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New Cleveland Company Wants To Be National “Clearinghouse” For Foreclosures

Posted: Tuesday, May 5, 2009

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The city of Cleveland is getting over $25 million in federal tax dollars to deal with the aftermath of the foreclosure mess. And more federal funds could be on the way. The question now is how cities and counties can get the best deals on foreclosed properties from lenders and bond investors. As part of ideastream's ongoing series, "Facing the Mortgage Crisis, Mhari Saito reports a new Cleveland-based for-profit company wants to become the middleman in that process.

Every day, Cuyahoga County Treasurer Jim Rokakis gets correspondence from new Cleveland real estate investors that makes him crazy.

Jim Rokakis: I got a letter recently from somebody in Manchester, England complaining about property taxes. He, too, had purchased a property sight unseen over the internet.

Home sales like this happen when loan servicers looking to clear their books of bad mortgage deals sell off houses for pennies on the dollar to private investors. Those investors sometimes post them on Ebay or elsewhere online. Former Citigroup executive Heidi Coppola says her new company, REO Clearinghouse, will help loan servicers sell bank-owned houses to a new clientele: nonprofits, cities and counties flush with new federal dollars from the Neighborhood Stabilization Program.

Heidi Coppola: It’s not just about the sale. Selling, donating, demolishing, you know, really try to figure out what makes sense for each of these neighborhoods.

Also with the company is Northeast Ohio’s Robert Klein, CEO of Safeguard Properties, one of the largest caretakers of foreclosures for financial institutions. Treasurer Rokakis says the county’s new landbank is looking at buying about 550 Cuyahoga County homes through REO Clearinghouse.

Jim Rokakis:The clearinghouse will be a logical place to go to acquire properties for the land bank not in groups of one or two or three or four, but a place to go to acquire properties in groups of hundreds.

REO Clearinghouse is piloting in Cleveland with plans to go national.

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