A Specter is Haunting Cleveland

Letter to the Editor By Jay Rothermel

The link to the PDF of the Case Western Reserve University foreclosure study may be of use to you. You can access it on the Internet at:

http://blog.case.edu/msass/2008/12/09/20081209_beyond_reo_final.pdf

I am also including an article about the study from the December 9 Crain’s Cleveland business newspaper [immediately below]. Speculative real estate sharks and financial parasites are buying property at sheriff’s auctions in North East Ohio at rock-bottom prices; I am sure this same study would generally pertain to other cities, too. The study is easy to read and has
useful diagrams.

Some neighborhoods in Cleveland I have recently been through while looking for a job look like some kind of “ground zero.” Yesterday in the deeply depressed areas off East 55th and Grand Avenue I saw an excavator demolishing an abandoned home that had burned. Out in the street were three Black men with grocery store shopping carts ready to salvage electrical wiring and copper from the site. There are two metal and wire salvage companies within half a mile of this residential work site. Recently the State of Ohio has taken to running a TV ad that says “Don’t let your tombstone say: ‘I died stealing copper from an empty dwelling.’” The precious metal from catalytic converters in cars goes for about $40.00 locally; one person at my old job didn’t know theirs had been stolen from their car until the car failed an EPA test required for license renewal.

The sunrise in this dark period is rising with Chicago’s sit down strikers, though.

Comradely,

Jay Rothermel

Ohio Moratorium NOW! on Foreclosures, Evictions, and Shut-Offs

Case Western Reserve University Foreclosure Study Paints Bleak Picture

By Stan Bullard

A high-volume, low-margin business trading lender-owned properties after foreclosure is slicing and dicing Cleveland and several of its suburbs to an incredible degree, according to a just-completed study by The Center on Urban Poverty and Community Development think tank at Case Western Reserve University (CWRU).

As the volume of bank-owned properties increase, lenders are shedding properties at startlingly low prices to investors who promptly resell them for gains from a few hundred to a few thousand dollars. The report says that in 2005, 2.6 percent of foreclosed homes in Cuyahoga County sold for less than $10,000, but by July of this year the volume of such “extremely distressed sales” increased nearly twelve-fold to 42 percent.

Sales and repeat sales of foreclosed properties are ravaging Cleveland property values, as 63 percent of the properties in the city were sold for less than $10,000 between 2005 and July 2008. The study finds that 75 percent of lender-owned properties on Cleveland’s East Side were sold for $10,000 or less, while 32 percent of lender-owned properties on the West Side sold for similarly low prices.

The center’s study also identifies the ten largest financial institutions shedding foreclosed properties in the county over the three-year period. Deutsche Bank National Trust sold 19 percent of the foreclosed properties, disposing of 44 percent of them for $10,000 or less, followed by Wells Fargo of San Francisco, which sold 18 percent of the properties, 39 percent of them for $10,000 or less.

Meantime, ten investors or investment groups bought 481 of the properties, or 18 percent of the lender-shed properties, for $10,000 or less.

The CWRU study did not look at the effectiveness of buyers in returning low-valued properties to productive use, but it noted several efforts are taking shape.

One, the study said, is the proposed Cuyahoga County land bank of foreclosed properties, the Cleveland Housing Network’s program to lease rehabilitated foreclosed homes to low-income buyers and market-oriented land contract and lease-to-own efforts by some individual sellers.

—Crain’s Cleveland, December 9, 2008