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Stabilizing Neighborhoods

Stabilizing Detroit's neighborhoods – tackling blight, increasing property values and attracting new residents – is key to rebuilding a thriving, vibrant and diverse city. JPMorgan Chase is supporting the Detroit Land Bank Authority, helping strengthen its capacity to fulfill its vital role coordinating the city's anti-blight efforts. We are also helping provide much-needed financing to enable working families and individuals to buy and renovate homes.

Liberty Bank Home Restoration Program

It is a Catch-22 in many of Detroit’s neighborhoods: Depressed property values and few comparable sales make it difficult to meet traditional lending standards, so financing is hard to come by. But prospective buyers and existing homeowners need financing to purchase and renovate homes – which is necessary to increase property values and generate sales activity.

JPMorgan Chase and community lender Liberty Bank are working to change this dynamic. Through the Home Restoration Program, Liberty Bank is aiming to extend up to $20 million in affordable mortgage and rehabilitation loans to qualified buyers and existing homeowners in Detroit. JPMorgan Chase provided a $5 million grant to cover potential loan losses, enabling Liberty to offer more flexible financing terms that account for the realities of Detroit’s housing market, as well as an additional $300,000 for down payment assistance.

In Conversation with Alden J. McDonald Jr., President and CEO of Liberty Bank

Why did Liberty Bank choose to work in Detroit?
We have been involved in community development since our founding in New Orleans in 1972. We looked at the marketplace in Detroit, and we felt it could use the services we provide. In 2009, we bought a Detroit bank that had failed. From our understanding, there were few financial institutions at that time lending in depressed areas of the city. We saw it as an opportunity for us to grow, as well as to help the community rebound.

What experience did you bring from New Orleans that you are applying in Detroit?
In New Orleans, we were devastated by Hurricane Katrina. Eighty percent of our customer base was literally underwater. We didn’t know whether or when these properties would come back. But we felt that somebody had to lend money to allow people to begin rehabbing homes that had been destroyed. We became intimately involved in lending money in a disaster area.

The similarity in Detroit is that you have beautiful neighborhoods where there are blocks and blocks of vacant houses that need to be redone. So we put together a program like one we had in New Orleans to help individuals get a loan to buy a home, or fix up their own, even though the appraisal might not justify it or the comps aren't there.

What is unique about the Home Restoration program?
We are putting a program in place that will be truly sustainable. The partnership with Chase, because it takes care of the initial risk factors, gives us the ability to do that.

Our program also comes with a lot of care to make certain that people get value for the dollars they invest in their home. We don’t provide just financing. We offer ongoing assistance during the rehab. We have a construction manager who monitors the work to make sure it is being done as proposed, for the costs agreed. So if something goes wrong, both the owner and the bank know right away, and we can find a solution. I don’t think there are other financial institutions doing this.

What value has your partnership with JPMorgan Chase provided?
more strength. We have booked more than $40 million of community development activity in the Detroit area, including in very depressed neighborhoods. As a result, a lot of those areas are beginning to rebound. By no means can we rebuild Detroit by ourselves, but now that some of these transactions have taken place, other financial institutions are looking at Detroit in a different way. And our partnership with Chase is one of the things that’s moved it to another level.

For more information on the Home Restoration Program, call (313) 873-3311 or visit www.libertybank.net/community/detroit.cfm

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