Title
Resolution to Approve the Discharge of Washtenaw Affordable Housing Corporation’s Mortgages and to Cancel the Promissory Notes for 5 Trowbridge, 13 Metroview and 723 South Main
Memorandum
Attached for your review and approval is a resolution to approve the discharge of three City mortgages on properties owned by Washtenaw Affordable Housing Corporation (WAHC) at 5 Trowbridge, 13 Metroview and 723 South Main. WAHC is selling off its single-family homes and a small multi-family property as part of its strategy to merge with Avalon Housing as discussed in the memorandum and resolution approved by City Council on September 22, 2008 (R-08-400). The two single-family homes at 5 Trowbridge and 13 Metroview are currently rental properties that are not financially sustainable. The cost of managing a single-family rental property with rent restrictions is higher than the rent revenue received. Due to the current housing market crisis, the values of these homes have dropped precipitously and will sell for less than the debt owed on them.
The property at 5 Trowbridge is scheduled for closing on November 17 requiring the mortgage for that property to be addressed immediately.
The current debt is:
5 Trowbridge: 1st mortgage Bank of Ann Arbor $50,000
2nd mortgage City of Ann Arbor $47,500
TOTAL $97,500
13 Metroview: 1st mortgage MI Interfaith Housing Trust Fund $56,700
2nd mortgage City of Ann Arbor $18,202
3rd mortgage Washtenaw County $10,000
TOTAL $84,902
The sales prices are expected to be $60,000 - $65,000 for each property. The net proceeds after paying off the 1st mortgages, realtor fees and closing costs is expected to be $0 for Metroview and less than $3,000 on Trowbridge. The City’s mortgage is in 2nd position, which is standard for these affordable housing transactions. The first mortgage position is always taken by a private lender, such as the Bank of Ann Arbor, Michigan Interfaith Housing Trust Fund and Comerica. Otherwise, ...
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