White people make up just 10 percent of Detroit’s population but got nearly half of the home mortgage loans made in 2017 for which the race of the applicant was known.

That data point and several more show that the mortgage market in Detroit, while improving in recent years, remains anemic at best and, at worst, nonexistent in many parts of the city.

Data collected under the federal Home Mortgage Disclosure Act show:

► White borrowers got almost the same number of mortgages as black borrowers despite being a much smaller percentage of the city population. Of 1,072 mortgage loans made in Detroit in 2017, the most recent year for which full data are available, 442 went to white borrowers, 461 to black borrowers, and in the remainder the race of the applicant was not known, or, in a few cases, went to Asians or those of other ethnic groups.

► The mortgage market doesn’t exist or barely exists in more than half the city. Of 297 Census tracts in Detroit, each tract measuring several square blocks, 139 tracts saw no mortgages at all in 2017, and another 91 saw just one to five mortgages.

► Only nine Census tracts out of the nearly 300 saw 20 or more mortgage loans made in 2017. Tracts where mortgages were more readily available were in the city’s more upscale districts, including the east riverfront, the Palmer Woods area, and a handful of others. In those areas, poverty rates are well below the city’s average and income levels are higher.

► In part because mortgages are less readily available in the city, black home buyers may be more likely to buy in the suburbs than in the city. In 2017, just two suburbs, Southfield and Redford Township, accounted for more mortgage loans to black home buyers (747) than the mortgage loans made to black buyers in Detroit itself (461) when the race of the applicant was known.

► A lack of mortgage loans does not mean there are no home sales in the city. Finance experts estimate there may be 4,000 to 5,000 home sales in Detroit each year but up to 80 percent of those transactions were cash or some variation, like a land contract, lenders and civic leaders estimate.

► Black borrowers more often got government-backed mortgages under either FHA or VA programs, an indication that lenders found those clients less credit worthy or of a higher risk. White home buyers, on the other hand, tended to get conventional mortgages, made to those with good credit in stable neighborhoods.

► In a vivid illustration of that last point, just three of a total of 635 homes sold by the Detroit Land Bank Authority from November through February involved a traditional mortgage loan, said Reginald Scott, director of dispositions for the Land Bank.

What the mortgage numbers mean

This lack of a robust mortgage market in Detroit creates a substantial drag on efforts to improve the financial life of residents. For generations, getting a mortgage has been a ticket to a middle-class life and a brighter future. The lack of mortgages for thousands of home buyers in Detroit each year holds back Detroit’s full recovery.

“There are large parts of the city — probably over half — that do not have a functioning real estate market,” said Alan Mallach, a New Jersey-based planner and author of the book “The Divided City,” who has worked frequently in Detroit.

“However, weak as the numbers are, they are an improvement,” he added. “In 2012, only 200 mortgages were made in the city, and the numbers have been steadily going up — albeit slowly — since then. So the trend is positive, but is affecting only a relatively small part of the city.”

Without overcoming the problems holding back its mortgage market, Detroit will face a much slower recovery, said Jay Farner, CEO of Quicken Loans, which is the largest mortgage lender in the city.

“It’s critical,” he said. Mortgages are “the vehicle that allows the buying and selling of properties easily. It empowers people who are just starting their lives, having their families, to buy a property they couldn’t buy” without a mortgage.

MAP: Click an area above to see how many mortgages are made in each Census tract in Detroit. The purple areas represent tracts with few or no mortgages. The gray pins show more mortgages and the lightest areas represent with the most mortgages.

The data are subject to a few qualifications. About 15 percent of mortgage loans reported in the HMDA data did not identify the buyer by race. Mortgage lenders who made less than 25 mortgage loans in a community were not required to report their data.

Also, since the Free Press analysis looked at loans for home buying, refinancing of existing mortgages was not included. And a handful of borrowers identified as white were also identified as Hispanic or Latino, although not a significant number.

But those qualifications aside, this remains clear: Traditional mortgage loans for home buyers remain far from readily available in Detroit.

Why so few mortgages?

Several years ago, lenders and civic leaders initially thought the problem limiting mortgages was a lack of capital available in the city, a legacy of the days when banks denied credit to city residents, a process known as redlining.

