Cleveland’s Got Big Problems — And It’s Not a Joke
USA Today noted on Tuesday that a lot of mistakes have been made in “The Forest City” by the lake (believe it or not, that IS the city’s nickname):
Ohio’s foreclosure rate — the highest in the nation — is weighing on Cleveland’s real estate market. In a one-two punch, manufacturing job losses and predatory lenders have hurt homeowners.
The state legislature has passed an anti-predatory-lending law that takes effect Jan. 1. It requires appraisers to be licensed and quadruples the required hours of continuing education for mortgage brokers, to 24 a year. It also aims to promote financial literacy in the poorest communities, which sometimes fall prey to salespeople pushing complex adjustable-rate mortgages with higher-than-average fees.
In Ohio, one in every 10 subprime loans — high-interest mortgages for those with impaired credit — is in foreclosure. The number of homes for sale in Cleveland has risen to 49,000, a two-year supply. Nationally, by comparison, there’s only about a seven-month inventory of homes for sale.
Giving free rein to predatory lending has had serious consequences for the economy of an entire region. The article goes on to blame the jobs situation for a lot of the problems, but I’m not buying it. The fact is that uninformed people got roped into bad deals by people who knew they were bad deals, and didn’t care.
Though the education may help a bit, the legislation described in the excerpt is not a substitute for scruples.
