The collapse of MCA Financial Corp. earlier this year could be a coup for the city of Detroit and residents, says City Council President Pro Tem Maryann Mahaffey. According to Mahaffey, the city and Wayne County are putting together a nonprofit corporation to manage about 1,500 homes that the defunct mortgage company owned before it went bankrupt earlier this year.
The aim, she says, is to sell the properties to individuals, thereby increasing home ownership and the citys tax base.
"It is a big coup for neighborhoods because we know who to hold responsible" for the homes, says Mahaffey. According to Mahaffey, MCA often skipped needed repairs and allowed houses to deteriorate. She says that the nonprofit will ensure that repairs are completed and the homes are in line with city codes.
In January, MCA closed 40 branch offices, locked its Southfield doors and laid off 900 employees without notice. MCA, which specialized in providing mortgage loans to people with poor credit, failed when the market dried up for reselling these loans to other companies at higher interest rates. MCA was placed in bankruptcy in February.
"We can make sure we do not have a repetition of what we had before," says Mahaffey.
But Loretta Hudson, who lives in Brightmoor, is not as optimistic. About 500 MCA homes are located in the blighted west-side neighborhood.
"I dont think the city should have any property," she says. "Look at how they manage their own property. They dont even know what they have." Hudson says that she has faced red tape, incompetence and hostility when trying to help neighbors in Brightmoor purchase city-owned homes.
Hudson also fears that the city may sell the properties to landlords who will not care for them. "If they dont go to investors, thats fine. If they sell them to landlords, we will be in the same spot," says Hudson.
Another 1,500 or so MCA properties are in the care of Sigma Financial Corp., an Ann Arbor stockbroker that sold MCA mortgage investments to its clients. Sigma president Jerome Rydell says that his plans for the homes are similar to the citys.
"We are developing a total neighborhood redevelopment program that will work in conjunction with the city and neighborhood nonprofit organizations," says Rydell. He intends to use Barron Capital Inc., a Cincinnati-based company that specializes in managing low- and moderate-income housing projects, to oversee the properties.
Sigmas plan includes selling some properties to individuals. Some properties will be rented out, says Rydell, because several neighborhood groups advised that decent, affordable housing is needed in Detroit for those who cannot afford to buy.
A survey will be sent to current occupants of the homes asking them what repairs are needed. "This is an enormous task," says Rydell, adding that he hopes to make all the homes meet city codes.