Ohio leads fight to stop foreclosures

When a county resident calls for help, some may end up at the storefront offices where Figueroa got help. The center receives about 35 to 50 calls a day from homeowners looking for help.

"It's crisis management," explains Lou Tisler, executive director of Neighborhood Housing Services of Greater Cleveland. "If we have 100 people walk through the door, we probably have a success rate of 20 to 25 percent." Mr. Tisler, like other people involved in the crisis, view the rescue funds as "band-aids." For a homeowner who is two to three payments behind on a fixed-rate mortgage, the funds might help, he says. But "can we help the 150,000 people in Ohio whose mortgage will reset in the next eight to 12 months? Certainly not."

The county has saved 1,400 households from foreclosure, Mr. Rokakis says. "Let's put it into perspective: For every person we save, 20 more get filed. It's a losing battle, now it's time to start talking cleanup."

Tearing down a house, however, is expensive. To completely clean up the county's blighted neighborhoods of foreclosed and boarded-up homes, Rokakis estimates it would cost $100 million. The county has budgeted $7 million. Congress is not oblivious to the problem. Rep. Brian Higgins (D) of New York and Sen. Hillary Clinton (D) of New York have introduced the Neighborhood Reclamation and Revitalization Act of 2007, which would provide $100 million over three years to tear down blighted areas and give communities money to plan redevelopment. The legislation has yet to receive a hearing.

Instead, Rokakis is hoping to create a public land authority that would raise $25 million to $30 million and hold thousands of properties in northeast Ohio. He believes that within the next 18 months many of the properties will come from the US Department of Housing and Urban Development and the mortgage-servicing companies, who will attempt to give back many foreclosed properties.

"My concern is that they end up in the hands of the next generation of [home] 'flippers,' scammers, and get-rich artists who took a weekend course in real estate investing," he adds. "I would much rather have them go to a public land authority where they are triaged responsibly."

Some Cleveland neighborhoods are already trying to find ways to manage the land as the defaulted properties are abandoned. In Slavic Village, an inner suburb of 30,000, thousands of predatory subprime loans were made to people who either could not afford them or had no intention of repaying them, says Anthony Brancatelli, the councilman for the district. Some buyers have defaulted on 10 or 15 properties at a time, leaving the area with blocks of boarded-up homes.

"We average about two foreclosures a day and have about 1,000 vacant and abandoned buildings," says Mr. Brancatelli, who adds that about 150 homes in the neighborhood have been bulldozed this year.

Although the city would rather preserve housing, Brancatelli is hoping to reshape Slavic Village as an "active lifestyle" community with walking and biking trails and public transportation to get people to jobs in downtown Cleveland.

On a tour of one neighborhood, he passes boarded-up homes, the aluminum siding stripped off, the copper wires yanked out of the walls. But across the street is Barkwill Park, part of which used to have foreclosed homes, with a bright jungle gym for children –­ a glimpse of the community's potential. "This is a five- to 10-year recovery to get us out of where we are at today," Brancatelli cautions, "because we are really dealing with it on a catastrophic volume."

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