Ohio County Suspends Tax Foreclosures for Six Months
Ohio’s Cuyahoga County will suspend foreclosures on tax-delinquent, owner-occupied residential homes for six months from December 2009, according to an announcement from the county’s treasurer. Through the moratorium, county officials say they want to give borrowers more time to catch up on delinquent taxes. According to the announcement, the suspension will keep more homes off of a real estate market already weighted down by foreclosures, especially in Cleveland, Ohio, situated in Cuyahoga County along Lake Erie’s shores. “Things are not getting better, they’re getting worse,” said Jim Rokakis, the county’s treasurer. “Vacant, foreclosed properties not only impact the homeowner, they harm entire neighborhoods and communities. The situation we now find ourselves in is akin to the 1930s. This is our Dust Bowl. It is my hope that this measure will cause fewer homes to become vacant and alleviate some of the human misery being caused by the economy and the collapse of the market.” Moratoriums on foreclosure activity have been prominent among lenders as the volume of homeowners behind on their mortgage has continued to grow; many have suggested that such 'foreclosure freezes' merely postpone the inevitable. But Cuyahoga County's tax-lien foreclosure moratorium is the first such effort by a county to halt foreclosures for borrowers not paying property taxes, sources suggested to HousingWire. Vacancies -- the typical result of a foreclosure sale -- handicap neighborhoods and hinder cities trying to push home prices upward and keep families in their home, local officials contend. And local governments have increasingly looked to get involved to prevent neighborhood blight. Lawmakers in Detroit recently created the Retaining Occupancy on Foreclosure (ROOF) agreement to rent back homes to a borrower for three months after foreclosure, for a monthly agreement fee. HousingWire spoke to Stephen Bancroft, one of the originators of the program, in an upcoming issue. Not only is the program designed to keep vacancies at bay, but it also drives up home prices from the bottom. A foreclosed home sold at a Cuyahoga County auction in 2000 went for 75% of its appraised value. In 2008, that percentage fell to a meager 27%, county statistics show. According to the Treasurer’s announcement, homes trade in many neighborhoods for less than $5,000. But Bancroft told HousingWire that an occupied foreclosed property could sell for 10 times the price, an eye-opening claim to say the least. The moratorium in Cleveland, much like foreclosure moratoria at banking and servicing firms, does not halt accruing interest and penalties and does not apply to commercial, industrial, vacant or multi-family properties. “It’s an emergency that requires a complete rethinking of our assumptions about real estate values and the taxes they support. Suspending foreclosures on this select group of properties gives us a chance to slow the cycle, focus on the vacant properties that are already harming our neighborhoods - and hopefully provide tax-delinquent homeowners a little extra time to get current,” Cuyahoga's Rokakis said. Rokakis added: “I intend to revisit the situation in six months and if conditions have not improved, we will extend the program for the remainder of the year.” Write to Jon Prior.