March 23, 2007
Times on Blight and Foreclosures
In a sign of the spreading economic fallout of mortgage foreclosures, several suburbs of Cleveland, one of the nation’s hardest-hit cities, are spending millions of dollars to maintain vacant houses as they try to contain blight and real-estate panic.
In suburbs like this one, officials are installing alarms, fixing broken windows and mowing lawns at the vacant houses in hopes of preventing a snowball effect, in which surrounding property values suffer and worried neighbors move away. The officials are also working with financially troubled homeowners to renegotiate debts or, when eviction is unavoidable, to find apartments.
“It’s a tragedy and it’s just beginning,” Mayor Judith H. Rawson of Shaker Heights, a mostly affluent suburb, said of the evictions and vacancies, a problem fueled by a rapid increase in high-interest, subprime loans.
“All those shaky loans are out there, and the foreclosures are coming,” Ms. Rawson said. “Managing the damage to our communities will take years.”
Cuyahoga County, including Cleveland and 58 suburbs, has one of the country’s highest foreclosure rates, and officials say the worst is yet to come. In 1995, the county had 2,500 foreclosures; last year there were 15,000. Officials blame the weak economy and housing market and a rash of subprime loans for the high numbers, and the unusual prevalence of vacant houses.
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It's interesting to read this together with Adam Gordon's note about the vast changes to mortgage law pushed through by the FHA in the wake of the rash of foreclosures during the Depression. See THE CREATION OF HOMEOWNERSHIP: HOW NEW DEAL CHANGES IN BANKING REGULATION SIMULTANEOUSLY MADE HOMEOWNERSHIP ACCESSIBLE TO WHITES AND OUT OF REACH FOR BLACKS, 115 Yale L.J. 186 (2005). Those changes made homeownership widely available for the first time, but at the same time decreased its availablity in the urban, integrated or African American areas, contributing to the rise of the suburbs, segregation, and the decline of cities. I wonder whether and how federal reactions to these foreclosures will change the residential landscape.
Posted by: bberger | Mar 29, 2007 5:32:07 PM