December 20, 2012 [Cleveland Press]
The U.S. Department of Housing and Urban Development (HUD) has been selling foreclosed and vacant properties to the Cuyahoga County Land Bank for $100 each. The program has helped keep damaged homes off the market and away from real estate flippers.
HUD can no longer afford to uphold the deal and will put its Cuyahoga County properties back on the open market. HUD issued a letter to the land bank stating it would not renew the contract.
The Cuyahoga County Land Bank and HUD made the deal in 2009. The program offers state and local governments or nonprofits first choice on buying HUD-owned foreclosed homes. To be eligible, governments and nonprofits must have received federal stabilization funds. The program has sent Cuyahoga County nearly 850 properties over three years.
During the first year, HUD homes valued at $20,000 or less could be purchased for $100. Later, HUD properties worth $30,000 or less became eligible. According to a spokesperson for HUD, the deal with Cuyahoga County’s land bank has become unsustainable under its current terms.
Land bank and city officials fear that hundreds of properties will be sold to real estate flippers who aim to quickly resell the blighted homes to vulnerable and naïve buyers. Often, buyers realize they made a terrible investment and leave the property to sit vacant for years. The abandoned properties become eyesores that deplete home values of the surrounding neighborhood. Ultimately, taxpayers wind up paying for demolition.