The City of Cleveland has garnered nationwide media attention as being the epicenter of the foreclosure crisis. Yesterday, a committee consisting of the majority of Cleveland’s City Council, conducted a hearing, at which testimony was taken from the County’s Court personnel and various advocacy groups.
The chair of the Court’s Judges’ Foreclosure Committee and the Chief Magistrate testified with regard to the Court’s new foreclosure mediation program. During 2007, 13,968 foreclosures were filed in the county and they expect approximately 15,000 to be filed during 2008. The Court is attempting to do its part to mediate alternatives to foreclosure.
Representatives of several advocacy groups also testified, challenging whether the court’s mediation program will be sufficiently successful. They advocated even bolder steps, including a stay or moratorium on foreclosures, to bring about more cases resolved through loan modifications or other loss mitigation efforts. They pointed out that Cuyahoga County’s Foreclosure Prevention Program, which operates under the auspices of the County Treasurer, has been in existence for over two years. In cases where borrowers met with the program’s counselors, 52.2% were able to avert foreclosure. They would like more effort made to refer borrowers to the counselors of this program.
Various councilmen and advocacy groups such as ACORN have scheduled “Homeownership and Foreclosure Prevention Fairs” to provide counseling and information to distressed borrowers. Various lenders are participating in the fairs, in order to discuss workouts and the possibility of switching from an adjustable rate to a fixed rate mortgage.
A representative of the Cleveland Tenants’ Association testified with regard to the hardship imposed on renters whose first notice that the property is or was in foreclosure might be the three-day notice to leave the premises in connection with an eviction following the foreclosure.
Following the hearing, we had informal conversations with one of the leading councilmen and a foreclosure magistrate on the problem resulting from lenders walking away from their mortgages and dismissing pending foreclosures when it is determined that the property lacks sufficient equity. That leaves the abandoned, unproductive property titled in the borrower’s name. The county is developing a “land bank” and might be amenable to taking an assignment of the mortgage in order to conclude the foreclosure in the county’s name, and then move the property into the county’s land bank. This idea is now being developed.
We will keep you advised of further developments with regard to these issues.
If you have any questions on this information, please contact Mr. Larry R. Rothenberg, Esq. Larry Rothenberg is the partner-in-charge of the Cleveland real estate and foreclosure department of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained within the treatise, “Dunaway, The Law of Distressed Real Estate”. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan. Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@weltman.com.
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