For the past three years, Smart Growth America has worked with other state and national organizations on the Restoring Prosperity Initiative, a joint effort to develop and advance an agenda for revitalizing America’s older industrial cities. Going forward, we’ll be incorporating Restoring Prosperity content into regular posts here. – Ed.
The Cleveland housing market is experiencing a disaster of nearly biblical proportions. Last year, more than 13,000 foreclosure cases were filed in Cuyahoga County, which includes the greater Cleveland area.
In response, the County Commissioners assembled the Cuyahoga County Land Bank, a non-profit organization dedicated to acquiring and restoring vacant properties into productive parts of the community. Last month the land bank took a leap forward by forging a unique agreement with mortgage giant Fannie Mae that could be a game-changer for the distressed Cleveland region — and a model for other communities hit hard by the foreclosure crisis nationwide.
In the new agreement, Fannie Mae has agreed to sell foreclosed homes in its possession to the land bank for the highly-affordable price of $1, and contribute $3,500 towards demolition for each house that isn’t salvageable. The arrangement is a win-win: Fannie Mae is able to avoid ongoing maintenance costs for low-value properties and prevent them from undermining the nearby homes with Fannie Mae loans. At the same time, Cuyahoga County can ensure that a large inventory of distressed houses won’t be added to the market surplus or fall into the hands of speculators, undermining neighborhood stability.
This is the first time Fannie Mae (or any other large-scale owner of foreclosed properties) has agreed to contribute to demolition costs on an ongoing basis, but the corporation plans to strike similar agreements with other communities if this pilot effort goes well. Advocates are hopeful that other lenders will follow suit.
In the meantime, Cuyahoga County’s agreement is moving forward: the first 25 properties were transferred to the land bank in December. “We are very well cranked up and ready to go,” said county land bank president Gus Frangos.