Banks Selling Cleveland Homes at 33% of Their Previous Price

Business Week reports:

Banks have been selling foreclosed homes in Cleveland at less than one-third of their previous value, harming property values in an area that has been an epicenter for the nation's mortgage crisis, a new study said Monday.

The study by Case Western Reserve University, which tracked thousands of houses sold at sheriff's auctions from January 2000 through last September, found that prices declined every year and fell dramatically in 2006 and 2007.

Foreclosure sales have more than quadrupled in Cleveland and Cuyahoga County since 2000.

Nearly 24,000 residential properties were involved in foreclosure sales in the county in the past seven years, representing 8.8 percent of residential properties in the city and 3 percent in its suburbs.

The report said that foreclosures "will have spillover effects, such as becoming nuisances or undermining the desirability and value of the surrounding area."

Last week, the city sued 21 mortgage bankers, claiming their subprime lending practices have created a public nuisance that have hurt property values and city tax collections.

Case professor Claudia Coulton, who wrote the report, said a draft had circulated among members of a civic committee working on foreclosure issues. She predicted the study's conclusions might help the city in its lawsuit.

In a second city legal challenge last week, Baltimore sued Wells Fargo, alleging the bank intentionally sold high-interest mortgages more to blacks than to whites in violation of federal law. The bank said it doesn't lend on the basis of race.

You'll notice how certain communities rely on higher and higher real estate prices to fund their government.Do you live in such a community? If you do, best of luck.