But as JPMorgan Chase, Quicken Loans and other lenders began to funnel new money into mortgage programs in recent years, it became clear that the problems went much deeper. Among the issues: Detroit’s supply of move-in-ready houses was limited; appraised values were often too low to support a conventional mortgage, and many buyers had blemished credit histories that made them, by conventional lending metrics, unqualified for a traditional mortgage.

The more lenders dug into the problems, the more pitfalls opened up. Some potential buyers had insufficient incomes either because the city lacked public transit to get them to a job, or they may have had a brush with the criminal justice system. Everything from child care obligations to Wayne County’s tax foreclosure process made buying or keeping a house more difficult, which, in turn, made mortgages harder to get.

“As we’ve been sleeves rolled up, working in the community, we’re learning over and over how multifaceted the challenge is. It’s not just a supply of mortgage capital or a matter of producing enough credit-worthy borrowers. It’s much more complex,” said Janis Bowdler, president, JPMorgan Chase Foundation.

Credit problems persist

Credit histories are one major obstacle for many Detroiters.

The experience of Tracee Anderson, 54, who rents an apartment in southwest Detroit but hopes to buy a house in the city, typifies what many potential home buyers go through.

A social worker, Anderson lost her previous house after a divorce, got laid off from her job at a local hospital, got sick and ran up medical bills. “I paid half of them and then I just couldn’t do it anymore,” she said. “I couldn’t manage it anymore. So I said I’ll file for bankruptcy.”

Her credit rating tanked. Talking with mortgage lenders showed her how difficult it is to buy a house with bad credit. Having referred clients to various social agencies, she referred herself to Southwest Solutions, where counselors helped her improve her credit rating over the past year and got her ready to look once again for a house.

But it’s difficult.

“It’s taking a long time,” she said. “You know how you go between being hopeful and being discouraged.

“The biggest thing I’m finding right now is where’s the help at? I know there are programs but how do you even get in contact with them? I think there’s a gap between people who are willing and able and working and all this blight, and what’s in that gap and how do you fill it?”

Stories like Anderson’s are all too common in Detroit.

“With the buyers we’re working with, they’re often living paycheck to paycheck, maybe able to save a little bit,” said Libby Palackdharry, senior director of financial stability programs for Southwest Solutions. “Student debt, medical debt, credit card debt, it’s a big problem.”

But weak credit is only part of the challenge.

Problems with appraisals

Lenders see low appraised values of Detroit homes as a major limitation on mortgage lending.

A bank or mortgage company typically will make a loan only when a professional appraiser finds that recent sales in the neighborhood — the comparables or “comps” —show that the sale price is fair. But home prices remained so depressed in Detroit until just recently that “comps” often did not justify a mortgage for a home sale.

If, say, a seller set a sale price of $50,000, an appraiser may find that earlier sales nearby translated into a value much lower, say $30,000.

So if, traditionally, a buyer in a robust market puts down 20 percent of the sale price, the loan-to-value ratio is 80 percent. Because appraised values in many parts of Detroit remained so low, lenders were faced with making loans with a 200 percent loan-to-value ratio — far more than any lender could justify.

That means that most house sales are done with cash or land contracts.

The problem with cash sales

Buying a home for all cash has drawbacks. It limits a buyer to however much cash he or she has on hand, often no more than a few thousand dollars. But a mortgage would allow them to put the same amount down and borrow more to buy a home worth several times the amount of the down payment.

And among other problems, buying for cash will not establish a credit history for a buyer like a mortgage will.

Since mortgages are out of reach and cash often inadequate, many Detroiters buy houses using a land contract. In a land contract, a seller agrees to accept a fixed sum each month from the buyer until the debt is paid off.

Although common in Detroit, buying on a land contract presents significant dangers. Land contracts may work out OK “if you know what you’re doing and had an attorney review it, but by and large it’s opens that buyer up to predatory practices, for sure,” said Hector Hernandez, executive director of Southwest Economic Solutions, an arm of Southwest Solutions.

