Understanding Mortgage Foreclosure in Shaker Heights
Addressing the Foreclosure Crisis
The City has been working to address the foreclosure crisis, including the commissioning of a Foreclosure Study. On August 27, 2007, the Shaker Heights City Council discussed the foreclosure issue. Questions raised by residents and City Council members are answered in FAQs.
The Study contained a number of recommendations by its authors for various actions at the local, county, regional, state and federal level that they believed might be employed to address the many facets of the foreclosure issue. The City has been taking action and considering additional actions to address the foreclosure issue.
Of course, foreclosures will always occur in every community. The issue that has made this an issue of concern in Shaker Heights, neighboring communities, and throughout the County, State and nation, is the significant increase in the number of foreclosure filings over what has been experienced in the past. The City’s Study notes that the numbers of foreclosures have risen significantly throughout the nation, and in the State of Ohio, in recent years. Ohio is at the forefront of the problem, and Cuyahoga County has been particularly hard hit.
However, the foreclosure rate in ¾ of the City of Shaker Heights has not changed significantly in recent years. Overall the number of dwelling units subject to Sheriffs Sales each year is still only a little over 1% (125/12,994) of all units, or 2.13% of all mortgages on an annual basis. Nevertheless, certain neighborhoods of the City have seen a significant increase in the number of foreclosures. The key to the problem is that non-prime refinancing loans have been push-marketed to residents in certain neighborhoods of the City.
The Study found that “the rising number of foreclosures threatens to undermine the stability of selected neighborhoods, especially those located along the City’s western and southern borders.” The authors continue, saying that “Building on its long standing policy for aggressive nuisance abatement, the City uses a series of ‘carrots and sticks’ to insure that properties experiencing economic distress do not become a blighting influence on entire neighborhoods…Given its history of active engagement in helping to develop and preserve good quality housing opportunities in stable residential communities, Shaker Heights should continue its proactive approach to community problem solving.”
There are four general strategies for addressing the foreclosure crisis:
- Preventing further irresponsible lending.
- Preventing deterioration of foreclosed properties.
- Restoring stable neighborhoods.
- Helping consumers overcome problem loans.
The City has been implementing and is beginning to implement numerous activities to address each of these issues.
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City
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County/State
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Federal Govt.
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Citizen
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Prevent further irresponsible lending
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Education
Linking residents with County & State programs
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State pressure on banks (e.g. Atty. Gen. lawsuit)
Strengthen & enforce consumer protection laws (e.g. increased damages)
Increased State regulation of appraisers
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Establish national standards for lenders (e.g. no “no-doc” loans)
Better enforcement of existing bank regulations
HUD pursue fair housing enforcement action against predatory lenders
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Education
Lobby action at State and Federal level
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Prevent deterioration of foreclosed properties
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Nuisance Abatement
Strict code enforcement (including prosecution of lending institutions)
Vacant property ordinance
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County issue of bonds to pay for nuisance abatement
Hold banks accountable for properties by having Sheriff record deeds (HB 138)
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Tax sub prime lending to provide funding to communities
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Report vacant properties to Housing Dept.
Report suspicious activity to Police
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Restore stable neighborhoods
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Purchase-Rehab program with non-profits
Land bank program
Purchasing strategic properties at Sheriff’s Sale
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Speed County foreclosure process
State law changes to increase land bank powers of cities
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Modify HUD & CDBG programs to assist communities where equity has been stripped
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Strong neighborhood associations
Encourage friends to buy in Shaker
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Help consumers overcome problem loans
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Linking residents with County & State programs
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County victim assistance program
State victim assistance program
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Force lenders to do work outs with consumers
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Linking residents with County & State programs
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