Ohio Fair Lending and Vital Communities Conference examines housing issues in Cuyahoga County

by Bruce Checefsky

     Frank Ford, Senior Policy Advisor, Fair Housing Center for Rights and Advisor with Vacant and Abandoned Property Action Council (VAPAC), presented the preliminary findings of a mortgage lending analysis in Cuyahoga County during the 33rd Annual Ohio Fair Lending and Vital Communities Conference. In a six-year review of home purchases and home repair lending by seven leading banks, 46 percent of all home purchases on the Black-majority east side were made by investor buyers from outside of Cleveland.

     “Investors buy homes for rental purposes. It leads to a decrease in homeownership for the rest of the population,” said Ford. “This happens more disproportionally in Black communities with a greater impact on African Americans.”

     Home improvement loans are given to white homeowners twice as often as Black homeowners, even given the same income level. Ford compared home sales in 2021 to loans and found more than 4,000 sales with only 900 mortgages. With a medium sale price of $45,000 on the Eastside, buyers are paying cash. In the outer suburbs, which are predominantly white, 80 percent of home sales came with a loan.

     “It is a missed opportunity for homeownership in the city because the price is affordable,” he said. “And the research shows that as African American population increases, their ability to access home repair loans decreases.”

     Community Development Corporation (CDCs) in Cleveland and Cuyahoga County count the number of homes built and repaired in a self-appraisal system tied to their funder assessment, including the Cleveland Foundation, Gund Foundation, and St. Luke’s Foundation. It’s a significant flaw in their reporting system, said Ford. Skewed information favors the CDC.

     Ford looked at the community benefits agreements seven banks have with the city and county and compared the dollars they have on deposits from citizens of Cuyahoga County to the loans given to them. Fifth Third Bank had $32 billion from 2016-2020 but remained consistently low with home repair loans on the Eastside during the same period. Other lenders didn’t fare much better.

     In a different forum, Zach Germinick, Director of Neighborhood Stabilization at Slavic Village Development, was joined by David Freno, Vice President, Financial Planner for TransitioNext, and John Lynch, a broker and partner in Keller Williams Citywide realtors. They discussed how outside investors distort the Cleveland rental housing market. Distressed real estate costs less than improving other properties, and with wide profit margins and minimal work, investors find income opportunities in distressed properties, according to Freno. 

     Opportunity Zones, created by the Federal Government to promote investment in distressed areas, are deferred taxes on financial gains. Investors must qualify with accreditation by an investment institution with an annual salary of more than $200K for two years or a net worth of $1M.

     “The idea is to maintain investments in the neighborhood,” Germinick said. “With minimum entry points well over six figures, it is not for everyone.”

     Lynch explained that, from his experience, investors are from Cleveland. People will fix up rental properties for income, while others flip them for a profit. As former Cleveland City Councilman from 1974 – 86, under Mayors Ralph Perk, Dennis Kucinich, and George Voinovich, Lynch said the housing market was affected negatively by a lack of enforcing housing codes.

     “The condition of real estate properties is dependent on enforcing housing codes. The City of Cleveland did not do it back then,” he said. “They can do a systematic inspection of homes and improve the condition in general. But it is not being done.”

     Germinick said distressed properties carry a negative connotation. With federal and state regulations from the financial advising and realtor industry, compliance varies, opening the door for bad practices.

     Unlicensed real estate brokers flood the market for cash deals even while the real estate and appraisal industry, licensed by the state of Ohio, Division of Real Estate, tries to protect legitimate transactions. Wholesale options happen regularly in Cleveland, with buyers promising cash for houses in less than 30 days.

     “Unlicensed real estate brokers will form a Limited Liability Corporation (LLC), advertise your property for a higher price than they paid, and then sell the LLC,” said Lynch. “It creates a problem for all of us in the industry.”

     Charles Bromley, the founder of Ohio Fair Lending Coalition, led a forum on Tenant Rights: A New Generation with Mike Foley, Former Executive Director of Cleveland Tenants Organization; Josiah Quarles, Director of Organizing and Advocacy, NEOCH (NE Ohio Coalition for Homeless); and Ronald James, Former Cuyahoga County Prosecutor, and Morelands Group Organizer.

     James Boyle and Mary Boyle, a former Cuyahoga County Commissioner, are tenants at 12701 Shaker Boulevard, a multi-story apartment building with severe mechanical and structural issues, resulting in residents living without heat during the winter of 2021-22. AMG Management from New York City, reportedly owners of the building, also own two additional properties at 12500 Shaker Boulevard and 12600 Shaker Boulevard.

     “None of the apartments had heat last year. Most have heat this year, but not everyone. I had black mold in my apartment,” said James Boyle. “The owners have gone to extraordinary lengths not to be identified by us,”

     The current owners took over the property in January 2022. They plan to make cosmetic changes to increase the occupancy rate and rent, reported James, then sell it at a profit.

     “They bought the property very cheaply and want the new owners to take care of the major repairs,” he said. “We had a property manager and three maintenance people. The owners fired two of them, and now we have one maintenance person for three buildings. Packages from FedEx and UPS have piled up for four or five weeks without letting us know. Thefts and vandalism have increased. We have no security.”

     James pleaded for more media attention to help tenants organize.

     Dennis Keating, an emeritus professor in the Department of Urban Studies at Cleveland State University, who has written widely on housing, neighborhood development, and urban planning, moderated a panel on the impact of the 2022 midterm elections. Panelists were Sarah Saadian, Senior Vice President of Public Policy and Field Organizing at the National Low Income Housing Coalition, and Jo Ingles, who covers politics and the Ohio government for the Ohio Public Radio and Television Statehouse News Bureau. Professor of Political Science and Director of the Community Research Institute at Baldwin-Wallace University Dr. Thomas Sutton rounded out the conversation.

     “Every statewide Republican officeholder that was up for election this year won,” said Ingles. “Republicans also took over Ohio Supreme Court.”

     Saadian shared information about the US Congress, with Republicans holding the majority while the Democrats remain in control in the Senate. She said committee leadership changes are likely a positive development for Democrats.

     Dr. Sutton said as the population gets older and whiter in the suburbs and more conservative, the Republican Party gains in strength. Democrats are branded politically as bicoastal and elite, with very little messaging to counter that image.

     “Democrats need to look at the messaging and build new coalitions in rural and small-town areas,” he said. “And immigration plays a part in the political dynamics of Ohio.”

     South Euclid Community Services Director Keith Benjamin addressed fair housing and links to public health disparities in a panel discussion with experts from the Cuyahoga County Board of Health, Cleveland Department of Health, and Ryan White Planning Council.

     Cleveland State University Levin College of Public Affairs and Education presented the conference.

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