199 sheriff’s deeds were filed with the Cuyahoga County Recorder’s Office in the past week (January 14 through January 18).

US Bank (28)
Deutsche Bank (26)
Wells Fargo (23)
Department of HUD (20)
Federal National Mortgage Assn (11)
Bank of New York (9)
Federal Home Loan Mortgage Corp (6)
HSBC Bank (6)
GMAC (6)

Here’s who filed five or more:

(Previous week.)

Destiny Ventures bought the property last March for $1,500 from EMC Mortgage (Bear Stearns), which acquired it at Sheriff’s sale in January 2006. (Yes, that means it’s been sitting vacant for two years.)

Here’s excellent coverage of yesterday’s trial by WKYC’s Mike O’Mara.

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Several out-of-state companies have purchased dozens of houses in Cleveland, some for less than $1,000.

One of the companies, Texas-based Econohomes, provides affordable housing to buyers with tarnished credit, Jeff Ball, the chief executive officer, said. Econohomes provides the loans and carefully screens customers to ensure they are reliable, Ball said.

“We buy property at such a deep discount we are able to sell it to people who are economically disadvantaged at very attractive terms,” Ball said. “These properties otherwise would most likely sit vacant.”

Former Cleveland Law Director Craig Miller represents the company in Cleveland. He says Econohomes’ owners are “very well-intentioned, very good businesspeople.”

Compare and contrast with this forum posting from “Amber Work” who identifies herself as an Econohomes representative:

Econohomes has properties all over the U.S. We sell the properties as-is and they are priced to move. I work with investors and owner occupy buyers on a daily basis. Currently, we don’t have a website that is accessible to the public, but there is a link to our inventory that is pasted below [link]… We are buying large packages of properties and have more coming online every 2-3 weeks.

Maybe Ms. Work just didn’t get Mr. Ball’s memo about careful screening, etc.

Econohomes currently holds title to seventy Cuyahoga County properties — fifty-nine in Cleveland, nine in East Cleveland, and one each in Euclid and Garfield Heights. Almost all have been acquired since July. The biggest single source has been Destiny Ventures (twenty properties), but Econohomes has also bought houses directly from Lasalle Bank, Deutsche Bank, US Bank, Wells Fargo, and ten other subprime lenders.

Here’s one they’ve owned since August 28 at 3271 West 34th Street (purchase price $1,500). Click for a closeup:

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179 sheriff’s deeds were filed with the Cuyahoga County Recorder’s Office in the past week (January 7 through January 11).

This total does not include 119 vacant lots taken (or taken back) by the City of Cleveland’s Land Bank.

Here’s who filed five or more:

Deutsche Bank (26)
Wells Fargo (23)
US Bank (20)
Department of HUD (18)
Federal National Mortgage Assn (10)
Federal Home Loan Mortgage Corp (9)
Bank of New York (7)
Lasalle Bank (5)

(Previous week.)

Deutsche Bank and Wells Fargo are among the 21 mortgage lenders and securitizers named in the City of Cleveland’s public nuisance lawsuit, filed Thursday. US Bank, the Bank of New York and Lasalle Bank are not.

New York Times story on the lawsuit this morning.

P.S. The lawyers and Court TV obsessives among us can get a free download here of CSU law professor Kathleen Engel’s 2005 paper, “Do Cities have Standing? Redressing the Externalities of Predatory Lending”, published in the Connecticut Law Review. Among other things, the paper discusses “public nuisance” as a possible basis for city claims against predatory lenders. (Thanks, Frank Ford.)

Exactly friggin’ right:

But Cleveland’s suit is even more unique because the city has based its complaints on a state law that relates to public nuisances. The suit also is far more wide-reaching than Baltimore’s in that it targets the investment banking side of the industry, which feeds off the mortgage market.

Investment bankers at these companies buy subprime mortgages from lenders, then sell mortgage-backed securities to investors. It is a legal practice, known as securitization, that became increasingly popular during the housing boom earlier this decade.

Jackson and city Law Director Robert Triozzi said Cleveland should have been excluded from the frenzy. They pointed to housing prices that remained relatively flat as real estate values jumped elsewhere, as well as a manufacturing downturn and widespread poverty.

