered mortgage payments for three to six months.

The FHA refinancing program would be available to those with credit scores as low as 500, said Vince Parlove, president of First Preferred Mortgage in Bingham Farms. The programs are expected to be available in the fall.

Drew Sygit, a certified mortgage planning specialist who leads the Lending Edge Team at First Michigan Bank in Troy, said the plan sounds great on paper. But he expects it would take months to roll out and could be difficult for banks to execute.

Mark Zandi, chief economist at Moody’s Economy.com, said the changes could spare 1 million to 1.5 million homeowners from losing their homes. And it could end the housing crisis earlier than expected.

Struggling homeowners eager for aid

Heidi Lucken, who has been working to save her Oak Park home for the better part of five years, was hopeful Friday that the expanded federal government loan modification program could help her stay.

Lucken, who lives in the three-bedroom, 1.5-bathroom house with her two sons, said the home that she bought in 2002 for $107,500 is now worth $55,000. She has been laid off, rehired and is now on a medical leave from her human resources job. She was granted a temporary loan modification last year, but has been waiting for something permanent.

“I’m hopeful about it for everyone,” Lucken said.

Despite the Obama administration’s attempts to short-circuit the housing crisis, just 170,000 loan modifications have been made since the program was unveiled last year. About 6 million homeowners have missed at least two months of mortgage payments. Meanwhile, Michigan ranks fourth nationwide for the number of mortgages that are underwater, meaning the owner owes more on the house than it is worth.

The expanded program, announced Friday, would encourage lenders to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. It also would help underwater homeowners refinance into loans backed by the Federal Housing Administration. The FHA will get $14 billion in incentive money from the federal bailout fund. Lenders would get incentive payments to reduce principal on home loans, but it was not clear Friday what those were.

“This is very encouraging for people who are having problems out there,” said Vince Parlove, president of Bingham Farms-based First Preferred Mortgage. “It is stimulating the lenders to go out and do these kinds of loans.”

Parlove said that according to information provided to lenders, FHA will allow people with credit scores around 500 to qualify for these loans. It would be available only to those who are current on their mortgages, and lenders must agree to a principal write-down.

“This is a pretty wide stroke of the brush in my mind,” Parlove said. “We’re starting to get our arms around this and helping people who have been hurt by the economic situation in the United States and Michigan.”

Since the housing crisis started, Michigan’s average home sale price has dropped by 35%. And the state remains in the top 10 for monthly foreclosure filings.

Administration officials cautioned that the plan won’t stop all foreclosures or help all troubled homeowners. Instead, they said the goal is to meet the original target of helping 3 million to 4 million borrowers avoid foreclosure.

Sygit said he was encouraged that principal write-downs are part of the plan.

“All the academics have said it isn’t going to work until you write down the principal balances,” Sygit said. “And here we are three years and billions of dollars later.”

It also gives temporary help for unemployed people who are looking for work. People receiving unemployment benefits would see their mortgage payments drop to no more than 31% of their monthly income for three to six months.

In Michigan, 39%, or 532,774 properties, were considered underwater, according to First American CoreLogic data through December. More than 11 million mortgages nationwide are underwater.

The administration’s existing program to prevent foreclosures has failed to make a major dent in the problem. A lack of planning created a huge backlog in the program, the special inspector general for the federal financial bailout fund told lawmakers this week. Only 170,000 homeowners have completed loan modifications out of 1.1 million who began the program over the past year.

The administration also stressed that the plan won’t aid investors, speculators or “Americans living in million-dollar homes or defaulters on vacation homes.”

But preventing even a fraction of potential foreclosures could help stop home prices from falling more. That would encourage those who are underwater to keep paying their mortgages as prices stabilize.

While many are critical of the government’s efforts to repair the housing market, Parlove said that even if the administration has made mistakes, it keeps trying new things and could eventually arrive at the solution. The FHA loan will be a standard loan program, which means local brokers can handle them for people instead of everyone needing to apply online, he said.

“There isn’t one solution for everyone. We have to keep layering these on,” he said. “Hopefully we will get a big bang out of this. I think it will stimulate the local mortgage firms.”

Banks will be given extra incentives to reduce payments or eliminate second mortgages, such as home equity loans. Second mortgages have derailed many modifications.

