In the wake of a mega-mortgage companys collapse earlier this year, some members of a Detroit task force studying the issue fear that more than 3,000 rental properties could end up in the hands of another company unable to handle them. The task force, which includes city officials, representatives of nonprofit groups and residents of affected neighborhoods, was formed by Detroit City Council President pro tem Maryann Mahaffey. The group, which met for a second time Monday, is to develop a plan by the end of the month. Mahaffey says she brought the group together because the collapse of MCA Financial Corp. could threaten Detroits tax base, property values and the census count ("House of cards," MT, April 7-13).
Representatives of BBK Ltd., the conservator appointed to oversee MCA and its 11 subsidiaries after they filed bankruptcy in February, also attended the meetings. They are part of the task force.
Tim Skillman, BBK Ltd. chief operating officer, said a consortium of lenders granted the conservator $5 million to sort out the mortgage corporations financial maze. But that money runs out at the end of the month. Skillman said the conservator hopes to sell the properties before that to the bidder who makes the "highest and best offer," but would consider selling to multiple parties.
Loretta Hudson, who is on the task force, fears the homes will be sold to a company that will not maintain them, leading to further decay. Hudson lives in Brightmoor, which has about 512 MCA-owned rental properties.
"How do I know I am not just transferring these properties to another slumlord?" asked Mark Hoerauf, who also lives in Brightmoor and is also part of the task force. He says he would like to see the homes purchased by people living in them.
Ted Philips, executive director of the United Community Housing Coalition, suggested that the city of Detroit, which is owed about $5 million in property taxes by MCA, help ensure that the new landlord is committed to the community. Philips suggested using tax waivers as a bargaining tool to attract the best buyers.
Skillman supported Philips waiver proposal and suggested that the task force also involve the Detroit Police and Fire Retirement Systems, which is owed $60 million by MCA. "They are a huge player," said Skillman. "They will have some influence on the process."
Skillman said that the conservator received two offers for the properties, but could not disclose details.
Meanwhile, Lee Rogers, former owner of RIMCO Financial Corp. the MCA affiliate that managed its 3,200 rental properties has recently started another company, Rogers Real Estate Investment. Rogers purchased about 85 homes in Detroit and 15 in Highland Park. Rogers said he is not managing rental properties, but buying, refurbishing and selling homes. He said that the new company will not have financial problems like the current ones because "it is our own funds that we are working with and we are not relying on someone elses resources." Rogers said that MCA provided RIMCO 95 percent of its business. When MCA went under, RIMCO failed.
MCA specialized in providing mortgage loans to people with poor credit, making money by selling the loans to investment firms at higher interest rates. MCA collapsed when the y could no longer sell the loans at the higher interest rates.
The task force hopes to work with nonprofit community groups that may be interested in purchasing a portion of the properties.
All bids the conservator accepts must be approved by the U.S. Bankruptcy Court.