I’m asking a serious question, and since it’s 2:00 am I can’t very well call anyone to get an answer. Senator Voinovich is not happy that HUD has sold homes to speculators (his term) when they should fix up the homes or tear them down instead. What got me thinking about this is the Mark Gillispie article in the PD. This is Voinovich’s argument: Cleveland will be getting over $25 mil from the Neighborhood Stabilization Act and he doesn’t think any of that money should go towards paying for HUD homes gone into foreclosure.
My questions:
1. What is the difference between using the money on say, a Citibank or Argent Mortgage Lenders home that needs to be torn down and a Fannie Mae home that also needs the bulldozer?
2.Who ultimately pays the price if HUD winds up paying for the demolition of a home? Tax payers? If so, why is that a good solution?
3. If it IS our taxpayer money to be used (and I realize I don’t know the answer yet), then why is this different than using my money to bail out banks?
4. The article points out Utah ‘speculators’ who bought homes from Fannie Mae. Do we know they are not going to spend money to fix them up?
5. What is the most cost effective way to handle this issue, and without using more taxpayer (or City money) money to do it?
maybe I just need sleep, but inquiring minds want to know.
The article points out HUD sold some homes to private investors when the City had already asked HUD to demolish the said homes. You might recall my client and I had an issue with a home we offered to buy, got a contract accepted, and were waiting to close so he could begin to bring the house back to it’s old glory….or better. And the bank had failed to tell us the City’s deadline to do the repairs had passed and voila the home was demolished before he could own it. It’s clear there are many homes in this situation that HUD and private lenders are not following through…maybe due to the overload, I don’t know. One of the commenters on the PD article asked how long someone can own a condemned home before they have to repair it or tear it down? My answer is, it depends on how many ‘connected’ or squeaky wheel people live on the same block as to how fast the City reacts. I’m pretty sure I’m right about that one!
So I’m hoping someone can tell me who is footing the bill if HUD is required to tear down some of these homes and why it’s important not to let the Stabilization monies go towards that.
What would make sense to me, is a clear, consistent policy. No matter who owns the home, the home owner would have x amount of time to do the needed repairs or demolition, or show that someone has been hired to do the work…and then a timeframe can still be established.
What say you? Peace Out – 3C
2/7/09 update: other NE Ohio bloggers are weighing in on this issues. Our network of bloggers is so helpful, and a shout out to lmcshane of REALNEO for a link to a post Norm Roulet wrote on Cleveland demolition monies. The graph blew me away in the same way Bill Callahan’s details about out of state investor sales by HUD did in his comment below. Norm asks if so much of a percentage of demolition is a step forward or backwards? I don’t personally think there is an easy answer to that because maybe weeding out is a good idea. But Norm also points out how the reuse of the ppty could be better as well. Please read his thoughtful post and thank you lmcshane for directing me there.
8 responses so far ↓
1 Kate // Feb 6, 2009 at 9:21 am
Here is another question-
Who is going to pay for a reinvestment into the properties where the homes were torn down? I mean I would love if the abandoned home next to me were leveled so that I could take over the empty lot (adding to the double lot I already have), but that wont give the city any more tax revenue. They need homes on these lots in order to bring in any money to help keep the city going.
I heard that there are plans for green space, which is a great idea and much needed, but with all the homes that need to be torn down they can’t turn *all* of it into green space. I don’t see how building a bunch of new single family homes works, they have already been doing that in Slavic Village and the ownership of the homes doesn’t last long. No one wants to buy a brand new home in Cleveland when they can pay the same price for a home in a suburb and have better schools, etc. available to them.
I do so want the city to turn around and things to change for the better, I just am clueless as to what the answer is for the whole problem.
2 Questions re: HUD Demolishing Foreclosed Cleveland Homes | Brewed Fresh Daily // Feb 6, 2009 at 9:38 am
[...] If HUD Demolishes It’s Foreclosed Cleveland Homes, Does That Mean We Pay For It?. Category: Yr Govt @ [...]
3 Carole Cohen // Feb 6, 2009 at 10:09 am
Kate, good point about losing tax monies if new dwellings are not built. The population shift of the last 10 years means we probably don’t need all the housing we have. And I do wonder if The City will ever be able to recoup the demo costs from homeowners, be they banks or HUD or whomever. Your question may be a good one for the Councilman or someone on his staff.
I wonder if there is a critical mass of urban gardening that could occur that would make a real difference. Like a mass victory/community garden effort?
We seem to be able to come up with lots of questions now to see if we can get answers!
