Foreclosures Force Suburbs to Fight Blight

[cal04]

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.”

http://www.nytimes.com/2007/03/23/us/23vacant.html?hp

[The Backlash Cometh]

1. The loans weren't shaky. The jobs were.

America hasn't been kind to its workers.

[Klukie]

4. I don't know

Way too many Adjustable rate mortgages out there. Payments are rising now.

[Matariki]

5. No. Housing as 'investment' main problem, coupled w/ adjustable rate mortgages to afford them. n/t

[Warpy]

8. The loans were shaky

Either they were ARMs with increasing interest rates and therefore increased monthly payments or they were interest only loans with balloon payments that started 3 to 5 years after purchase.

Both loans counted on interest being low and/or wages increasing and/or property values continuing to inflate. Wages have stayed flat or fallen in the last few years while mortgage payments on subprime loans have skyrocketed on property that is losing paper value.

[The Backlash Cometh]

10. If they saddled low income families with these ticking time bombs,

then it is odd.

[Warpy]

12. The problem with a speculative bubble

and make no mistake, speculators were driving the prices upward over the last 6 years, is that people think it's going to last a lot longer than it does.

The lenders thought "Sure, they can unload this shabby bungalow in a couple of years and make enough for a down payment on something else and qualify for a fixed mortgage" and the families thought the same.

Hindsight is always 20/20 and the market was so hot that people never seemed to remember one of Newton's laws: what goes up will come down.

A lot of the people who are getting nailed by those "interest only" loans with the huge balloon payments are speculators who are barely clinging to the middle class lifestyle and were counting on high inflation on their property investment to supply them with a nest egg for retirement.

Those iffy loans looked like a sure thing in a rising market. Now that the air is leaking out of the bubble more quickly every day, it looks like the bad idea it always was.

[youngdem]

2. A vacant home should be automatically enrolled in Section 8 after 1 year of vacancy

There is no reason good housing stock should sit empty wasting away because they can't get what is owed for the home. People are in need of decent housing in this country. A one year rule would encourage landlords to get serious about blighted properties and vacancies and would generate some housing availability in better neighborhoods for section 8 folks to hopefully take more section 8 out of the poorest neighborhoods.

[Dr.Phool]

6. Not a great idea.

I had a home in a nicer section of Cleveland, that I lived in for 10 years. I had it on the market for 6 months before I moved to Florida. I rented it out for over a year, and put it back on the market, and it sat. And sat. and sat for another 2 and a half years, before I finally sold it for just what I owed on it, roughly, half the original listing price.

I always kept the place maintained. Lawn service, etc. The place damned near put me in bankruptcy.

Don't talk about forced Section 8. I'd already had it with renters.

[MadMaddie]

3. Yes it is just beginning....this administration allowed the

predetory lenders get away with anything and everything under the sun.

You keep hearing that this is temporary but if restrictions are finally put on the type of loans that were allowed, wages are not moving up..who is going to buy the houses?

[Warpy]

7. There have been adverts on the local real estate shows

for "3 years young! Never lived in!" houses in newly constructed bedroom communities on the edge of town, sometimes multiple houses on the same cul-de-sac. Those are mostly the McMansion neighborhoods, huge heaps of steel (not lumber) and stucco with only 2 bedrooms but game room, media room, 2 living areas, bar, etc. Not one of them is practical multi family living space and all of them are going to be horrible to heat and cool. I can see nothing in store for those areas but boarded up mansions with occasional squatters, meth cookers, and shooting galleries.

Stupid, of course, will bail out the subprime lenders that were bought out by big corporations and do nothing for families who fell for them. We're going to see some very fancy communities where housing was bought by speculators falling into slum property very quickly as the speculators just walk away from them and hope nobody notices.

As much as a lot of us sneered at new money buying the oversized things, having them lose them is going to be worse than a lot of folks anticipate.

[bedpanartist]

9. As a resident of an blighted inner city

they don't call Dayton little Detroit for nothing. The entire county has developed like a giant donut hole, although now it looks like the hole is collapsing.

After witnessing these fools drive around in their giant trucks with their homogenized homes with my buckets of tacky to share than the average joe, why do I get a little bit of glee from hearing about what I've told people was going to happen 10 year ago?

We are now seeing shootings in the suburbs around here, etc...

Welcome to the 'hood America!

[bedpanartist]

11. sorry, "a" blighted inner city...nt

nt

[Warpy]

13. I live in a shabby house in the inner city, too

and this county developed McMansions on the outskirts, also.

Most of the gangsters and drug thugs were driven out of my area by an organized group of neighbors. The "nice" parts of town inherited the problem about 10 years ago.

I have a sneaking suspicion we're headed back to the traditional development of cities: the wealthy living in the center of things surrounded by a ring of peasants who keep the things going.

[bedpanartist]

14. you are so right

The City of Dayton is building gobs of luxury apartments and loft condos downtown, and about 40 percent are occupied.

Personally, I am looking forward to the collapse of the suburbs. They were originally based on racism and a "I am more important than we" mentality.