The suit claims that even though these issues were well documented, investment bankers continued to feed loans to hungry investors at the expense of borrowers buried in interest.

“Ultimately, they’re responsible,” Triozzi said of the investment banks. “They knew the economic conditions in which they were operating here. They decided that didn’t matter.”

Now I remember why I voted for Frank Jackson.

P.S. You can download the City’s actual filing here (pdf). Recommended reading!

I went to the Mayor’s press conference this morning. Not a lot was said that wasn’t in the PD story, but here are a few details:

• Jackson said explicitly that the City’s objective is cash to clean up the huge neighborhood damage left behind by foreclosures and derelict vacant houses arising from securitized subprime mortgages.
• Asked by a reporter why there are no local banks among the defendants (actually there is one “local” lender, JP Morgan Chase), Jackson and Triozzi said other institutions may well be added. Triozzi also said they’re continuing to look into the potential for additional litigation based on fair housing and racial discrimination issues, like Baltimore’s suit against Wells Fargo.
• Community Housing Solutions and the Equal Justice Foundation are involved in the City’s suit as co-counsel.

I have to say that Law Director Triozzi gave one of the clearer explanations I’ve heard of the role of securitization in making Cleveland the foreclosure crisis “epicenter”.

On the “local bank” question, there is one really obvious hole in the City’s defendant list: US Bank, which filed over 1,100 foreclosure cases and 650 sheriff’s deeds in the county last year, nearly all in its role as a trustee for securitized investment pools created by Citibank, Homecomings and other big subprime lenders.

100 sheriff’s deeds were filed with the Cuyahoga County Recorder’s Office last week (December 31 through January 4).

New Year’s Eve and January 2 had minimal filings, but by Thursday the lenders’ lawyers were getting back to business.

Here’s who filed five or more:

US Bank (15)
Deutsche Bank (14)
Wells Fargo (10)
Department of HUD (7)
Federal National Mortgage Assn (6)
Bank of New York (5)

(Previous week.)

Also last week:

On New Year’s Eve, the last day of a very bad year, 135 foreclosed homes were added to 2007′s “sold at auction” total by the County Sheriff; and

197 new foreclosure cases were filed in Cuyahoga County Common Pleas Court… the last 33 foreclosures of 2007, and the first 164 of 2008.

(If you’re looking for straws in the wind, 164 new foreclosures in the first three business days of 2008 is just six fewer than were filed in the same three days of 2007.)

Oklahoma speculator Destiny Ventures buys 53 more foreclosed Cuyahoga County houses.

(Here’s one of them)

At the other end of the foreclosure process, 10,160 sheriff’s deeds (completed foreclosures) were filed with the County Recorder in 2007, compared to 5,517 in 2006.

According to the 2000 Census, Cuyahoga County has about 430,000 residential structures, including 335,000 single-family homes. So the number of foreclosure cases filed in the last two years equalled about 7% of the county’s total housing stock.

Source: Common Pleas Court docket and County
Recorder’s database, both on line.

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All of them are, of course, foreclosed buildings or lots. Almost all are houses (many of which are multi-unit, which means the number of residential units in DB ‘s name is significantly larger than 970). And most, if not all, are vacant.

Who actually owns all these properties? Not Deutsche Bank, of course. Deutsche Bank is a trustee, a stand-in, for the real owners — large investors who bought shares in securitized investment pools of mortgages (Residential Mortgage Backed Securities, or “RMBS“es) created by the original mortgage lenders, and are now losing their shirts.

These real owners’ names don’t appear on the Auditor’s records. But you can often find some version of a RMBS’s name on the actual deed, or the Sheriff’s sale record. And then you might be able to deduce the name of the company responsible for servicing the property (i.e. disposing of it) by looking up the “pooling and service agreement” for that particular RMBS, which might be on line. If you’re lucky.

Remember when we did this for a house down the street from me?

