Tag Archives: Foreclosure

“Reverse Redlining” Reversing Black Progress

The New York Times is carrying an interesting article about the city of Memphis and the shrinking ranks of the local black middle-class.

As a result of predatory lending and job loss, residents the majority-black city have seen decades of economic progress reversed, The Times reports. The article focuses on the role played by Wells Fargo, and outlines the mortgage lender’s targeted efforts to sell high-interest loans in black neighborhoods. The results are hallowed out neighborhoods and declining wealth for blacks and latinos in metro Memphis.

According to the article, the weath gap between white families and black families is growing. For every $1 the average white family has in wealth, the average black or latino family has only 16 cents.

I wanted to highlight this article because this is very clearly happening in Cleveland and Youngstown and Detroit. The difference is, many black families have been suffering economically in Rust Belt cities for 30 years. This foreclosure crisis only compounds the problem.

19evict_ca0-articlelarge

-AS

4 Comments

Filed under Featured, Race Relations, Real Estate, The Media, U.S. Auto Industry, Urban Poverty

Cleveland vs. Wall Street

Here’s a movie I can’t wait to see: Cleveland vs. Wall St.

The documentary will be screened at the Cannes Film Festival, Reuters reports, and follows victims of foreclosure facing off against banks.

-KG

1 Comment

Filed under Art, Economic Development, Politics, Real Estate, The Housing Crisis, The Media

Ohio’s Poorest City: The Struggle to Remake East Cleveland

Great article in the Plain Dealer about the city East Cleveland–Ohio’s poorest city–its new mayor, and the seemingly impossible task of turning it around.

Gary Norton is young (37) and well educated (he attended Morehouse College in Atlanta and earned his master’s degree in public administration at Cleveland State University’s Levin College of Urban Affairs). And that’s a big change in a city that has been characterized by political mismanagement and corruption. Former Mayor Emmanuel Onunwor was convicted on bribery charges in 2004.

gary-norton-east-cleveland-mayorjpg-c1b1300c8dcd205a_large

Norton’s election has injected fresh hope in the largely black, inner-ring suburb of Cleveland, which has lost more than 1,500 homes to foreclosure in the past two years–about 500 per mile, the highest in the state.

East Cleveland was once the home of Cleveland’s industrial titans, including John Rockefeller, but many of the breathtaking mansions have been overtaken by weeds and vandals.

Norton’s hoping to leverage the city’s location near the Cleveland Clinic and Case Western Reserve University to attract some new development. He also has $2.2 million in federal stimulus dollars to attack blight.

On the other hand, the city has a failing school system, a 35 percent poverty rate and the lowest educational attainment stats in Greater Cleveland. Truly, and I’m editorializing here, the challenges in this city cannot be overstated.

large_1224081409

1east_cleveland_01

I visited this city shortly after moving to Cleveland last year and I was shocked.

But redevelopment officials are encouraged by Norton’s cooperative attitude, according to the article. His leadership helped the city secure a $20 million expansion of Huron Hospital, a Cleveland Clinic satellite, and the city recently began a partnership with the county landbank.

-AS

5 Comments

Filed under Art, Economic Development, Headline, Real Estate, The Housing Crisis, Urban Planning

Alyssa Katz: Reconsidering the American Dream

Author Alyssa Katz called on concerned individuals to play an active role in shaping new federal policies toward homeownership in a speech today at Cleveland State University’s Levin College of Urban Affairs.

695katzartalyssa1

Katz, author of Our Lot: How Real Estate Came to Own Us, spoke as part of the CSU’s ongoing “Building Our Future Beyond Foreclosure” speaker series.

“History has handed this country and all of us this great tragedy and this great opportunity,” Katz said. “In the throes of this national trauma, the idea of community development really has to go mainstream.”

Federal invention in the housing market has a long history in the United States, Katz said, beginning following the Great Depression with the creation of the Federal Housing Administration.Government sponsored housing lenders Fannie Mae and Freddie Mac followed. Later, during the white flight of the 1970s, the government enacted the Community Reinvestment Act to hold lenders accountable for supplying credit in low- and moderate-income neighborhoods.

Now, following the devastation of the foreclosure crisis in Cleveland and elsewhere, our regulatory and housing subsidy environments are in need of another overhaul, Katz said.

She recommended retooling the Community Reinvestment Act and overhauling the banking regulatory structure to meet the challenges of the 21st Century.

“How can a global investment system that pools resources from all over the world remain accountable to local communities?,” Katz implored. “This question is one of particular urgency for Cleveland and Ohio.”

Building stable communities with lasting value will take the cooperation of bankers, community development officials and city planners in addition to average citizens that demand sensible policy solutions, Katz said.

“If the federal commitment to supporting home ownership is not in question. The terms on which it will operate are still in question,” she said.

“How can [banks] underwrite not just the value of an underwrite on one home but on the total community in which it sits?”

