A local nonprofit and the city of Cleveland are asking a federal judge to force nearly a dozen financial institutions and loan servicers to take care of the houses they took back in foreclosure or pay to knock them down. ideastream®'s Mhari Saito reports.
Banks are not in the business of being landowners, but in the wake of the foreclosure crisis some of the world's largest financial institutions became some of Cleveland's largest property owners. Attorneys for lenders like Deutsche Bank and Wells Fargo became regulars in housing court as they dealt with problem vacant houses. Two years ago, a nonprofit affiliated with Neighborhood Progress Inc, an umbrella organization for Cleveland's community development corporations, sued these two lenders arguing the houses they had taken back in foreclosure were becoming public nuisances.The cases bounced around the courts and Deutsche Bank and Wells Fargo ultimately paid to demolish the properties named in that suit.
But, the plantiffs say, the problem continues with yet more properties, and so the nonprofit Cleveland Housing Renewal Project and the city of Cleveland have refiled an amended suit in federal court. The defendants include not just Deutsche Bank, says attorney Thomas C Wagner, but also nine loan servicers including big Wall Street names like JP Morgan Chase.
Thomas C. Wagner: Any other homeowner in the city of Cleveland is obligated to abide by the housing codes of the city of Cleveland. There should be no exception made because they are a bank and they've taken it in foreclosure.
The city of Cleveland is also asking the court to force Deutsche Bank to pay over $50,000 for board up and demolition costs as well as unpaid sewer and water bills on 23 houses it once owned. A spokesman for Deutsche Bank declined to comment. The city of Cleveland estimates that since 2006 it has spent $60 million in taxpayer dollars boarding up and demolishing vacant houses left behind by the subprime mortgage crisis.