There goes the neighborhood

 

(CBS News) 

Across America, recession-fueled foreclosures and plummeting home values have left countless properties abandoned and vulnerable to looting. As Scott Pelley reports, the problem has gotten so bad in Cleveland, Ohio, that county officials have demolished more than 1,000 homes this year - and plan to demolish 20,000 more - rather than let the blight spread and render nearby homes worthless.

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The following is a script of "There Goes The Neighborhood" which aired on Dec. 18, 2011. Scott Pelley is the correspondent. Robert Anderson and Daniel Ruetenik, producers.

Chances are the home you're in isn't worth what it used to be. You may not have indulged in the real estate bubble with its liar's loans and Wall Street greed, but you were stuck with the bill. Home values have dropped so far, so fast, that nearly 25 percent of mortgage holders today owe more than their house is worth.

And with unemployment so high, so long, many face foreclosure. If you thought your home value couldn't drop any more, have a look up and down the block. You might say, "There goes the neighborhood." The new threat from the great recession is the sudden surge in the number of abandoned houses. Vacant homes have become so ruinous to some neighborhoods that one city, Cleveland, decided it had to find a solution.

Perfectly good homes, worth 75, 100 thousand dollars or more a couple of years ago, are being ripped to splinters in Cleveland, Cuyahoga County, Ohio. Here, the great recession left one fifth of all houses vacant. The owners walked away because they couldn't or wouldn't keep paying on a mortgage debt that can be twice the value of the home. Cleveland waited four years for home values to recover and now they've decided to face facts and bury the dead.

Why destroy them? Jim Rokakis, a former county treasurer, showed us.

Jim Rokakis: We're looking at a neighborhood that has almost as many vacant houses awaiting demolition as there are houses with people living in them. We have one here. One here. One here. One there.

Rokakis is leading the effort to tear down thousands of abandoned homes because they're rotting their neighborhoods from the inside out. It often starts, he told us, when a vacant house becomes an open house to thieves.

Scott Pelley: It's a nice house from the roof to about here. And then down here it's been ripped to pieces. What's goin' on?

Rokakis: Well this is typical because this is as high as they could reach without using ladders. They ripped off the aluminum siding, which you'll see on most of these houses. The aluminum and the vinyl siding comes off. It's getting' about a buck a pound.

Pelley: Essentially foreclosure scavengers have been through here?

Rokakis: The thieves have gone high tech. They know when evictions are occurring 'cause they're posted online. And they will follow the sheriff. They're usually there that afternoon or that evening.

Rokakis: So, in here, what you're gonna see, well. I guess they took everything including the proverbial kitchen sink, right? The sink is gone. The plumbing is gone in this house. All the copper. Anything metal that had value is gone. The furnace is gone.

Pelley: The light fixture--

Rokakis: Light fixture came out--

Pelley: Is gone. How often is this happening in Cleveland?

Rokakis: This happens every day. And the foreclosure crisis creates this spiral, because as a result of this people are now more likely to leave neighborhoods like this. And as they leave, the scavengers come in and do the same thing to the house next door or across the street.

To make the house next door, worth more instead of less, vacant land created by demolition is often given to the neighbors, and sometimes turned into fields or gardens.

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[wulfranoruizsainz]

This is insane. It would have been better to have dropped monthly mortgage payments than kicking people out on the streets and then destroying the property. This is insane.

[geppiec]

The tax payer bailed out the banks to the tune of $700 plus billion. The banks now borrow from the gov't at a mere 1/2 of 1 percent yet they fail to realize they could have saved many a foreclosed home if they too reduced the interest rate on the mortgages they held or continue to hold. A reduction in interest rates of 4% on a $300,000 mortgage would reduce the monthly payment by $1000. This simple but temporary, say 3-5 year formula, would have made millions of foreclosed homes afordable and would have saved trillions of dollars of vanished equity by those with and without mortgages not to mention the billions of dollars of capitol the banks continue to right down. Shame on our short sighted political leaders for not holding the bank's feet to the fire requiring the banks to pass on to mortgage holders the savings that we taxpayers gave to the banks.

Gasper Celauro
Patchogue, NY

[detroitcbsviewer]

Detroit has the same problem as Cleveland with foreclosed and abandoned homes but doesn't have the money to pay to demolish homes like Cleveland and Cuyahoga County. Where do they come up with the money to do such a program. If other communities could, I'm sure they would do the same thing

[glovesmed]

Shocked...I understand how/why "Bank" can take property for non-payment of an agreed upon contract. The "Bank" repos the property and also goes after the assets of the homeowner, if he/she has any to recover debt owed to the "Bank", fine, I think I get that. My problem is with the "Bank" taking the property for non-payment, and then having no obligation to maintain it. The property is then condemned by the "city", and the "Bank" is allowed to walk away leaving the taxpayers of the "city" to pay the bill for demolition. Why, finally the question, is the "Bank" allowed to do this when it has assets that the "city" could go after for the negligence of the "Bank' to its property? Any slum lord in any city isn't allowed to do this if he has assets to clean up his mess......................

