Land banks seeking share of settlement
WARREN – The $16.6 billion settlement with Bank of America announced Thursday – the largest ever with a bank over its role in the 2008 mortgage crisis – already has officials with housing organizations in Ohio making plans to secure a portion that has been set aside for land banks.
Fifty million dollars will be available to land banks across the United States, including the 22 in Ohio, leaving Jim Rokakis, director of the Thriving Communities Institute and others who’ve already put together the Ohio Plan with the goal of making sure the money is used to make a ”real meaningful difference” in communities like Warren, Youngstown, Dayton and Cleveland.
”Our goal is to make sure this money truly finds it way back to Ohio in a way that is quantifiable,” Rokakis said.
The Ohio Plan is what land bank officials from around Ohio developed earlier this year to before another mortgage settlement, with JPMorgan and Chase Co., to divide a portion that $13 billion settlement between demolition, foreclosure prevention, home renovation and re-purposing land that is vacant because of demolition to stabilize communities.
The JPMorgan settlement did not provide money for distressed cities.
Speculating what’s next for the $50 million in the Bank of America settlement and $25 million more for the same purpose in an earlier Citigroup $7 billion settlement is sort of an ”open question,” said Frank Ford, a senior policy adviser with the Thriving Communities Institute.
Ford said he expects the decision making will be left to the banks, which leaves land banks in Ohio two options: Reach out and inquire, ”How can we apply?”; or get the land banks together again and present their goals to the banks to show ”this is what we want to do; tell us how we can apply to do that.”
”The devil is in the details,” Rokakis said. ”Now we have to find out how we get that money back to Ohio.”
Matt Martin, executive director of Trumbull Neighborhood Partnership, which runs the land bank in Trumbull County, said he would like to see some of the settlement money used in Trumbull County on homes that are salvageable and be an ”opportunity to create homeownership for residents.”
”We feel like for the settlements to be meaningful, we have to get money for things we want to do with the houses,” Martin said.
The land bank is at the point now where the ”worst of the worst” homes are beginning to come down and renovation dollars would continue the mission of ”blight busting,” which he sees as equally as important as foreclosure prevention to stabilize neighborhoods.
So far, the land bank has sold more than 300 vacant side lots to next-door neighbors to expand their property and about 100 homes that require some improvements, most for much less than $10,000.
Also, there are more than 300 homes in the land bank pipeline that are set for demolition.
”What we are doing here, we are taking on other people’s property by the boatload … These are all post-foreclosure properties. We are taking these bank-owned properties on, we need the resources to deal with that,” Martin said.
Land banks, which will be competing amongst themselves for a piece of the settlement dollars, also will be competing against Community Development Financial Institutions, or CDFI, which is a type of alternative bank that is typically a nonprofit organization that gives loans for community development projects.
The deal with Bank of America calls for the bank, the second-largest in the U.S., to pay a $5 billion cash penalty, another $4.6 billion in remediation payments and provide about $7 billion in relief to struggling homeowners.