4 Bill Callahan // Feb 6, 2009 at 9:37 pm
1. Carole, yes, of course if HUD demolishes a house in its inventory “we” (taxpayers) pay for it — but not out of the City’s one-time Federal pot of $26 million, so the City can use that money to deal with another property. The Administration believes it can tear down 1,700 houses in the next year using $14 million of that pot. We’ve got three times that many vacant dilapidated REO houses right now, and will probably add a at least couple thousand more this year. Which is why Tony Brancatelli and others (like me) think HUD should not be handing the City money with one hand and more demolition costs with the other.
(Obviously Deutsche Bank and Wells Fargo should be paying to deal with the costs of their own properties too. Some CDCs are suing them in Housing Court right now trying to make that happen.)
2. Re: the Utah ’speculators’ and whether we know they are not going to spend money to fix them up, the company in question (United Management and Investment LLC) was incorporated in August by a gentleman named Lynn G. Connelly who runs a couple of insurance companies at the same address (4778 North 300 West, Provo, Utah). By the end of the year Mr. Connelly’s new LLC had acquired 76 Cuyahoga County houses including 44 from HUD, 5 from Fannie Mae, 2 from Ginnie Mae and 25 from various private lender REOs. The Auditor’s listed sale price for each of those HUD houses: $0. At least one of them, in Brancatelli’s ward, was condemned, and he had already asked HUD to have its property manager demolish it and three others that United subsequently “bought”.
There is, of course, a possibility that Mr. Connelly is planning to plow tens of thousands of dollars of his insurance profits into each of these houses and then sell or rent them in legal condition. The facts just recited, plus experience, suggest some much stronger possibilities: That he’s planning to peddle them to various other Utah “investors” with a few thousand dollars markup, or peddle them as rent-to-own with a coat of paint, or just sell them on e-Bay.
Go ahead, call me cynical.
5 Carole Cohen // Feb 6, 2009 at 9:53 pm
Why am I not surprised that so much detailed info would be available from you, Bill.
Let me get this straight. Fannie, Freddie and Ginnie ‘sold’ double digit numbers of homes to this Utah guy but really got no money? But then that would mean we paid for the demolition of these homes and got nothing back in the kitty in return? Can you explain to me how F F and Ginnie are allowed to do this? Depreciation write offs? My mind is boggled for sure. And isn’t it like a slight of hand to ‘sell’ something only to have it demolished? I feel like I’m on drugs even though I’m not.
I knew about the law suit and of course I agree with you that Deutsche and W Fargo should be picking up the demo tab.
So I guess the way to look at it is that tax payer money is going to be used no matter how we look at it and yes I get the point about the Fed one time take all money being a different pool.
I have a client who is buying a few homes to fix up and resell….of course he doesn’t live in Utah and we need about 50 people like him to take care of our vacancies!
If someone were to do what you say and then try to sell them on ebay without being repaired, isn’t that some kind of lawsuit waiting to happen?
Sorry, can’t get away from more questions
6 If HUD Demolishes It’s Foreclosed Cleveland Homes, Does That Mean … « Homes // Feb 7, 2009 at 2:40 am
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7 Christine // Jul 21, 2010 at 2:55 pm
Thank you for enlightening me even more on how this whole game is being played out. During my own research and adventure in Cleveland’s ForeclosureLand, I discovered in at least one case where HUD bought a house in foreclosure in 2007 for $83,086.00, The guy who owned it only owned $77,ooo approx. 2007 was well enough into this real estate bottoming out, why is HUD paying so much for a house that wasn’t worth what the property owner even owed on it? Also, The banks are not going to bother with trying “tend” to their “crop” of foreclosed homes because they are holding all the former owners captive by not recording the deed. Not in their name and not their problem. I am on the line for my foreclosed home until they do and there is no time limit requiring them to do so. So the grass being cut, taxes, etc all can just pile up for them to sell to joe snake (I prefer this to schmoe) behind my back, just like my loan was sold to some other snake who’s job entails suing people for a living and buying “bulk debt” only to put liens on everyone he bought. EXTORTION, legal extortion is the only way to describe it. Foreclosure reform is a piepdream, there are too many hands in there that it will not happen until it happens to someone who can do something about it. The county has no real incentive for Forecloseure reform because it is a money maker for them. The Banks never stop making money, so why should they help. HUD – may not be involved in my problems but it doesn’t help that they are wasting tax dollars to boot. All I know is if I had known what foreclosure was going to be like I would have bulldozed my house a long time ago and put up a garden!
8 Carole Cohen // Jul 21, 2010 at 3:34 pm
HUD and Fannie Mae also sell their homes to investors who seem to have no intention of improving the value of their newly purchased homes…..Christine, I feel your frustration and it does seem that a lot of the modifications are not going through, for various reasons.
Sorry you are going through all of this but glad the info here could help a bit.
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