The four big holders of second mortgages — Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. — have now joined the government’s program to modify second mortgages, after pressure from the Treasury Department. That program was delayed for months, but now the major industry players are on board.

Contact GRETA GUEST: gguest@freepress.com. The Associated Press contributed to this report.

Full Article Available Here:

DETROIT — On a grassy lot on a quiet block on a graceful boulevard stands the answer to a perplexing question: Why does the typical house in Detroit sell for $7,100?

The brick-and-stucco home at 1626 W. Boston Blvd. has watched almost a century of Detroit’s ups and downs, through industrial brilliance and racial discord, economic decline and financial collapse. Its owners have played a part in it all. There was the engineer whose innovation elevated auto makers into kings; the teacher who watched fellow whites flee to the suburbs; the black plumber who broke the color barrier; the cop driven out by crime.

The last individual owner was a subprime borrower, who lost the house when investors foreclosed.

A city that began a slow slide 60 years ago has now entered a free fall, pushed by the twin crises of housing and cars. Detroit’s population peaked at 1.85 million in the 1950 census. It is now less than half that. In July, unemployment hit 28.9%, almost triple the national average.

And the median selling price for a home stood at a paltry $7,100 as of July, according to First American CoreLogic Inc., a real-estate research firm — down from $73,000 three years earlier. A typical house in Cleveland sells for $65,000. One in St. Louis goes for $120,00

But, battered and forlorn today, both Detroit and 1626 W. Boston Blvd. were solid and optimistic 90 years ago.

Truman Newberry: Laying a Foundation

Early in the 20th century, Detroit was the p

lace to make money, and to Truman H. Newberry, the ground beneath the city’s Boston-Edison neighborhood was the way to make it.

Mr. Newberry, the son of a congressman, was a founding investor in Packard Motor Car Co., a maker of luxury autos. A portly man with a pince-nez and bushy moustache, he also dabbled in politics: In the 1918 race for the U.S. Senate, he defeated Henry Ford, the founder of Ford Motor Co.

A campaign-spending scandal quickly brought Mr. Newberry’s political career to a halt. But Detroit was growing rapidly — leaping from the country’s 13th most populous city to its fourth in the first two decades of the 1900s — and Mr. Newberry and his brother owned land in an up-and-coming area called Boston-Edison.

They subdivided it into roomy parcels to accommodate Detroit’s newly prosperous.

Clarence Avery: Industrial Innovator

In 1917, the Newberry brothers sold a lot on West Boston Boulevard to Clarence and Lura Avery. The covenants required the Averys to spend at least $5,000 on construction of the new house, which had to sit 50 feet from the front lot line and be built of brick, stone or stucco.

Mr. Avery, born in 1882, taught shop to Henry Ford’s son, Edsel. “You have an engineering mind,” Edsel told Mr. Avery, according to the latter’s grandson, Avery Greene.

Soon, through his friendship with Edsel, Mr. Avery landed a job at Ford. He started on a three-month internship at 25 cents an hour. At the time, Mr. Ford was pushing his men to speed production of the Model Ts, each of which then took 12½ man-hours to build. Today, historians credit Mr. Avery, more than anyone else, for turning Mr. Ford’s wishes into a breakthrough that would change the nature of American industry: the moving assembly line.

Mr. Avery wandered Ford’s Highland Park plant, stop-watch in hand, learning how the cars were built. He studied meat-packing plants, where hog carcasses were disassembled on a conveyor. His team tested its theories by dragging a car chassis across the factory floor.

The moving assembly line — on which workers repeated specific tasks as the vehicles passed by — cut assembly time for a Model T by almost 80%, to 2.7 man-hours.

As Ford and Detroit prospered, so did the Averys. Their move from a small house near the Ford plant to their freshly constructed home on West Boston Boulevard was a steep climb up the social ladder. Henry Ford’s own

starter mansion stood close by.

The Avery home had four bedrooms and a third-floor suite for the German maid. There was a butler’s pantry off of the kitchen and a fireplace in the living room. Mrs. Avery set trellises against the front of the house and hung frilled curtains in the upstairs windows. Shortly after moving in, she gave birth to Anabel in a bedroom facing the street.

“I loved that house,” says Anabel Avery Baxley, now 91 and living in Alabama. “I don’t think I ever felt quite the same about a house as I did about that house.”

