In a rare move, the City of Cleveland filed a lawsuit in Cuyahoga County Common Pleas Court, suing 21 banks over the foreclosure crisis. As some consumer advocates applaud the move, we know that it is too little too late.
Sure the city was adversely affected. They have lost millions in property tax revenue while having to spend money boarding up houses. Even police units are strained trying to prevent looting of properties.
In a related case, the city of Baltimore sued Wells Fargo on claims that federal laws were violated when more blacks were sold higher priced mortgages than whites. Such a trend likely occurred in Cleveland as well.
We applaud moves that hold corporations accountable for violations of law. However, these municipalities have failed to protect their residents.
Instead of losing millions of dollars trying to patch up their broken neighborhoods, these cities could have spent a few hundred thousand dollars helping homeowners avoid such traps. Many cities have special homeownership assistance programs that help people qualify for a mortgage using down payment assistance.
These programs also prohibit loans with predatory terms. Progressive programs such as these help to build solid neighborhoods. These mortgage holders are in better shape and are more likely to be able to afford payments on their homes.
If these cities are successful in gaining any compensation, they should use it to improve their homeownership support programs. Then they could help themselves avoid further shocks from future foreclosure spikes.
Tags: Baltimore sues Wells Fargo, Cleveland sues 21 banks