FinanceHope for homes
|More Finance Stories|
In tent city (6/3/2009)
After the foreclosure (6/3/2009)
Why bail? (10/1/2008)
|More from Ann Mullen|
Reading, writing and politics (10/13/2004)
Fistful of fun (9/29/2004)
Uplift the senses (9/22/2004)
The Neighborhood Management Company has turned a potential disaster for Detroit into a triumph, according to city planners.
Last September, a Wayne County-created nonprofit hired the organization to care for 1,600 dilapidated properties that MCA Financial Corporation had owned and RIMCO had managed after both went bankrupt. In the last three months, NMC has nearly completed city inspections on all of the properties and soon will begin massive renovation on them.
"We are pleased with the progress," says Jim Saros, who heads the company. He adds that rent collections have increased from $170,000 to $260,000 per month.
Though Saros expected home inspections to take six months, 90 percent of them were completed in the last four weeks. Leaky roofs, backed-up sewers, cracked windows, peeling paint and faulty furnaces are some of the housing code violations that inspectors found.
"We have a huge violation list, but it was nothing we didn't expect," says Saros.
tenants occupying the
RIMCO-managed homes complained that the properties were not well-maintained. Most of the homes are concentrated in blighted areas and some feared that MCA's collapse would lead to further decay. Experts suggested that the mortgage company's demise may threaten the city's tax base, the health of its housing market and the census count if residents were forced to move from these homes. But when Saros took the helm, attitudes changed.
The Detroit City Council immediately approved a $3.5 million loan for preliminary work on the homes. This money was used to buy smoke and carbon monoxide detectors, which have been installed in every home. Saros says that securing the properties was his number one priority.
Though massive renovation of the 1,600 properties will not begin until spring, one vacant home on Detroit's north side is currently being overhauled. The run-down house sits across from a public school; some feared that it posed a danger to students.
About $30,000 is expected to be invested in the home. Renovations will be completed next month; then the house will be offered for sale for $55,000.
Saros says that it may cost as much as $20 million to renovate all 1,600 homes. The city will pay for the repairs, which will be repaid when the homes are sold. This could take several years because the titles, which are in disarray, have to be cleared.
About another 1,500 properties are in the care of Sigma Financial Corp., an Ann Arbor stockbroker that sold MCA mortgage investments to its clients. In an August interview with Sigma president Jerome Rydell, he said that the group, like the city, plans to redevelop and sell the homes. Rydell could not be reached for comment about the status of those plans.
MCA, which was based in Southfield, specialized in providing mortgage loans to people with poor credit and was servicing about 4,700 mortgages totaling about $355 million and about 7,000 land contracts. Most of its business was in Detroit.