Autos made a number of Detroiters very rich and they yearned for more exclusive housing. The Averys, too, built a grander home on a wooded lot in ritzy Palmer Woods.

John Crawford: Pushed Out

In 1924, they rented out, and later sold, 1626 W. Boston Blvd. to Edsel Ford’s personal assistant, John Crawford, and his wife, Minnetta.

Edsel headed a design team trying to add style to Ford functionality. As part of that, “I had to figure out how or if the car could be built,” Mr. Crawford was quoted as saying in a 1974 Special-Interest Auto magazine article. “Could we form a sheet of steel to the desired shape? Was the chrome trim practical?”

Ford was a Machiavellian workplace, where members of one faction drilled peepholes to spy on their bureaucratic opponents, according to a book about the era by Thomas E. Bonsall. In this environment, Mr. Crawford — who retained the heavy brogue of his native Scotland — also served as Edsel’s protector, according to the reminiscences of Bob Gregorie, a Ford designer at the time.

In the early 1940s as Edsel Ford was dying of cancer, his enemies ousted Mr. Crawford. Mr. Crawford moved to Massachusetts and put 1626 W. Boston Blvd. on the market.

By then, the street had slipped a notch in desirability. Detroit’s well-to-do moved to more grandiose housing in Grosse Pointe and other suburbs, their commutes made possible by the very automobiles that had made them rich.

Marie Ryan: From White to Black

That allowed people of more modest means, such as Marie E. Ryan, a single schoolteacher, to aspire to West Boston Boulevard. She was born in 1894 in Ypsilanti, Mich., a town of 7,000, where in 1900 the average farmer owned 48 sheep and 108 acres.

Ms. Ryan’s father was a conductor on the Michigan Central Railroad, her mother an immigrant from France. Graduating high school in 1911, she was named “school prophetess” — a position she fulfilled by writing a whimsical essay predicting her classmates’ futures. One boy would build a “wireless telegraph station” on the North Pole, she said; another would woo his love from a “flying machine.” The Rust sisters would end up lion tamers.

Miss Ryan herself went on to attend Michigan State Normal College, then spent 35 years teaching music in the Detroit public schools. She was 48 when she bought 1626 W. Boston Blvd. in 1942, taking out a $5,000, 20-year mortgage at a fixed 4.5% interest rate. Her monthly principal-and-interest payments came to $31.65.

When she moved in, the neighborhood was still fashionable for whites. That changed during the 23 years she owned the house.

In 1910, blacks accounted for just 1.2% of the total population of 465,766. By 1960, the percentage had grown to 29% of 1.7 million.

Competition for jobs and homes became acute. The tensions accelerated the use of real-estate covenants to prevent blacks, Jews and other minorities from moving in. Between 1940 and 1947, every new Detroit subdivision barred black residents, says Thomas Sugrue, a University of Pennsylvania historian.

Some deeds in the Boston-Edison neighborhood had such restrictions, but not 1626 W. Boston. Early in the century, few owners in white neighborhoods would have sold to a black family in any case.

By the 1950s, however, the white exodus to the suburbs was in full swing, and the neighborhood became a prestigious address for black doctors and lawyers seeking the large houses, leafy streets and social status.

In 1965, Miss Ryan, 71 and still single, sold 1626 W. Boston Blvd. to its first black owners, Herman and Ida Adams.

Adams Family: Blue-Collar Elite

For Mr. and Mrs. Adams, buying the house was a social high-jump. Mr. Adams had moved north from Georgia just before World War II. He joined the Army as a cook, but ended up fighting at the Battle of the Bulge in 1944 and earning a Bronze Star, according to his son, Bob Adams. After the war, Mr. Adams landed a job stamping out engine parts for Chrysler.

On the side, Mr. Adams and his two brothers-in-law ran a plumbing business. One was American Indian and light-skinned enough to pass for European white. So he wore a suit and pretended to be the boss to win white customers, while the darker men, posing as his employees, did the plumbing.

“They couldn’t believe that people went for it, but they did,” recalls Bob Adams.

Mrs. Adams was a prize-winning typist and graduate of all-black Lewis Business College. She owned beauty shops and worked as a state unemployment-claims examiner.

The family had been living in a Polish, working-class neighborhood. Bob Adams recalls his mother getting a phone call in the 1950s from a real-estate agent who, apparently thinking the Adamses were white, urged them to sell by warning that blacks were moving into the neighborhood. “They’re coming,” the agent told Mrs. Adams, according to Bob Adams.

