When Judge Pianka found mortgage giant Fannie Mae and Utah-based company Go Invest Wisely LLC guilty of housing court violations earlier this summer, he sentenced them to fines and ordered restitution hearings. These are an opportunity for residents to come forward with any claims that they had suffered economic loss as a result of the defendants' letting the homes go unattended and unmaintained. Just three individuals who live near the homes showed up, but there was an unexpected fourth party - the Cleveland city government. Robert Triozzi, the city's Law Director, says the defendants' houses are dragging down home prices.
Robert Triozzi: There is a diminution in property value and as a result there is a diminution in the tax revenue that comes to the city so that we have the resources to maintain our neighborhoods at a standard that our citizens expect. Of course we're a victim here.
The city is seeking $600 from Fannie Mae to pay for housing inspections by city workers and about $7,000 from Go Invest Wisely for assessments and inspections. The city is also seeking unspecified amounts for economic losses due to the two vacant houses in the neighborhoods. In court, the attorney for Fannie Mae wondered how this claim would be different from the city's lawsuit against 21 Wall Street firms seeking damages for financing subprime loans. The city recently lost an appeal of that suit in the US Court of Appeals for the Sixth Circuit. In Housing Court, Judge Pianka scheduled a hearing on the city's claims for mid-September.