With a traditional mortgage, a buyer who falls behind may be able to negotiate a payment plan or otherwise not lose everything. “With a land contract, they can just pull you right out of that home. Even if you had paid off 90 percent of it, you fall behind one payment, that’s it,” Palackdharry said.

And oftentimes those transactions take place without a title insurance policy in place. So a buyer may never know if she has a clear title to the property. That can lead to nasty surprises down the line.

So a traditional mortgage offers more protections, establishes a credit history and a clear title.

And, crucially, a mortgage helps create a record of market-rate sales so an appraiser can find “comps” or comparable sales that enable lenders to justify future mortgage loans to other buyers.

“By getting those property values supported in a concentrated area, you start to get financing going, create more comps, you get that flywheel spinning,” said Farner of Quicken Loans. “So you get some momentum in pockets like that and very quickly you’ve established a good comp base.”

A success story

The story of Detroiter Jomica Miller, 43, is fairly typical. A cashier working at 36th District Court, she had hoped to buy her parents’ home after her father died but found it had been sold out from under them at the annual Wayne County tax foreclosure auction. She also found her past credit history presented a problem for lenders. She had student loans she was slowly paying off and a past bankruptcy on her record.

“I actually started my process in 2017,” she said. “Nobody wanted to work with me because my credit was so bad. I didn’t know where to start.”

Through credit counseling and perseverance for more than a year, she eventually was able to buy a house in the Marygrove district on the city’s northwest side with an FHA-backed mortgage. The house is one of four that were part of the Fitz Forward project that have gotten mortgages closed in the Fitzgerald neighborhood. Fitz Forward is the initiative led by Century Partners and The Platform to rehab houses in the district.

“I almost gave up, but I had some great people in my corner,” she said. “Don’t give up."

Rehabbed & Ready

Aware of the many obstacles holding back borrowers like Miller, lenders and civic leaders have come to their aid in many ways.

Southwest Solutions, the nonprofit, offers new home buyer classes and credit counseling. Then, too, the Michigan State Housing Development Authority offers down payment assistance to qualified buyers.

The Detroit Land Bank Authority has made more houses affordable though its programs, including auctions and others efforts. JPMorgan Chase has committed more than $5 million to help fund mortgage and rehabilitation loans through Liberty Bank, a New Orleans-based institution working in Detroit.

There are many such efforts, and more new ones are in the works. Collectively, they are one reason why the number of mortgage loans in the city, while still small, has risen in the past few years, from no more than about 200 mortgages several years ago to more than 1,000 a year today.

“Legacy Detroiters can climb that economic ladder if given the opportunity and the tools,” said Hernandez of Southwest Solutions.

One such effort, a partnership of the Detroit Land Bank Authority and Quicken Loans, is called Rehabbed & Ready. It is aimed at overcoming the problem of the large renovation costs that many Detroit houses require to come up to code.

Quicken Loans funded the program with several million dollars that allows the Land Bank to fix up blighted houses in its inventory before a sale, rather than after. The renovated houses then sell for something closer to a fair market value.

So far, about 60 homes have been completed under the program and another 40 or so are in the pipeline. In the Bagley neighborhood on the northwest side, Rehabbed & Ready has resulted in 13 home sales so far. The first of those sales averaged $35,000, but today it’s closer to $90,000 — an indication that priming the pump with an initial investment works.

But if these programs have moved the needle, they have done so slowly.

More changes ahead?

If Detroit’s mortgage market remains weak, the good news is that the problem is getting lots of attention. Millions of dollars have been devoted to improving the market and a lot of smart people are working on solutions.

And, over time, credit counseling and down payment assistance and programs like Rehabbed & Ready should continue to show progress. And as new job training programs graduate skilled workers, more Detroiters should be able to earn the incomes that will help them qualify for a mortgage loan.

But no one should say the mortgage market in Detroit has normalized just because the number of mortgages has increased in the past few years. Far from it. As with so much of Detroit’s highly touted recovery, the hard work of innovation and improvement is just beginning.

Contact John Gallagher:313-222-5173 or gallagher@freepress.com.Follow him on Twitter@jgallagherfreep. Read more on business and sign up for our business newsletter.