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Solutions To The Foreclosure Crisis In Cleveland

1572 words - 6 pages

Cleveland, Ohio faces a vacant property crisis. Steady abandonment of vacant properties, both residential and commercial, has diminished stability, property values, and public safety in the city of Cleveland and its neighboring suburbs. This multi-faceted problem of mortgage loan delinquency and bank walk-aways in Cleveland has generated an extensive legal discussion concerning pressing public policy matters.
The foreclosure crisis in Cleveland has imposed significant financial burdens upon taxpayers and area residents who have been forced to shoulder burdens that are rightfully the responsibility of borrowers, mortgage lenders and others that are direct parties to the mortgage transaction. Indeed, “the failure of borrowers and lenders to pay the full social costs of nonprime lending also leads to perverse market effects, as less-than-scrupulous lending organizations overextend credit to highly foreclosure-prone borrowers.”
Economic conditions and predatory lending in Cleveland have hindered the city from being able to effectively respond to the crisis. However, Cleveland has been successful in its property acquisition tools for revitalization, namely its city land bank. The use of the city land bank has been a key element in the successful efforts of community development corporations (CDCs), but as economic conditions and challenges have plagued the Cleveland housing market, this tool is no longer as effective in generating a sufficient pipeline of properties for redevelopment. Recognizing that reinvigorating the city’s land bank was a key measure to pursue in light of economic changes, the Cleveland Housing Renewal Project (CHRP), a non-profit organization subsidiary of Neighborhood Progress Incorporated (NPI), filed an action against Wells Fargo Bank in an effort to pursue revitalization changes through litigation.
Filed in June 2009, CHRP’s suit against Wells Fargo claims that the bank’s business practices in the post-foreclosure purchase, maintenance and sale of residential properties acquired through sheriff’s sale, constitute a public nuisance. The outcome of that case, and the judgment orders placed upon Wells Fargo to bring foreclosed properties it owns in Cleveland up to city code, provides a foundation for foreclosure legislation reform and ideas to rebuild and revitalize Cleveland.
The Challenges of Vacant Properties in Cleveland: Who is Interstate Investment, LLC?
According to the National Vacant Properties Campaign, no uniform policy or consistent definition of a vacant or abandoned property exists. “Vacant properties can include abandoned, boarded-up buildings; unused lots that attract trash and debris; vacant or under-performing commercial properties known as greyfields (such as under-leased shopping malls and strip commercial properties); and neglected industrial properties with environmental contamination known as brownfields. Vacant properties impose massive costs, and municipalities like Cleveland bear the costs...

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