We have been fighting terrorists since 2001, for so long that some now call it “the endless war.” But here in Cuyahoga County, the foreclosure battle has been going on even longer — since 2000, years before the rest of the country even knew there was a housing crisis.
It is not overdramatic to state that Cuyahoga County was Ground Zero for the collapse of the nation’s real estate market. From 2000 to 2006, there were 62,000 foreclosures here, more than anywhere else in the country. We finally lost our first-place ranking as bursting housing bubbles spread the pain west and south, but with 42,000 more foreclosures in the last three years — an average of 14,000 a year, compared with 10,000 a year from 2000 to 2006 — Cuyahoga County’s situation actually worsened. And that total doesn’t include so-called “zombie loans,” which are mortgages more than 90 days in arrears that the lender has not foreclosed on yet.
Foreclosure affects not only those unfortunates who lose their homes, but all of us through declining property values. Currently in Northeast Ohio, 51 percent of all mortgages are in a negative equity position — “underwater,” as the expression goes. The foreclosure crisis is a problem that feeds upon and compounds itself every time another home goes vacant and dark, becoming a target for vandals and contributing to neighborhood blight. Currently, there are 35,000 such properties in Cuyahoga County.
To fight a battle of these dimensions, a powerful new tool was needed, and in December 2008, the General Assembly provided it with legislation enabling the creation of the Cuyahoga County Land Reutilization Corp., which we refer to as the County Land Bank. After a year in operation, the Land Bank is, I believe, the most effective and comprehensive program in the country to deal with vacant properties due to its entrepreneurial transactional capabilities and funding.
The Land Bank is a quasi-public entity governed by a seven-person board on which I, as county treasurer, serve. In its first year of operation, it has acquired title to more than 200 vacant properties, a number that will grow to more than 2,000 in the coming year. Homes that can be renovated will either be responsibly mothballed and preserved, or come under innovative development programs established by the Land Bank; those too far gone to be salvaged will be demolished using a streamlined bidding and contracting process. Currently, the Land Bank has 60 properties slated for demolition with another 80 under bid preparation.
The Land Bank is working closely with the cities to determine how properties within their borders will be utilized once demolition is completed, such as developing pocket parks or community gardens. By speeding up the tax foreclosure process for tax-delinquent, abandoned properties, which before could take years, the Land Bank is allowing cities to finally address longstanding eyesores that previously were beyond their reach.
Among several significant accomplishments, a major achievement for the Land Bank was negotiating an agreement with the mortgage giant Fannie Mae to stop selling low-value properties to speculators and flippers. Instead, distressed properties valued at $25,000 or less are transferred to the Land Bank for $1 and Fannie Mae contributes $3,500 for each property. The Land Bank was the first agency in the country to negotiate such an agreement, which is now serving as a model for other cities. Another first-in-the-nation arrangement with Fannie Mae soon to follow will allow the Land Bank to get nuisance properties off the market up to six months sooner. The time saved can be the difference between a house capable of rehabilitation versus one that has been stripped and damaged beyond hope. Even more important, this will discourage bank walk-aways, which can cloud title to abandoned properties for years.
The Land Bank is also working with the Cleveland Housing Network to provide first-mortgage financing to prospective lease-purchase homeowners. This will allow hundreds of families to reach the dream of home ownership, but in the old-fashioned way — responsibly.
It has, in short, been a whirlwind first year for the Land Bank. The cooperation and collaboration among the many political jurisdictions involved has been amazing and has gone beyond anything I’ve seen in all my years of public service.
The infrastructure has been laid to finally allow us to address the foreclosure crisis in a meaningful, effective way. The Land Bank has been designed to provide a long-term fix, and the results are already beginning to show.
The battle is still far from over, but at least now we’re fighting back.
Jim Rokakis, Cuyahoga County treasurer, is chairman of the board of the Cuyahoga County Land Reutilization Corp.