Cleveland Has a Foreclosure Problem?

You might have caught 60 Minutes flying over Cleveland last Sunday for a quick look at the city’s challenges stemming from rampant foreclosures and vacant properties. If you did and […]

Photo of Downtown Cleveland Ohio just before Sunrise.

You might have caught 60 Minutes flying over Cleveland last Sunday for a quick look at the city’s challenges stemming from rampant foreclosures and vacant properties. If you did and you were familiar with what’s happening on the ground in Cleveland, images of bulldozers clearing away vacant homes and a sobering interview with former Cuyahoga County treasurer Jim Rokakis provided few revelations. If you were not familiar with this situation, you could have had the same sympathetic, but detached, response that 60 Minutes correspondent Scott Pelley had when one of his interview subjects, Cleveland resident Roberta Bryant, offered to sell him her home:

“I don’t live in Cleveland.”

That’s not to say running a piece about how abandoned properties bring down property values and decimate neighborhoods and what that community is doing about it is a negative, but as Alyssa Katz so aptly noted on Facebook, “Sadly, 60 Minutes could have done this segment in 2006. And yes, the prior sentence can be interpreted, correctly, two different ways.”

That’s also not to say that the piece didn’t raise important issues that need repeating: severely underwater homeowners walking away from homes in neighborhoods already dominated by abandoned homes awaiting demo; subsequent increases in crime; and the fact that residents, the city, and the county need to respond.

But the problem is, as challenging as it is in Cleveland, the piece never really addressed how the resident, city, and county are responding.

For example, while the story gave a passing mention to the fact that “Cleveland and Cuyahoga County believe that only by turning the failures of the great recession into green space can they stabilize the value of what’s left,” it doesn’t mention the Cuyahoga Land Bank that conducts strategic property acquisition to reflect the aims of the community and “return property to productive use” (Rokakis, as county treasurer, helped oversee the land bank’s implementation and held a seat on its board. Rokakis currently directs the Thriving Communities Institute at the Western Reserve Land Conservancy).

The piece also didn’t address how community organizations are addressing foreclosure and empty lots.

While the piece didn’t hesitate to mention homeowners walking away from toxic mortgages, it did not address the bank walk-aways and vulture investors, nor did it mention the innovative legal maneuvers coming out of the Cleveland Housing Court designed to curb those practices.

The piece did address principal reduction, but it did it in a way that made Rokakis defend the very idea of it, rather than present it as a way to keep people in their homes and for banks to not take a complete loss. “Look, you’re asking the banks, to write down the principal on these mortgages, to take losses in the millions, if not billions of dollars,” Pelley said, albeit in a non-confrontational way (leave that to other networks). Rokakis responded with a barb toward lenders:

“Aren’t you better off let’s say on a $150,000 mortgage preserving $75,000 in value, as opposed to letting that house go vacant, possibly seeing the house vandalized and dropping to a value well below that? I mean, they helped to cause this mess. And it’s not going to fix itself without their cooperation.

The piece could have shed light on a little-noticed provision of HAMP called the “Principal Reduction Alternative” that provides investors with incentives to write down mortgage principal. Since being launched in October 2010, more than 50,000 borrowers have qualified for PRA, with an average principal reduction of $65,000. Of course, Fannie Mae and Freddie Mac, who guarantee the majority of residential mortgages in the U.S., don’t take part in PRA. 60 Minutes could have talked about that.

It’s easy, and possibly unfair, to pick apart a five-minute segment, but 60 Minutes’s revelatory tone probably didn’t sit well with the multitude of committed people who have worked, and continue to work toward a better Cleveland.

Photo courtesy of cfour33 via Creative Commons.

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