Motor city has seen better days and mortgage lender and financial institution Bank of America has instituted a couple of efforts to help Detroit, Michigan during their most recent time of need.
The double whammy of the mortgage meltdown backed by the Great Recession has caused the city's population to drop by 25 percent and has left more than one in five of Detroit's homes vacant (U.S. Census, 2010). Estimates suggest that there are close to 90,000 empty properties in town and Bank of America has committed their efforts to trying to prevent further blight.
B of A Donating Homes For Project 14
Earlier this year, Detroit Mayor, Dave Bing, announced a program offering $1,000 homes to police and fire fighters who opted to live in town. The offer was being made to make the city safer, as over a decade ago, Michigan lawmakers got rid of a law that required Detroit's police force to reside in the city limits. That act prompted a mass exodus from town that resulted in a 53 percent of the city's police force and a larger percentage of firefighters to relocate out of city borders. Bank of America has offered to donate 10 abandoned homes to the city, to offset the financial burden of the city's program.
Bing's plan is called Project 14 and along with the mortgage provider, program funding and assets are coming from the U.S. Department of Housing and Urban Development (HUD), neighborhood stabilization funding and partnerships other local lenders. Bank of America CEO, Brian Moynihan, is a Project 14 advocate and has stated the plan "... will help stabilize neighborhoods in the process. It's a small step, but it's a consistent step in how we think we can help the city through the crisis," (Consumerist.com).
B of A Demolishing Home
While tales of homes being leveled by accident have grown in popularity, B of A has the legal clearance to level homes for the greater good of the city. In addition to the lender's donations, the bank has agreed to level 100 real estate owned abandoned homes at an expense of $1 million. According to Moynihan, the strategy is being done as a way to "right-size" the city (Detroit Free Press). Once the homes are leveled, the land will become Detroit city property with the areas being converted into either green space or to be used for either urban farming or redevelopment.
Mayor Bing announced his intention to tear down 10,000 abandoned homes out of the 90,000 vacant properties plaguing the city (Wall Street Journal). Those properties have dragged the median values of local homes down by 22 percent, to approximately $55,000 (Trulia.com). Tearing down the homes is expected to help stabilize values and the community at large.
B of A Launches Local Mortgage Service Centers
Detroit's homeownership rates are in decline as many residents are unemployed and unable to handle the monthly payments associated with their home mortgages. According to city statistics, the city's unemployment rate is just below 30 percent. However, according to Bing and other local leaders, the actual unemployment rate is closer to 50 percent (HuffingtonPost.com). B of A has agreed to open to local mortgage service centers to help the masses and help financially struggling homeowners keep the roof overhead.
The customer service centers are being launched to assist mortgage and other credit customers facing financial difficulty. The physical locations will be announced in the upcoming months. The offices will concentrate their efforts on providing face-to-face contact and immediate assistance for property owners on the verge of default or foreclosure. The bank has pledged to continue working with the city in order to assist in the local stabilization efforts.
