City of Cleveland Vacant Properties

A recent report in the Cleveland Plain Dealer discusses vacant properties and the role of lending institutions and investors associated with the properties.

Big banks head list of urban deadbeats
Bills for boardups, cleanups go unpaid

Cleveland has for years billed property owners after boarding up their vacant houses, mowing their untended lawns and carting trash from their garbage-strewn lots.

And for years, the vast majority of the bills have been ignored. In 2005, for example, the city spent more than $2.6 million cutting grass and cleaning lots, but recovered only $750,000, or about 28 percent.

As of last month, landlords still owed the nation's poorest big city a combined $4 million for tending their property, an analysis of city records shows. That's more than twice this year's budget for demolishing and boarding up vacant buildings and nearly three times what the city spent in 2005 helping needy seniors repair their homes.

The worst offenders, by the city's reckoning, include some of the world's biggest names in banking - JPMorgan Chase, Deutsche Bank, Wells Fargo or subsidiaries of the financial institutions.

Others contributing to the problem include the Cleveland Housing Network and the U.S. Department of Housing and Urban Development, two organizations that are supposed to help the city fight neighborhood blight.

Cleveland has typically sought to recoup the money by filing liens on the properties that were tended by city workers. But that means the city doesn't get paid until the houses are sold. So this year, the city has hired a lawyer to collect on the oldest bills, some of which date back years.

"They have the ability to pay, so they should pay," said Finance Director Sharon Dumas. "We need to recover our costs, and they need to become good civic citizens particularly because these abandoned homes are a quality of life issue for the neighborhoods."

Most of the financial institutions dispute the city's claims. They argue that Cleveland tries to make them pay for properties they no longer own or have never owned.

But the Cuyahoga County auditor's office reported few problems placing the liens, an indication there is little confusion about who owns these properties. Dumas said the city worked closely with the county, verifying owners before filing the liens.

In past years, City Council members and others complained that the city wasn't meticulous about finding property owners and frequently missed the September deadline for filing liens. By the time the liens were filed the following year, the property had been sold.

The city's high foreclosure rate is a major reason that the institutions that grant or insure mortgages owe the most, city officials said. During the foreclosure process, ownership often isn't clear, meaning the city has to dig through county records to find the actual owner of a structure or lot.

But many of the banks and mortgage companies contend that the city still does a sloppy job in finding the real owners. They complain that Cleveland often labels them as the owners, when they are only trustees.

"A corporate trustee for mortgage-backed securities where there is a pool of investors only serves an administrative role, but has no ownership stake," said Kevin Heine, a spokesman for the Bank of New York.

Heine said the bank owns none of the properties that the city says it does, including 11 structures that the city boarded up. He said the bank once owned one, but sold it. It's a trustee for four others, but the companies that service those loans are responsible for resolving the issue with the city, he said.

A spokesman for Deutsche Bank, which the city has billed for 22 properties, said he would look into whether any of the bank's subsidiaries owned the properties.

HUD denied owning any of the 12 properties for which it was billed. A spokesman said HUD used to own two and had insured mortgages on three others that were later paid off by their owners.

The city said it had boarded or cut grass at 19 Wells Fargo properties, but a spokeswoman said the company had owned only two, but sold them.

Several companies said they are willing to work with the city.

Cleveland Housing Network head Rob Curry reported by e-mail that the nonprofit had not received bills for all of the properties. He said the agency either paid or appealed the bills it received.

"CHN is a good citizen," Curry wrote. "We take our mission seriously and strive to pay our bills, including and especially those from the city of Cleveland."

Fannie Mae, a government-chartered buyer and guarantor of home mortgages, is committed to paying and is working with the city to see how much it owes, spokesman Alfred King said.

JPMorganChase - which owns Bank One - denied owning most of the properties for which it was billed. Spokeswoman Mary Kay Bean said the bank did serve as a trustee for several of the properties. The bank wants to resolve "concerns about property the bank has repossessed," she said.

Councilman Robert White said he believes the city lists are accurate. Several of the homes are clustered in his Union-Miles ward, causing blight and despair among the residents.

"They need to step up to the plate and be truthful about what they own, so that they can become a team with the city in solving this issue," he said.

Housing Court Judge Raymond Pianka said he is checking the city's list of unpaid bills against owners with criminal cases before the court, making sure their cases can't move forward until they pay their bills. He said he was looking at doing something similar for landlords filing evictions.

Councilman Jay Westbrook, who has complained in the past about the city's lax collection methods, said he is optimistic about the changes.

"It is about time the city is making the people who own the assets take responsibility," he said.

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