Cleveland sues lenders over subprime

[Andrew]

CLEVELAND (CNN) -- Likening their actions to those of organized crime syndicates, Cleveland's Mayor is suing 21 major banks and mortgage companies for the roles they played in the sub-prime mortgage crisis that devastated many neighborhoods in the city.

The suit, filed in Cuyahoga County Common Pleas Court, alleges that in pushing sub-prime mortgages in Cleveland, the companies created a public nuisance in violation of state law.

City officials hope to recover hundreds of millions of dollars in damages for lost property tax revenue, the cost of demolishing homes left abandoned and the cost of policing neighborhoods devastated by thousands of foreclosures.

Cleveland Mayor Frank Jackson said, "If you look at the end result of organized crime activity on neighborhoods, cities and individual lives, sucking equity out, you see the same thing here."

Where Cleveland went wrong
There were over 7,000 foreclosures in Cleveland in 2007 alone. Crime has skyrocketed in areas where boarded up houses are a common site. Many of those homes have been stripped of their aluminum siding and plumbing. Some blocks bear an eerie resemblance to New Orleans' Lower 9th Ward in the months following Hurricane Katrina.

The banks and mortgage companies being sued reads like a 'Who's Who' list on Wall Street. "They are the ones that fueled this operation and that's what placed us in this predicament," said Cleveland's Director of Law Robert Triozzi. "They are going to be held accountable. Mayor Jackson said the lenders signed off on deals that they knew should have never been made."

Triozzi said, "The model they used was completely inappropriate for a city like Cleveland but they didn't care."

The companies being sued are Deutsche Bank Trust, Ameriquest Mortgage, Bank of America (BAC, Fortune 500), Bear Stearns (BSC, Fortune 500), Citigroup (C, Fortune 500), Countrywide Financial (CFC, Fortune 500), Credit Suisse (USA), Fremont General, GMAC-RFC, Goldman Sachs (GS, Fortune 500), Greenwich Capital Markets, HSBC Holdings, Indymac Bancorp, J.P. Morgan Chase (JPM, Fortune 500), Lehman Brothers, Merrill Lynch, Morgan Stanley, Novastar Financial, Option One Mortgage, Washington Mutual and Wells Fargo.

Goldman, Lehman, Merrill, HSBC and Deutsche Bank Trust would not comment on the lawsuit. A J.P. Morgan spokesman said, ""We share the city's concern over foreclosures, and we work with borrowers whenever possible to keep them in their homes."

None of the other companies named in the suit could immediately be reached for comment.

[6wolverines]

Let's here it for the mayor of Cleveland!!! It really does play out like the actions of an organized crime syndicate!!! The end result of the foreclosures is a public nuisance. I've said it before on this forum.....an empty home in my neighborhood has corn up to your shoulders growing in the front yard (we live near the OH/MI state line near farming fields), another one has garbage cans sitting in the driveway that have been there for months, another has been stripped of the gutters and chain-link fencing, etc., etc., etc. Four years ago, if you wanted a home in this neighborhood you had to place an offer $10,000-20,000.00 higher than the asking price just to make sure you got the home. The average home price was $135,000.00 or so. Now, a home can sit for years on the market before the owners finally pack up and abandon the property because they really have to get out!!! ORGANIZED CRIME, INDEED!!! I can't wait to see how this plays out!!!

WAY TO GO, CLEVELAND!

Char

[sethorion]

I'm going over a set of loan docs for a friend. The loan was a refi and it appears a copy of the hud-1 was never givin to the borrower. Does the ommision of the hud-1 constitute a rescindable transaction? Anyone.

[Moe Bedard]

No it would not.

[Moe Bedard]

I love that Andrew. I have been on that Cleveland blog all day fighting homeowner haters. I emailed the mayor and some other official. I have a feeling they would like my website and support it. All they need is it's residents to fight these foreclosures.

[Andrew]

That would be great if we could get some cleveland home owners on here.

[Moe Bedard]

Yeah I was trying to get Richard Davet, but he is too busy fighting his case.

[Andrew]

What about Lents.

[Moe Bedard]

I'm going to talk with him tomorrow. He seemed more open to helping.

[6wolverines]

I emailed our mayor and attached a copy of the news article about the mayor of Cleveland and his brave actions against the crooks!!!! Hey, we take a serious stance against dope dealers and prostitutes and bank robbers, why not stand up again the creeps in 3-piece suits!!??? One need not wear a Richard Nixon halloween mask and carry a pistol to be a thief!!!!

I invited our mayor to take a walk around my neighborhood and get a real look at what the foreclosure crisis looks like. The mayor of Toledo, Carty Finkbeiner, is in love with this city but focuses his attention on improving the downtown area while the areas outlying downtown a turning into the 'hood because of the empty homes and the open invitation they give to crime.

Ay, carumba!!!

Char

[dakota]

Andrew/Moe....just so you guys are aware...I live about 20 minutes from Cleveland. I can tell you that the situations is bad in the city. The homeless are now "squatting" in these forclosed homes and the police can do nothing about it.

[6wolverines]

Yeah, Dakota....that's been one of our issues too. Siding, gutters and fencing stolen by metal scrappers. Grass growing up to your shoulders. People staying in the empty homes and trashing the inside. All the while, we're cutting our grass, cleaning our gutters, cleaning the trash out of our front yard......... and the value of our home is plummeting because of what is going on around us.

It makes me wonder.......is it worth staying here anyway, if we get the modification? Something BAD is happening here and I fear it is going to get much, much worse before it turns around for the better.

Char

[default]

Cleveland homeowner in the loansafe house right here people..

[JacMac]

Yeah, Dakota....that's been one of our issues too. Siding, gutters and fencing stolen by metal scrappers. Grass growing up to your shoulders. People staying in the empty homes and trashing the inside.

Dakota:

I live about 20 minutes from Cleveland. I can tell you that the situations is bad in the city. The homeless are now "squatting" in these forclosed homes and the police can do nothing about it.

This is terrible! It will be like that in many cities all over America if the banks don't get on the ball and start modifying these loans!