Finding the Mortgage Flippers at Fault
The recent mortgage meltdown had many players in many places. The investment banks on Wall Street needed large amounts of sub-prime loans to package into investment vehicles. To satisfy this need, they found plenty of help in most of America’s major cities. Some local banks, brokers and appraisers were more than happy to generate an almost unlimited supply new mortgages. The generals on Wall Street had boots on the ground on Main Street.
One of the bloodiest battles was fought in Cleveland, in the Slavic Village neighborhood. Today the streets of Slavic Village show the scars of the battle — destroyed homes, destroyed lives and vacant lots. From 2003 to 2007 houses were bought and sold at an alarming rate in this working class neighborhood. Houses were bought cheap and almost immediately sold at multiples of their true worth — this is commonly called flipping. Most new owners ended up with with sub-prime mortgages that put them on the fast track to foreclosure. A local real estate gang had emerged, and was partnering with mortgage bankers in California. They had the home sales process covered — seller, broker, appraiser, banker, buyer — all lined up to feed Wall Street a never ending supply of sub-prime mortgages.
Anthony Brancatelli was the local Cleveland city councilman in Slavic Village. He could not believe what was going on in his neighborhood. He started tracking real estate activity in his neighborhood via a spreadsheet — the same names and the same companies kept popping up. With the help of public records, soon Brancatelli and colleagues had the details on hundreds of real estate transactions which were compiled in a report by The Slavic Village Vacant and Abandoned Property Task Force.