How Risky Lending Hollowed Out Detroit

While Detroit has enjoyed sporadic rejuvenation, it continues to lose housing stock. Risky past lending is a key culprit. "The toll is massive: 56 percent of mortgage foreclosures are now blighted or abandoned. Of those 36,400 homes, at least 13,000 are slated for demolition at a projected cost of $195 million, The News found. The city lost another $300 million in tax payments from foreclosed homes that Wayne County seized for nonpayment of taxes."

Pre-2008, "Detroit had one of the highest rates of subprime lending in the country: 68 percent of all city mortgages in 2005, compared to 27 percent statewide and 24 percent nationwide, according to federal records."

While blight is also a function of faltering city services, the immense devaluation of foreclosed properties makes it easier for them to fall into a decrepit state. "Few efforts were made to hold institutions accountable for damage after those lenders blanketed city residents with risky loans, and then sold homes for as little as $1 after they were foreclosed on."

The lending industry claims no responsibility for what buyers do with their one-dollar homes. Quicken Loans founder Dan Gilbert, who co-chairs the Detroit Blight Removal Task Force, concurred. "[Gilbert] blamed high taxes and other factors. 'Existing blight causes other blight. Poor city services. All of it together.'"