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A neighbor's foreclosure mess could affect your property's value
Nov. 9, 2007— -- Even homeowners who are up to date on their mortgage payments are feeling the pain of the current mortgage market.
Slavic Village, a suburb of Cleveland, used to be a thriving, working class, multi-ethnic community. It's now the victim of what some refer to as "economic rape."
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This part of Cleveland may look to some like post-Katrina New Orleans -- but it's a manmade disaster area. Cuyahoga County Treasurer Jim Rokakis says 1,000 homes have been boarded up.
So how does a thriving community turn into a ghost town?
Local resident and politician Tony Brancatellu said a few years ago mortgage lenders, who used to ignore places like Slavic Village, began giving loans to almost anyone.
"What happened here is what I would call unbridled greed; it's fraud," Brancatellu said.
Many people in the suburb were able to get loans, with no down payment, and get cash back.
Melanie Whipple is one of those who took out a loan she couldn't afford to pay back. Now she's in foreclosure.
"Move.That's all I can do is just move," she said.
It's a bad situation for people like Whipple who lose their homes, but it's also bad for those who don't.
According to one study, if your home is within 150 feet of a foreclosed property, your property value goes down by at least $7,000. So imagine what happens when you have a home that's in a whole neighborhood full of foreclosed properties.
Empty homes in this neighborhood are systematically stripped and looted and have become havens for criminals. Many residents no longer feel safe.
"Definitely not. I do not walk down the street [at night,]" long-time resident Barbara Morgan said.
The local government wants the Feds and mortgage banks to give them money to demolish all the empty homes left in Slavic Village.
In the meantime, the residents have resorted to painting the boarded-up buildings in an attempt to make them more presentable.
"Nobody's fooled. Obviously people know there's nobody there," Rokakis said.
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