Filed Under:

'Land Bank' Knocks Out Some Foreclosure Problems

Play associated audio

Cities have been tearing down crumbling, vacant houses for decades. The money for municipal demolition bills usually comes out of city budgets, but in Cleveland the housing crisis has started to change that equation.

Bill Beavers has lived on Cleveland's Dove Street since 1967. But on a frecent sunny morning, Beavers is sitting on a neighbor's front porch, watching something he has never seen on his block before.

Across the street, a huge excavator is tearing through the front façade of a two-story wooden house. The top half of the house, windows and exterior wall folds as easily as cut weeds and tumbles to the ground.

"Oh, it's good to see them tear these old structures down because nobody wants to move in them," Beavers says. "It costs too much to fix them up, you know?"

The house went into foreclosure two years ago, and when the family moved out, vandals stole the circuit panel and pipes. Other houses on the block are nicely kept up, but the street is in the 44105 zip code — which in 2007 had the dubious distinction of garnering the highest foreclosure rate in the nation.

Saturated with foreclosures, the lender that took back the house couldn't unload it for even $5,000.

"A property like that, on a street that's otherwise relatively stable but (in a) depressed market, probably needs to come down because it has way too much need on the inside," says Gus Frangos, head of the Cuyahoga County Land Bank, which oversees these demolitions. "If you take these pockmarks out, all of a sudden you stabilize the street a little bit."

Let's Make A Deal

When the land bankf started two years ago, Frangos thought the group would have to pay its demolition bill from its own budget. But then the economy worsened and the foreclosures piled up. Lenders stuck with crumbling houses found themselves on the hook in the Cleveland Housing Court for hundreds of thousands of dollars worth of code violations.

The Cuyahoga County Land Bank, a quasi-government corporation, offered lenders a deal: We'll take your worst houses, if you pay to knock them down. This year, Fannie Mae and some of the country's biggest lenders — including Bank of America, Citibank and Wells Fargo — will help pay for half of the land bank's 700 scheduled demolitions.

Lenders pay $3,500 to $7,500 per house. Wells Fargo's Russ Cross says it's a sensible and responsible business plan.

"We want to make loans on an ongoing basis, and to do so, we need stable to rising home values," he says. "We've got to do whatever we can to protect home values in neighborhoods."

Some lenders are looking at starting similar programs in Detroit, Chicago and Milwaukee. Fannie Mae's PJ McCarthy says the government-controlled mortgage giant has been donating properties and demolition funds to the Cuyahoga County Land Bank since 2009 because keeping the houses just doesn't make sense.

'Not A Cure-All'

"They are not going to sell on the market for much more than a few thousand dollars, and our costs in marketing those properties and preserving them generally exceed the costs," he says. "So the economics of the transaction make sense as well as the intent of the land bank to reduce supply and stabilize the neighborhood."

Dealing with foreclosures is a huge headache for financial institutions. RealtyTrac, an online marketplace for bank-owned property, counted more than 1.6 million foreclosures in the U.S. in July.

Realty Trac's Rick Sharga says demolition programs like Cleveland's only start to address the backlog.

"Eliminating a handful of these houses really isn't going to be a cure-all in and of itself," he says. "It's one step in a much longer process that's going to be required before the housing market comes back."

And in the meantime, cities have to figure out what to do with the newly vacant land. In South Euclid, an eastern suburb of Cleveland, building inspector Rick LoConti is walking on a brick path through small plots of tomatoes, eggplants and sunflowers and remembers what used to be here.

"The house was so far gone we couldn't fix it up and get any kind of a return, so we demolished the house, and we put in this community garden," he says. "And it's now become a source of community pride."

LoConti concedes there are more vacant lots than demand for community gardens. So municipalities are also offering newly vacated land to neighbors as side lots and putting other plots away for if and when the housing market improves here.

Copyright 2011 Cleveland Public Radio. To see more, visit


'Star Wars' Editors Defy Hollywood Conventions

In a film industry often dominated by men, there's at least one exception: Many editors are women. Maryann Brandon and Mary Jo Markey speak about their work on the new Star Wars.

Florida Says Its Fruits, Vegetables Are Safe From Invasive Fruit Fly

Since September, Florida has been fighting an infestation of the Oriental fruit fly, an invasive pest that threatened more than 400 crops. The state declared the insect eradicated as of Saturday.

4 Questions With NPR's Nina Totenberg About Justice Antonin Scalia

NPR's legal affairs correspondent talks about about Scalia's life, legacy and what's next.

Colonialism Comment Puts Facebook Under Scrutiny

A Facebook board member lambasted a decision by regulators in India, the social network's second-largest market. He thereby sparked new scrutiny of Facebook's intentions in that country.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.