Prior federal interventions achieved meaningful results, drastically reshaping American neighborhoods and giving birth to suburbanization and later urban renewal, she said.

But special interests are using the housing crisis to attack successful government housing policies like CRA, despite overwhelming evidence that CRA lending did not contribute to the housing crisis, Katz said.

Moving forward, we need an “explicit government framework for community reinvestment,” Katz said. “Those of us who know how important government policies are to giving communities access to credit have to be pretty specific.”

Katz’s speech was followed by a panel discussion including Robert Curry, director of The Cleveland Housing Network, Christine Henry, director of the WECO Fund and Ruth Clevenger, Community Affairs Officer at The Federal Reserve Bank of Cleveland.

Addressing potential changes to the CRA, Clevenger recommended expanding the legislation to include more financial service providers, outside of traditional “brick-and-mortar” banks.

Secondly, she said, despite CRA’s benefits, it hasn’t been enough to address the current vacancy and abandonment problems being seen across the region.

-AS

2 Comments

Filed under Headline

Fires and Foreclosures

images

This Associated Press story highlights the problem of fire – by arson or by accident – in vacant homes, increasing as does the foreclosure crisis.

It focuses on the sad story of one homeless man squatting in one vacant home in Flint.

-KG

Leave a comment

Filed under Crime, Featured, U.S. Auto Industry

Foreclosures Down in Pittsburgh Area

The Post Gazette is reporting that foreclosures are down in the five-county Pittsburgh region for the first part of this year.

If the current trend continues, this could be the third year in a row that foreclosure rates have dropped in the region.

Which begs the question: what is Pittsburgh doing right that the rest of us are doing wrong?

2415bryant1

Leave a comment

Filed under Featured, The Housing Crisis

Tips for Preventing Foreclosure

   The Brookings Institution has another fantastic report: Addressing Ohio’s Foreclosure Crisis. The research institution offers 10 ways to help prevent foreclosure and it’s certainly applicable outside the Buckeye State.

reason-foreclosure-1b

 

   Many of their recommendations are fees and regulations that level the playing field between borrows and lenders. This is, in my opinion, a particularly good point they make:

 

Simple fairness dictates that where a lender (or anyone else) takes actions that impose significant social and economic costs on innocent third parties, be they neighboring homeowners or local governments, they should not get a free ride at cost to the public—they should bear the burden of those costs, which are known as externalities.”

 

Here’s a short review:

 

#1. Get borrowers better information about their options, and

greater access to counseling, emergency assistance and loan modification opportunities.

 

Among the recommendations: Impose a $1,000 fee on all foreclosure filings (or certain categories of foreclosure filings, such as subprime loans), with the proceeds to be used principally to fund foreclosure prevention counseling programs and emergency assistance through the Home Rescue Fund.

                (This is one I particularly like because it alters the incentives for lenders against foreclosure. Because apparently, the near-worthlessness of many Cleveland/Detroit/Youngstown/Buffalo-area homes is not disincentive enough to seize property after property.)

 

#3. Create a fair foreclosure process, with ample protection

for borrowers and opportunity to negotiate with creditors.

    Brookings recommends rewriting the laws governing borrowing to provide more protections for consumers.

    “The foreclosure process is an extreme example of what is known as an “asymmetrical relationship, where the distribution of both available resources and potential costs are

highly uneven. Creditors have far more resources to pursue foreclosure than most debtors have to defend against it, while the consequences of failure to the debtor—loss of her

home, her assets, her credit rating, and often her health and family stability—vastly exceed the consequences of failure to foreclose that may be borne by the creditor.”

 

                Here is another sub-recommendation I like: Require plaintiff to complete a mortgage origination fraud “screen”; that is, a series of questions about the origination of the mortgage being foreclosed, at the commencement of foreclosure proceedings, in order to enable the court to evaluate the possibility that fraud or misrepresentation occurred in the course of originating the mortgage.

 

 

      Recommendation 11: Require that the entity initiating a foreclosure on a residential property be legally responsible for maintenance of the property in the event that the title-holder vacates the premises at any point after the initial foreclosure filing.

   Recommendation 13: Eliminate foreclosure as legal grounds for eviction of a sitting

tenant who is otherwise in compliance with her legal obligations as a tenant.

 

   Under current practice and law in Ohio, when a tenant-occupied residential property is foreclosed, eviction of the former owner’s tenant is automatic and all but immediate. Where the tenant is a responsible one, this makes no sense. A rent-paying tenant, who is in no manner responsible for the owner’s default, loses her home. An occupied property is rendered vacant, and in most cases, immediately begins to lose value and devalue

neighboring properties. The lender, who is now the new owner, suffers from the loss of the property’s value, and loses the opportunity to gain at least some cash flow from the

property while seeking a new buyer. Tenants should be allowed to remain in their home at least until expiration of their lease.

 

 

 

 

 

 

 

 

 

 

 

 

Leave a comment

Filed under The Housing Crisis