Here are the real owners of a few other “Deutsche Bank properties” in Cleveland, picked at random:

• 1527 East 122nd St. — “Morgan Stanley Abs Capital I Inc Cdc Mor Cap Tr 2003-He3“
• 6611 Edna Ave. — “Argent Mortgage Loan Trust 2005-W1“
• 1355 East 88th St. — “Ameriquest Mortgage Securities Inc/Asset-Backed Pass-Through Certificates Series 2004-R11“
• 1268 East 115th St. — “New Century Mort Sec Inc Home Equity Loan Trust 2003 6“
• 3651 East 50th St. — “Long Beach Mortgage Loan Trust 2005-WL3 U.S. SEC Registrant”
• 6814 Hague Ave. — “GSAMP Trust 2005-HE3“

It seems at least two-thirds of the foreclosed houses for which Deutsche Bank is the named trustee are owned by RMBSes created (and originally serviced) by Cleveland’s subprime champ Argent Mortgage and its older sibling Ameriquest. Both companies have now gone belly up, with their servicing contracts absorbed by a Citicorp subsidiary, Citi Residential. But dozens of RMBSes bearing the Argent and Ameriquest names go marching on, under the Deutsche Bank flag.

Who are the others?

“GSAMP” is short for Goldman Sachs Alternative Mortgage Product. Goldman Sachs has created and peddled more than 50 RMBSes, one of which (not 2005-HE3, but also trusteed by Deutsche Bank) was dissected in this extremely enlightening Fortune article in October.

Long Beach Mortgage is a subprime subsidiary of Washington Mutual Bank of Seattle. There are at least thirty RMBSes under the Long Beach name, (and more than twice as many under “Washington Mutual”). Deutsche Bank seems to be trustee for most, if not all, of the Long Beach RMBSes.

New Century Mortgage was the nation’s second biggest subprime mortgage lender (after Countrywide) until it declared bankruptcy last April. It created more than 30 RMBSes before its demise, most if not all using Deutsche Bank as trustee.

Morgan Stanley is… well, Morgan Stanley. Huge investment bank and financial services company, currently writing off billions of dollars in losses from investments in RMBSes and other funky asset-backed securities. Among its hundreds of RMBS deals, in 2004-2005 Morgan Stanley created five investment pools of mortgages (apparently originated by Ocwen and Countrywide) with a company called CDC Mortgage Capital listed as “independent seller”. Deutsche Bank is the trustee of four of these pools and “custodian” of the fifth.

That’s just a small sample of the scores of RMBSes that now own nearly a thousand Cuyahoga County properties (with something like two thousand more in the foreclosure pipeline for 2008) just in Deutsche Bank’s name.

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Well, we didn’t get a holiday from foreclosures during Christmas week, but it looks like most of the mortgage bankers’ lawyers decided to slack off on their final paperwork.

Only 81 sheriff’s deeds were filed with the Cuyahoga County Recorder’s Office last week (December 24 through December 28).

Here’s who filed five or more of them:

Department of HUD (15)
Bank of New York (12)
US Bank (9)
Deutsche Bank (7)
Wells Fargo (5)
Federal National Mortgage Assn (5)
Citibank (5)

(Previous week.)

Unfortunately, the “foreclosure bar” was taking no holiday break across the street in the Justice Center.

At the Christmas Eve Sheriff’s sale, 163 properties actually went up for auction and 138 were sold. (The other 24 were “not sold for want of bidders”, meaning that nobody offered the minimum two-thirds of their appraised value).

This morning, the Sheriff’s Office is capping off 2007 with 158 more properties on the auction block.

And moving right along toward another busy year, the folks upstairs at Common Pleas Court took in 269 new foreclosure filings last week.

But we don’t need a Foreclosure Holiday because, you know, Tom Moyer’s plan will get them all into mediation, once the judges and the Bar Association get all the details worked out. Which will be, as the PD assures us, “as soon as possible.”

Happy New Year, everybody.

P.S. Since Chief Justice Moyer announced his foreclosure mediation initiative on November 8, there have been 1,297 additional sheriff’s deeds (i.e. finalized foreclosures) filed with the Cuyahoga County Recorder, and 2,251 new foreclosure cases filed in Cuyahoga County Common Pleas Court.

Just in case you’re counting.