Solutions to the Foreclosure Crisis in Cleveland Essay -- Economics

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, â€Å"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 ac... ..., and if and when foreclosure does occur, the banks, not the municipalities, should be held accountable for property-code violations on those homes. To promote economic development and to assist low-income communities in the midst of this housing crisis, laws must be strengthened to make it harder for banks to flip homes to out-of-state LLCs like Interstate Investment. In terms of litigation, housing courts should consider the order by Judge Pianka when deciding who should bear the burden of paying foreclosed and distressed residential properties. Cleveland is a location where real estate development is needed to overcome the crisis of foreclosure. The remedies will not be quick, but holding lenders accountable for their properties and developing legislation to discourage conveyances to foreign LLCs are some important ways to turn abandonment into opportunity.