Judge May Hold Investors Responsible For Blight A local judge says out-of-state investors violated housing codes for houses they own in Cleveland, and that they should pay restitution. A hearing Thursday will determine whether neighbors suffered economic loss because of a house owned by Fannie Mae.
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Judge May Hold Investors Responsible For Blight

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Judge May Hold Investors Responsible For Blight


Judge May Hold Investors Responsible For Blight

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In many neighborhoods around the country, foreclosed homes are a common site. Those empty houses are often neglected. They bring down property values for the remaining homeowners, as well. In Cleveland, one judge is testing out a novel judicial tactic to help those neighbors.

From member station WCPN, Mhari Saito reports.

MHARI SAITO: On a hot afternoon, on a quiet street on Cleveland's southeast side, 74-year-old Yvonne Means stands in her carefully manicured yard watering the tomatoes, green beans and a sickly looking set of collard greens.

Ms. YVONNE MEANS: I've got to get some medicine for this one. Ooh.

(Soundbite of water spraying)

SAITO: But what really gets this retiree upset is the house across the street. When it sold in 2004, Means had her own house appraised. It came in at $70,000. Means didn't sell her house, but the one across from her went into foreclosure. Now you can barely see the boarded-up windows, because the shrubs are so overgrown. Means had her own home appraised again last spring.

Ms. MEANS: But now it's priced at $50,000 so that's about what, $20,000 less? And you really - I really don't invite my friends over. I'm just ashamed of my street now. I really am. You know, the houses and the, you know, that are not kept up.

SAITO: Means and her neighbors recently received letters from Cleveland Municipal Housing Court Judge Raymond Pianka, telling them that one of the former owners of that empty house, mortgage giant Fannie Mae, was found guilty of housing code violations. As part of its remedy, the court ordered the company to pay restitution. Tomorrow, Pianka will hold a hearing to determine whether neighbors like Means can prove they suffered economic loss because of the house that Fannie Mae owned.

Emory University School of Law Professor Frank Alexander says it's an unusual move for a housing court judge.

Professor FRANK ALEXANDER (Emory University School of Law): Criminal law has long afforded the possibility that a criminal defendant who is found guilty can be ordered to pay restitution to a victim. What is unusual in this case is that the victim are the adjoining owners who did not initiate the lawsuit, necessarily. This lawsuit was initiated by the city.

SAITO: To complicate matters, an attorney for Fannie Mae says the property was supposed to have transferred to Aurora Loan Services in 2008, before the violations were written up. But the paperwork wasn't filed until last spring. A Fannie Mae spokesman says tomorrow, the company hopes to clear up just who owns the house.

Judge Pianka also sent similar letters to neighbors of another rundown Cleveland house that's so bad, it's now condemned. The defendant in that case is a Utah-based company called Go Invest Wisely, LLC. Company officials did not respond to requests for comment.

Cleveland law director Robert Triozzi says the proposed restitution hearings may help frustrated homeowners.

Mr. ROBERT TRIOZZI (Director of Law, Cleveland): It is an appropriate recognition that other people other than the city itself has been harmed here.

SAITO: But in an editorial, The Cleveland Plain Dealer wrote that Judge Pianka's restitution hearings risk overstepping the bounds of impartiality. And legal experts point out that neighbors can already sue negligent owners through nuisance or trespass laws. Others worry that restitution claims could scare off much-needed investors. Some Cleveland homeowners will be closely watching the restitution hearings. The defendant from Utah, Go Invest Wisely, also owned a dilapidated and graffiti-covered house a few doors down from retiree Edith Crum.

Ms. EDITH CRUM: They buy up the houses, then they go live somewhere else in beautiful mansions, and we are stuck down here. It lowers the property value. And what can you do?

SAITO: What Crum and her neighbors are doing is working with a group of local housing activists to try and get the property condemned. And depending on how tomorrow's restitution hearings go, Crum says the group may also head to housing court for its share of any restitution money.

For NPR News, I'm Mhari Saito, in Cleveland.

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