Following Plain Dealer Report, Brown Meets with Federal Housing Administration Nominee to Raise High Cost of Razing Abandoned Homes

Brown Cites Plain Dealer Report of Out-of-State Companies Buying Dozens of Abandoned Homes, But Failing to Conduct or Pay for Necessary Repairs, Maintenance, or Demolition;

Cleveland Has Spent More Than $25 Million Razing Homes Owned by Out-of-State

 Carol Galante is President Obama’s Nominee to Head the Federal Housing Administration


WASHINGTON, D.C.—Following a report in the Cleveland Plain Dealer revealing that out-of-state property firms have left the City of Cleveland on the hook for the high cost of razing abandoned and condemned houses, U.S. Sen. Sherrod Brown (D-OH) raised the issue in a meeting today with Federal Housing Administration (FHA) commissioner nominee Carol Galante. Galante was nominated in October by President Obama to serve as FHA commissioner. 

“The City of Cleveland has been hit hard by the foreclosure crisis, and as this week’s report in the Plain Dealer shows, some out-of-state companies are perfectly willing to exploit our city’s crisis just to make a buck,” Brown said. “These companies buy abandoned homes with the goal of reselling them for a quick profit, but when they don’t sell, are nowhere to be found when the bill comes for repairs, maintenance, or demolition.

“I raised this issue with Carol Galante today because I need to know that this is the kind of issue that she’ll work to address should she be confirmed as the FHA commissioner,” Brown added. “Cleveland is not the only city to be targeted by these shadowy companies, and I’m hopeful that HUD will recognize the magnitude of this problem and work to prevent our cities from being forced to raze homes that are owned by private firms.”

According to the Plain Dealer, the City of Cleveland has spent more than $25.9 million—while recovering just $1.8 million—to raze abandoned or condemned homes owned by out-of-state investment companies. These companies purchase dozens of homes with the hopes of reselling them for profit but do not conduct or pay for necessary repairs, maintenance, or demolition. Efforts to track down these companies, to recoup costs, are often fruitless.

Brown fought for the creation of the Neighborhood Stabilization Program (NSP), aimed at revitalizing neighborhoods that have been hit hard by the foreclosure crisis, in the Housing and Economic Recovery Act of 2008 and the continuation of the program in the American Recovery and Reinvestment Act (ARRA). It is estimated that each dollar in NSP funding has more than twice the economic impact due to a multiplier effect generated through new jobs and rehabilitated housing. In September 2008, Brown announced that Ohio communities would receive more than $258 million in NSP funds authorized by the housing bill. In Sep. 2009, Brown wrote to U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan in support of Ohio applicants to the second wave of funding through the NSP program.

Brown also introduced the Community Regeneration, Sustainability and Innovation Act of 2009 with Sen. Charles Schumer (D-NY) and Reps. Tim Ryan (D-OH) and Brian Higgins (D-NY). This legislation would create a new, competitive grant program within the HUD targeted toward cities and metropolitan areas experiencing large-scale property vacancy and abandonment due to long-term employment and population losses.

The Federal Housing Administration provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.



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