Mortgage company tries to block city’s effort to remove West 117th St. blight
The city bid $55,000 at sheriff's auction to acquire this property.
The city’s effort to rid itself of one of the blighted apartment buildings on West 117th St. has run into a snag.
Wilshire Credit Corporation, acting as the servicing agent for Wells Fargo Bank, filed an appeal in the Cuyahoga Court of Common Pleas on December 11, 2009 seeking to block the city from demolishing the 8-unit building located at 1482-1484 West 117th St. (Read the appeal here – .PDF)
A loan gone bad, a building in limbo
According to the loan history detailed in Wilshire’s court filing, CIT Group issued the former owner of the property, Mariana Sanic, an adjustable rate 30-year mortgage in May of 2005 for $208,500. The first monthly payment was around $1,500 at an interest rate of 8.05%.
Sanic defaulted on the loan three years later and Wilshire foreclosed on the property seeking $203,939.92. The interest rate on the loan had risen to 11.05%.
Wilshire won a default judgment in September of 2008, but before the property could be sold at sheriff’s auction, Sanic – who had lived on West Clifton – declared bankruptcy in Florida. The bankruptcy essentially put the building in limbo.
Excrement in the tub
Responding to a complaint, the Division of Building and Housing conducted an inspection of the property in June of 2009 and identified an array of damage to the interior and exterior of building including damaged floors and plaster walls, as well as broken windows, doors, and toilets. The housing inspector noted excrement in one of the bathroom tubs.
A copy of the correction notice was mailed to Sanic at her Port Orange, Florida address. She was given 30 days to make repairs.
Missed demolition notice – things get confusing
On October 15,, 2009, the city sent a letter to Sanic and Wells Fargo Bank notifying them the property had been declared a nuisance and would be demolished. The letter indicated the deadline to appeal the decision was 10 days after receipt of notification, or, as it turned out according to the certified mail receipt, November 2nd.
Though the letter was received by Wells Fargo on November 2nd, it didn’t reach the correct contact person within the organization until much later, when it was too late to submit an appeal.
Almost simultaneously, the bankruptcy, which had kept the property in a virtual no man’s land for a year, was ended and the court ordered the property to sheriff’s auction for sale.
Wilshire, acting on behalf of Wells Fargo, mailed an appeal to the city, but it was rejected because it arrived after the stated deadline.
Wilshire’s position
Wilshire wants the county court to restrain the city from enforcing the demolition order. They also want to be able to appeal the demolition order before the city’s Board of Building Standards
Wilshire claims the city violated the 14th Amendment of the U.S. Constitution that provides for due process. Under Ohio law, Wilshire believes, the city was supposed to have included the corrections notice in the October letter that warned them of the demolition order. According to their interpretation of Lakewood’s laws on the matter, the city should have recognized them as the owner of the property and sent them a copy of the corrections notice in June, when the inspection was originally performed.
Wilshire also says Ohio law requires the city to provide a 30-day window to appeal, not a 10-day period. Wilshire alleges the city sent the notification to the wrong corporate address in Maryland, when it should have gone to an address in Oregon – the same address listed on the foreclosure papers.
Finally, Wilshire refers to an Ohio appellate decision that gives property owners a reasonable time to repair their property if it isn’t an immediate threat to public safety.
Follow the money
In October of 2008, Wilshire appraised the as-is value of the property at $185,000. Seven months later, the same type of appraisal was performed and it registered a steep drop to $110,000. The land – without the building on it – was deemed to be worth just $12,000.
Wilshire claims it has a $100,000 insurance claim pending and a firm rehabilitation plan that would allow it to completely repair the property and recoup its investment. Wilshire says the property is worth far more to them in a rehabilitated state, and they don’t want it razed.
City buys property at auction
11 days after Wilshire filed their court complaint, the property was auctioned off by the Cuyahoga County Sheriff’s office to the City of Lakewood for $55,000. Presumably, Wilshire had a representative present at the auction and could have easily purchased the property themselves if they so desired.
What happens next is not clear. Wilshire could withdraw their appeal, and let the city have the property. Alternatively, Wilshire could continue with the appeal and try to reach an agreement with the city that will allow them to rehab and sell the property.
Is this Cleveland or Lakewood?
Incidentally, the other vacant apartment building on the Lakewood side of West 117th – which the city is also trying to demolish – was struck sometime around December 28th by vandals who smashed the glass in the front doors.
The city resecured the building with reasonable promptness, but one has to wonder what people think when they drive along West 117th, and see all of that plywood on the Lakewood side of the street.
Woodward house razed, owners say appeals process wasn’t fair
It was mentioned in this space previously that the house at 1570 Woodward was designated as a nuisance property due to its poor physical condition and would be razed.
Well, it has been demolished. In a bit of a head-scratcher, the owners have filed separate appeals in county court seeking to invalidate the city’s nuisance designation. One of partners claims the appeal hearing was non-binding because the testimony wasn’t sworn. The other partner, whose name is not on the deed, alleges the process wasn’t fair because the city wouldn’t formally recognize him as a property owner.
When they spoke before the city’s board to appeal the nuisance designation and demolition order, they didn’t offer much of defense. They said they were going to tear down the house, and were fighting with their insurance company over a settlement payment.
Read Victoria Greenleaf’s appeal (.PDF). Read Peter Machlup’s appeal (.PDF).
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