The old neighborhood did shift from Polish to black. But, in any case, Mrs. Adams wanted to move up to Boston-Edison.

“My mother wanted to move over there because she desired to have a bigger house — plain and simple,” says the couple’s daughter, Veronica Adams, now 49. Mr. and Mrs. Adams borrowed $14,500 to pay for the home on West Boston.

Veronica loved peering out of her second-floor bedroom window at the leaves of the American elm in the front yard. When Dutch elm disease swept down Boston Boulevard, the city nailed a notice to the tree, marking it for removal. Veronica used her father’s claw hammer to pull the sign down — several times.

“They can take any other tree in the neighborhood, but they’re not taking my tree,” she recalls thinking. Eventually, the city did cut down the tree.

Ava Tinsley, a black neighbor, played jacks on the Adams’ front porch as a girl. She remembers scraping her hand when the jacks snagged the rough edges of the red-brown tiles.

Veronica and Bob recall the black doctors on the block, including one who owned a motor home, a stretch limo, a Corvette and two Lincolns. Veronica recalls complaints about how the doctors’ families snubbed the auto workers’ families.

Mrs. Adams died of lung cancer in 1966, leaving Mr. Adams to raise the children alone just as manufacturing in Detroit began its long slide. City factories shed about 130,000 jobs between the mid-1950s and the late 1960s, according to Prof. Sugrue.

The economic unease contributed to a volatile atmosphere in 1967. On a hot night in July, police raided a “blind pig,” an unlicensed saloon in a black neighborhood, and arrested 85 people. The incident escalated into five days of rioting that left 43 dead.

Across from the Adams house, young Michelle May, an African-American, peeked through closed curtains at the looters running in the street. “If there were any more white or Jewish people, they got out of here after that,” says Ms. May, 46, who still lives there.

For Mr. Adams, the riots presented a chance to leap the color barrier at the auto plant where he worked. During the violence, white workers stayed away from the factory. When a couple of sinks broke, there was no union pipe-fitter to do the repairs.

“If you give me the wrenches, I’ll fix it,” Herman Adams told the plant superintendent, according to Bob Adams.

Later, the boss made sure Mr. Adams made it onto the union apprenticeship program — a career path largely closed to blacks at the time. In 1979, Mr. Adams retired from Chrysler a master pipe-fitter, one of the blue-collar aristocracy.

But Detroit and the auto industry were declining in tandem. In 1980, Chrysler skated past bankruptcy only through the intercession of the Carter administration. Struggling to adjust to consumers’ desire for reliable, fuel-efficient cars, car makers shuttered Detroit factories.

After her father died in 1989, Veronica Adams, then a security officer with the city water department, lived in the house. She tired of poor services, high taxes and rising crime. The family fell behind on property taxes, both Adams children say.

In 1999, an appraiser valued the home at $104,000 and said it needed $12,000 in repairs to patch the plaster and fix plumbing in three of the four bathrooms.

David Andrews: ‘Such a Steal’

The idea of being urban pioneers appealed to David Andrews, a young, black Detroit police officer, and his wife, Ruth. Scouting Boston-Edison for a house in 1999, they spotted Veronica Adams pounding a for-sale sign into the yard at 1626 W. Boston.

They closed the deal for $79,900. “It was in some disrepair,” Mr. Andrews recalls. “But we thought, given the values in the neighborhood, it was such a steal.”

The Andrews turned a blind eye to the vacant house across the street. They borrowed tens of thousands of dollars for improvements and to buy a car. They refinished the oak floors. They replaced the furnace and pipes.

Mr. Andrews, now 42, used the third-floor maid’s quarters as his hideaway. Soon after they moved in, Ms. Andrews, now 40, became pregnant with their first child.

Starting in the 1990s, American car companies enjoyed a brief interlude of optimism brought on by low gasoline prices and a boom in sports-utility vehicles. Detroit, like the nation as a whole, got caught up in the housing bubble.

The Andrews watched happily as their own house’s value rose. But crime drained their enthusiasm. Three times, thieves broke into their cars. “When they come into my house, I’m out of here,” Mr. Andrews told a neighbor at the time, they both recall.

