JACKSON, MI – City officials are out about $15,000 after forgiving a home rehabilitation loan issued to a Jackson resident prior to the owner short selling the property.
RE/MAX real estate agent Sharon Norton said the home at 133 Arnold St. will be sold in the near future.
"We're working on finalizing the offer with the bank right now," she said.
A short sale is a sale of a property where the proceeds from selling the property fall short of debts secured to the home. The home is selling for about $20,000, according to city documents.
Jackson City Council members voted unanimously recently to forgive the $15,136 rehab loan, which would have been due in full May 2025.
Homeowner April Bliss requested the loan be forgiven in a letter to city officials.
"I have had financial difficulties over the past years, having filed bankruptcy once already, and now falling behind in bill payments again," she wrote. "My goal is to do a short sale on my property in an attempt to avoid foreclosure."
Bliss explained in her letter she is a single mother with a 9-year-old son who "never received any child support payments from the non-custodial parent to aid me in my monthly expenses."
Attempts to contact Bliss were unsuccessful.
Jackson City Manager Patrick Burtch said, similarly to a loan issued to Daryl's Downtown Restaurant, there is "no chance" the city would recoup the loan funds.
"We have to use the (Community Development Block Grant) funds, it's federally mandated," Burtch said. "There is no way we'd see the money since we're subordinate to the mortgage."
According to city documents, the current balance on the primary mortgage is $53,286.
"When the property is sold, there will not be sufficient funds to repay the outstanding loan with the city, nor will the homeowner receive any net proceeds at the closing," Burtch wrote in a memo to city officials.
Jackson City Council voted to issue the loan in May 2005 to rehabilitate the home to city code standards.
Similarly, Jackson officials voted to forgive an $80,000 loan – issued in 2006 – to Daryl's Downtown Restaurant in March. The city was third in line and subordinate to two other loans when restaurant owner Daryl Hoskins announced the restaurant would close in January.
Both loans were made through the city's Jobs Creation Loan program, a program federally funded by the city's CDBG allocation. The yearly allocation is set forth by the U.S. Department of Housing and Urban Development.
If repaid, home rehab loans would go back into the CDBG pot, according to Burtch.
"This kind of thing happens all the time, all over the country," Burtch said. "When you're mandated to provide loans for home and business improvements, you're never going to be first priority. There's usually one or two mortgages first."
Contact Will Forgrave at firstname.lastname@example.org or 517-262-7554. Follow him on Twitter at @WillForgrave.