Foreclosures Force Suburbs to Fight Blight
SHAKER HEIGHTS, Ohio — In a
sign of the spreading economic fallout of mortgage foreclosures,
several suburbs of Cleveland, one of the nation’s hardest-hit cities,
are spending millions of dollars to maintain vacant houses as they try
to contain blight and real-estate panic.
In suburbs like this one, officials are installing alarms, fixing
broken windows and mowing lawns at the vacant houses in hopes of
preventing a snowball effect, in which surrounding property values
suffer and worried neighbors move away. The officials are also working
with financially troubled homeowners to renegotiate debts or, when
eviction is unavoidable, to find apartments.
“It’s a tragedy and it’s just beginning,” Mayor Judith H. Rawson of
Shaker Heights, a mostly affluent suburb, said of the evictions and
vacancies, a problem fueled by a rapid increase in high-interest,
“All those shaky loans are out there, and the foreclosures are
coming,” Ms. Rawson said. “Managing the damage to our communities will
Cuyahoga County, including Cleveland and 58 suburbs, has one of the
country’s highest foreclosure rates, and officials say the worst is yet
to come. In 1995, the county had 2,500 foreclosures; last year there
were 15,000. Officials blame the weak economy and housing market and a
rash of subprime loans for the high numbers, and the unusual prevalence
of vacant houses.
Foreclosures in Cleveland’s inner ring of suburbs, while still low
compared with those in Cleveland itself, have climbed sharply,
especially in lower-income neighborhoods that border the city. Hundreds
of houses are vacant because they are caught in legal limbo, have been
abandoned by distant banks or the owners cannot find buyers.
The suburbs here are among the best organized in their
counterattack, experts say, but many suburbs elsewhere in the country
have had jumps in foreclosures and are also working to stem the damage.
Outside Atlanta, Gwinnett and DeKalb Counties have mounted
antiforeclosure campaigns while several towns south of Chicago are
forcing titleholders to fix up empty houses, or repay the government
for doing it.
Here in Ohio, there are more than 200 vacant houses in Euclid, a
suburb of Cleveland north of here. In the last two years more than 600
houses in Euclid have gone through foreclosure or started the process,
many of them the homes of elderly people who refinanced with low
two-year teaser rates, then saw their payments grow by 50 percent or
Euclid has installed alarm systems in some vacant houses to keep out
people hoping to steal lights and other fixtures, drug users and
squatters. The city has hired three new building inspectors, bringing
the total to nine, to deal with troubled properties and is getting a $1
million loan from the county to cover the costs of rehabilitation,
demolition and lawn care at the foreclosed houses. (When the properties
are sold, such direct maintenance costs will be recovered through tax
The Euclid mayor, Bill Cervenik, said the city, with a population of
53,000, was losing $750,000 a year in property taxes from the empty
At greatest risk in Cleveland’s suburbs are the low- and
moderate-income neighborhoods where subprime lending has soared. The
practice involves lenders issuing mortgages at high interest rates for
people with lower incomes or poor credit ratings, usually involving
adjustable rates and sometimes no down payment and no investigation of
the borrower’s circumstances.
“What makes the subprime mortgages so devastating from a community
perspective is that they’re so concentrated geographically,” said Dan
Immergluck, a professor of city planning at the Georgia Institute of Technology
Rosa Hutchinson Yates, 62, had kept up payments on her tidy
two-story house on Chagrin Boulevard in Shaker Heights for 30 years.
Now, she may well lose the house because of a disastrous refinancing
deal in 2003 that brought her $24,000 in cash but bills she could not
Ms. Yates, who has worked as a beautician and a cocktail waitress,
was emotional and confused as she tried to explain what happened.
Though she signed the closing documents, she said she did not realize
that she was getting an adjustable rate mortgage that did not include
taxes and insurance.
In 2006, broke and bewildered, she stopped making payments and the
lender started foreclosure proceedings. A Shaker Heights city attorney
said it appeared that illegally high fees might have been charged and
that the broker had overstated Ms. Yates’s income, raising the
possibility of a legal challenge.
Ms. Yates, preparing for the worst, has learned that she can move
into a subsidized apartment for retirees. But the thought is
“When folks pay for a home, they expect to die in it,” she said, breaking into tears.
In a report for Shaker Heights, Mark Duda and William C. Apgar of Harvard University
found that expensive refinancing deals had been aggressively
“push-marketed” in the city’s less affluent west and south sides,
bordering Cleveland. They said that “the rising number of foreclosures
threatens to undermine the stability” of those areas.
“The moral outrage,” Ms. Rawson, the mayor, said, “is that subprime
lenders have targeted our seniors and African-Americans, people who
saved all their lives to get a step up.”
About one-third of the residents in Shaker Heights and Euclid are black.
Early last year, James Rokakis, the Cuyahoga County treasurer,
started a countywide foreclosure-prevention program, which pays
community groups to educate people about loans and help defaulting
borrowers negotiate with lenders.
In the late 1990s, Mr. Rokakis said, the flight of manufacturing
jobs was the major cause of rising foreclosures but around 2000, the
surge in careless lending began to wreak havoc.
Mr. Rokakis estimated that more than three-fourths of the current
foreclosures in Cuyahoga County involved subprime loans, some of them
blatantly unwise or dishonestly portrayed to buyers. Only last year did
Ohio tighten its laws to require more complete disclosures to borrowers.
With so many homeowners running into trouble, the City of Cleveland
has been unable to keep track of the number of vacant houses, said Mark
N. Wiseman, director of the county prevention program. He estimates
that 10,000 of the city’s 84,000 single-family houses are empty.
Suburbs like Shaker Heights are trying to avoid the experiences of
blighted neighborhoods in Cleveland like the one where Barbara Anderson
lives. Ms. Anderson, 59, said her block of East 76th Street was fully
occupied three years ago, but now about half the houses are empty.
Many of the houses are filled with smelly trash and mattresses used
by vagrants. They have been stripped of aluminum siding, appliances,
pipes and anything else that scavengers can sell to scrap dealers.
“It stifles you,” Ms. Anderson said of the squalor. “It lowers the
value and affects the kind of people who are willing to move here. I’m
embarrassed to say I live here.”
Ms. Anderson, who works for the city ombudsman’s office, is
president of a street association that is working with a
county-financed group, the East Side Organizing Project, to salvage
some homes. But so far, she said, “when we try to board the houses up,
someone comes and tears the boards down.”
Things are not as bad in the Moreland section of Shaker Heights, but
residents are worried and angry all the same. Robert O’Neal, 52, has
lived there nearly all his life and, until recently, could not remember
a house being empty for more than a month. Now on his block, 4 of the
12 houses are vacant, 3 of them for more than a year. Lost jobs,
divorces and predatory loans have all played roles, he said.
“It’s sucking the life out of the neighborhood,” said Mr. O’Neal,
the town’s chief probation officer. “These are big empty houses near
the Cleveland border, and people start worrying about letting their
kids out to play.”