[sjtmcbs]

I still don't get it. Is the sheriff's sale for the property when the people have been evicted? Or is it for tax defaulted property? If I default on taxes doesn't this mess up my finances totally? Doesn't it show up on my credit record? Why doesn't this apply to the lenders who foreclosed? Or is this another insidious aspect of the MERS system and there's no record of ownership except for the borrower and original lender and that's not who foreclosed on the loan? Thanks to MERS, the foreclosing lender can't be legally tied to the property? So go after the original lender. Make the lenders understand they will be held accountable and treated just like any other property owner (after all, corporations are people). Can't cities pass an ordinance? Something like: If the Sheriff's department is going to serve a notice on the lender's behalf, then the lender has to agree that they are the owner of record and responsible for the property, including any related expenses. There's so much "wrong with this picture" that it still just doesn't make sense!

[onadaga]

Now that you have done the story on the foreclosure issue, why not back it up and show how this mess began with then President Clintons "every one should be able to own the american dream plan" . This in my opinion had started the ball rolling with his direction to now NYS Gov A. Cuomo former HUD secretary under Clinton and his underling Jillibrand now a us senator NY were responsible for relaxing the banking regulations .This allowed for all the crazy mortgages to be created and allowed people who could not ordinarily afford a home to buy one ,and now the banks are being totally blamed for this mess COME on CBS cover the whole truth! but that would mean you would have to expose our great politicians for what they are!

[bayouself]

Hi,
After watching your segment on foreclosures in Cleveland, this question came to mind: Are the banks, who are the entities that own these properties, taking "write-offs" for the full amount of the risky loans?
If that's the case, then the problem will just perpetuate. The banks will keep foreclosing on properties, they will take the beneficial tax write offs instead of reducing the loan amount, the banks won't take care of the properties, and the city will keep having to destroy these houses that have been plundered to prevent further depression of housing prices in the neighborhoods. Please follow up on my question about tax write-offs.

[MoreQuestionsThanAnswers]

OK 60 Minutes. I'd like to see a follow up. If this is happening to such an extent, then most of the viewers are facing this dilemma themselves. WHAT happens to the homeowners who abandon? Are they better off? WHO are the banks doing this? Did they receive TARP funds? Are there any watchdogs who are working on laws to give the banks reason NOT to abandon the properties? Is there a way for cities to force the banks to abandon sooner so that the city may set these properties up as rentals before they become destroyed. Don't banks take losses anyway, isn't it built into the system? Follow up please.

[sjtmcbs]

Goodness! I hope that the sheriff's department is at least getting paid by the foreclosing lenders; at least enough money to run the place since it sounds like these are the people they are "serving". Perhaps to the point of exclusion when it comes to "protecting"? Maybe instead of using sheriff's office personnel to serve the evictions, they should be using them to catch those "foreclosure scavengers".

From the transcript — Rokakis: The thieves have gone high tech. They know when evictions are occurring 'cause they're posted online. And they will follow the sheriff. They're usually there that afternoon or that evening.

Its known that people are likely to show up to vandalize a property and law enforcement just lets them do it? Doesn't anyone ever call the police when these people show up? Where are all those cell phone owners with videos from people who live in the neighborhood? Or anyone? Maybe there needs to be an "occupy foreclosed homes sooner than later" movement just to protect these properties?

There are so many gaps when it comes to making sense of all of this foreclosure mess that it makes me wonder what the media just hasn't figured out. Or maybe it just isn't being reported????

[olderfan]

Howdy after watching homes being demolished last night i am confused. These are good homes. Knocking them down is such a waste. Abandoned without a sheriffs sale then destroyed to try an boost other homes values....

It just goes against my grain . So many people out of work. Out of homes and such a rich country. This is the best we can do?

How about buying them for $1.00 and putting unemployed youth to work renovating& selling these at the newer lower value. Building these young people by training and getting a pay check. Sure it's helping them an others whom could then afford the lower house payments. Strengthening the communities instead of destroying them. If i heard it right just in the county 21,000 including the 1,000 already destroyed - shame on where we the people have come. The great depression what did they do then? My frugal parents kids then survived - did not waste they built or maintained. 50 million Americans now living in poverty. Whats the legacy becoming?

[pam0528]

I totally agree with you oldefan, I live in Cleveland Ohio and these homes they are tearing down are lovely homes. Now they have the program here now where they are allowing people to buy the homes for $300.00 but for some reason that isn't working out either because people are buying the homes for $300.00 and turning around selling them for like $25,000.00 and that is not what the city wanted the people to do with the homes. So I don't know if they are still offering that program. I'm trying to find something that is available here that they give you the money to fix up the homes and just rent them out to keep from tearing them down. It just looks horrible to see all these abandon properties on streets, because I still think it brings your property value down. Something has to be done, and I am over here trying to find out what can be done now.

[Rokakis-TCI]

This is from the office of Jim Rokakis, Director of the Western Reserve Land Conservancy's Thriving Communities Institute located in Cleveland, OH. Thank you for your concern and offer of assistance to Linda Bizzelle, the out-of-work nurse unable to make her mortgage payments, mentioined in the "60 Minutes" broadcast of "There Goes the Neighborhood" on Dec. 18th. If you wish to help Linda save her home, donations may be sent to her through the Cleveland Housing Network. Please send all checks or money orders made payable to: The Cleveland Housing Network: Linda Bizzelle Fund, 2999 Payne Avenue, Cleveland, OH 44114. Their phone number is 216-574-7100 if you have questions. Thank you!

[thurston2001]

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