Back to Detroit again… where the real estate news remains deplorable. This round is not only deplorable, but shameful as well.
Turns out Detroit city councilman Kwame Kenyatta and his wife walked away from their beautiful home. I won’t recount all the details in full here; instead, check out this Associated Press article. I interviewed Kenyatta when that other KK (former Detroit mayor Kwame Kilpatrick) refused to step down, so I wanted to get the story directly from him.
On the phone Tuesday afternoon, he said they had bought the house about four years ago, with an adjustable rate mortgage that had since climbed to nearly 7 percent and was scheduled at the end of 2008 to adjusted upward again. Apparently it had a cap of 11 percent. At the time they abandoned the home they were paying about $2,600 (he said that includes principal and interest, PMI, taxes and insurance), and it was headed up to over $3,000.
Kenyatta said his wife contacted the bank (the house is in her name) before the rate adjusted upward, asking what they could do to bring it down, considering rates now are just south of 5 percent. She says they were told they did not "qualify for any programs," because they were paying their mortgage on time and had not missed any payments. He says they asked about a deed in lieu of foreclosure, and was told they should sell.
Sell? In Detroit? Not for the $225,000 they originally paid, or for the $204,000 he says they still owe. Backing up here a second, he also says theirs is not the only house on the block in foreclosure. Judging from what happened with a nearby home, he said, he knew his would go for less than $100,000 — if it sold at all.
Still, I couldn’t believe that a city councilman, someone elected to serve and care for the city, could walk away from his home, his neighbors, his community. Kenyatta said they weighed their "personal situation," and they were facing rising payments on declining value. When asked what kind of message that sent to his constituents he said, "I stand on my public record which is untarnished. My ability to deal with public funds has never been called into question."
As he’s considering a run for mayor, or at least wants to hang on to his council seat, I wonder if the voters in Detroit will see it that way?