2007 – 783 foreclosures, #1 ranking nationally
2008 – 1,607 foreclosures, # 105 ranking
2009 – 981 foreclosures, # 508 ranking
2010 – 1,001 foreclosures, # 436 ranking
2011 – 627 foreclosures, # 457 ranking
2012 – (first quarter) 165 foreclosures, # 675 ranking
The zip code does not perfectly match Slavic Village. But the national ranking fell not because the situation improved here, but because it worsened so significantly in suburban parts of Cuyahoga County and, nationally, in Sun Belt states such as Arizona, California, and Nevada. That the crisis has not ended is clear from the Cuyahoga County numbers. In 1995, before the crisis hit, the county had 3,345 foreclosures. This was considered a normal year, the baseline. In 2005, that had tripled and it climbed from there to reach a peak in 2009 of 14,171. In 2011, it had declined to 11,544 — still four times what had been a normal year.
The numbers don’t hint at the human devastation. Ed Rybka, who lives in Slavic Village, is now the Cleveland housing director. But before that he was Brancatelli’s predecessor as the neighborhood’s councilman. He started noticing something troubling in the early 2000s. Before then, he spent time looking for absentee landlords who lived in Cleveland’s suburbs and who had family ties to the ward. “Suddenly, it was no longer chasing property owners in Cuyahoga County or Greater Cleveland,” he said. “Now, we had them in Russia, we had LLCs on the West Coast. They were everywhere.” As county treasurer, Rokakis said he started noticing that homeowners who had always paid their taxes on time were suddenly delinquent.
It amounted to “flipping on steroids,” Rokakis said, with buyers snatching up houses on the Internet and reselling them within days. “Buy a house for a thousand dollars on a Monday and sell it for $5,000 on Friday,” he said. “Usually, there was a conspiracy involving a bank, a buyer, a seller, and an appraiser.” Rokakis tried to sound the alarm in December 2000. “We approached the Federal Reserve Bank in Cleveland and said, ‘We need your help. There are some really bad things going on here and we think you can do something about it because you have some unique authority’,” he said. The Fed hosted a conference on the topic.
Rokakis and his allies then turned to City Hall. Cleveland, followed by Dayton and Toledo, passed bills cracking down on real-estate fraud and predatory practices. But the banking lobby descended on Columbus and the Republican-dominated state Legislature stripped cities of the right to regulate the practices. “So we failed at the federal level. We failed at the state level,” said Rokakis, who then turned for help to law enforcement—FBI, U.S. attorneys, county prosecutors, postal authorities. “The county prosecutor said this is fraud at an industrial scale. This wasn’t just one or two people committing fraud. Appraisers were lying. Mortgage brokers were lying.” Rokakis estimated that two-thirds of the 100,000 foreclosures in the county over the last decade involved fraud.
But no one acted at that early stage. Until then, the people of Slavic Village were being failed by Washington and Columbus. Older residents who owned their houses free and clear were being pushed by door-to-door solicitors, by ads—and, in one case related by Brancatelli, by their minister—to refinance and take cash out for repairs, vacations, or medical bills. Then, when rates rose or bills came due, they were losing their houses. And new owners were moving into the neighborhood after they were allowed to buy houses with no proof of finances and no ability to pay their mortgages.
It was, said Brancatelli somberly, as if the neighborhood had been struck by “Hurricane Greed.” Rokakis said that the most obvious impact in Slavic Village “is it has helped to empty it out and in doing so completely destabilize it.” The two men began to try to track down the owners of the many abandoned houses. Many were fly-by-night corporations; some were well-meaning individuals who felt they couldn’t pass up Internet offers to buy houses for $1,000 or $2,000. But they did not do their homework. They did not understand the housing stock or history of Slavic Village. These were tiny houses built between 1890 and 1920 to handle the big influx of immigrants being brought in to work in Cleveland’s thriving nearby steel mills and factories. They were needed for Cleveland’s population boom. In 1950, Slavic Village held 70,000 people in a several-block area that could barely handle the crush.
But from there, the municipal decline began and Slavic Village’s population declined to 23,000. There was a glut of housing and it was outdated and undesirable, except to those looking for easy profits. Just look at 3456 East 72nd St. A tiny one-bedroom, one-bath house built in 1900, it has 864 square feet, less than one third what the U.S. census shows as the average-sized house. On a recent drive on East 72nd Street, Brancatelli saw that though the windows were boarded up, the door was open. Going past the uncut grass and into the house, he pointed out the gaping holes in the walls where vandals had used a sledge hammer to get to the wiring. All the plumbing had been ripped out, as had the outdoor siding that could be reached without a ladder.