Not long afterwards, Mr. Andrews found his house pillaged. The antique chairs were gone. A trail of his CDs crossed the front lawn. The couple found a house they wanted on a golf course. But it took them a year to sell 1626 W. Boston Blvd.

Kimberly Carpenter: Big, Risky Debt Pile

In 2005, they found a buyer, Kimberly Carpenter, willing to pay their $189,000 asking price. They were too relieved to question why Ms. Carpenter’s closing documents recorded the sales price as $250,000.

“We were just praying and praying we could sell it so we could move to the golf course,” says Ms. Andrews.

County records show Ms. Carpenter took out simultaneous loans of $200,000 and $50,000 from First NLC Financial Services, a unit of Friedman, Billings, Ramsey Group, an Arlington, Va., investment bank. First NLC specialized in subprime mortgages — loans for borrowers with damaged credit.

At the time, Detroit was swept up in the subprime-lending frenzy that hit much of the country and eventually sparked the financial crisis and deep recession. Lenders became quick to loan to high-risk borrowers.

Ms. Carpenter, 37, says she was buying the house on behalf of her father, Lewis Maxwell, whose own credit record was too blemished. “My father handled all of that,” she says of the financial details. Her father, who worked on the Chrysler assembly line, died of cancer in 2007.

David and Ruth Andrews say Ms. Carpenter paid them $189,000. They say they don’t know what happened to the other $61,000 entered into sales records.

“I have no idea about any of that,” says Ms. Carpenter. “It’s over. It’s out of my head.”

Neighbors say nobody maintained or lived in 1626 W. Boston Blvd. A lawyer for the neighborhood association wrote a letter to Ms. Carpenter urging her to clean the property.

“Houses that are vacant and/or in obvious disrepair invite vandalism, theft and stripping, which not only destroys your property value, but impacts adversely on the neighborhood as a whole,” the letter stated.

American Residential Equities: Foreclosed

Ms. Carpenter quickly fell behind on her payments. In August, 2006, First NLC Financial bundled Ms. Carpenter’s first loan with a pool of other troubled mortgages and sold them to American Residential Equities, or ARE, a Miami company that specialized in buying bad loans.

First NLC Financial went into liquidation last January, dragged down by mortgage losses. Its parent company, FBR Group, became Arlington Asset Investment Corp. A spokesman for Arlington said the company can’t locate the original files on the Carpenter loans or comment on the lending decision.

By November 2006, ARE’s collection agents were after Ms. Carpenter for $218,348.53 on the $200,000 mortgage, according to county documents.

A few months later, ARE foreclosed, and in February 2007 a deputy sheriff auctioned the property at city hall. No outside bidder was willing to pay the $170,000 minimum.

In early 2008, Ms. Carpenter filed for bankruptcy protection, according to court records. ARE, meanwhile, sold the house to Petra Finance LLC, a private, Miami-based investment firm. In May 2008, Petra Finance put the house on the market for $75,000. Unable to find a buyer for almost a year, the company ratcheted down the asking price to $14,500.

Lisa Johanon: A New Beginning

This past April, the Central Detroit Christian Community Development Corp., a nonprofit, bought Clarence Avery’s house for $10,000.

One day this summer, Lisa Johanon, the group’s executive director, undid the padlock on John Crawford’s boarded-up front door. Sheets of peeling paint hung from Marie Ryan’s kitchen ceiling. Advertising fliers littered the porch where Veronica Adams’s neighbors played jacks. The glass was missing from the window on the staircase to David Andrews’s third-floor sanctuary. Kimberly Carpenter’s radiators had been stolen.

Usually, Ms. Johanon’s charity provides subsidized housing in the poorest neighborhoods — where ice-cream cones are sold from behind bullet-proof glass — not high-end areas such as Boston-Edison. But now some 100 out of the 900-odd houses in Boston-Edison are vacant.

If you can’t save 1626 W. Boston Blvd., Ms. Johanon wondered aloud, what hope is there for the rest of Detroit? Walking through, she noted the heavily stained carpet and the rickety back steps, but also the rich woodwork and the clawfoot tub.

She hopes her group can revive the house and find a new family willing to bet on Detroit. “A minimal spec, I’d say, would be $30,000 to $35,000, and it would be in pretty good shape,” she said.
—Louise Radnofsky contributed to this article.

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