Potential game changer for Detroit’s housing problem

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Shuttered and repossessed homes line the streets of a middle-class neighborhood on the east side of Detroit.

Plus, if you’re a Detroit homeowner and know you can’t get a higher appraisal for your home improvements, there’s little incentive to invest and upgrade, which only adds to the city’s blight problem and declining population. The upshot is a “vicious cycle” of unprofitable rehabilitation and little incentive to invest in property, according to a new update from the Washington, D.C.-based Urban Institute that focuses on economic and policy research.

“In Detroit, the appraisal problems are so acute,” said Laurie Goodman, director of the Urban Institute’s Housing Finance Policy Center.

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To offer a sense of the city’s struggles, consider that there were only about 500 mortgages in 2015 in Detroit, Goodman said.

Now a new program is expanding and hoping to gain more traction by targeting Detroit’s appraisal gap through the use of second mortgages.

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