Callahan’s Cleveland Diary

Friday I wrote about Wells Fargo: “As far as I can tell, no other lender on the county’s 2005 “top ten” list comes close to this level of foreclosure activity.”

Technically, that’s probably true. But the truth, as always, is more complicated than it looks at first. And more bizarre.

Recall that Number Two on the above-mentioned list of the county’s top 2005 mortgage lenders was Argent Mortgage Company, with 1,746 home purchase loans originated, compared to Wells Fargo’s 1,292. But Argent’s name shows up only nine times on the Common Pleas index of civil actions (i.e. foreclosures) filed in 2007, and only six times in a search for property owners on the Auditor’s database.

So… lots of Argent mortgages, but not many foreclosures? Lots of happy endings, for a change?

Fat chance. You see, Argent has a good friend… Deutsche Bank. Deutsche Bank is also one of the biggest home mortgage operations in Cuyahoga County, but it does almost no retail lending. Instead, Deutsche Bank buys mortgages from other lenders. Lots of mortgages.

The legal term for selling a mortgage is “assignment”, and such a sale shows up under the code “RELA” — “release assignment” — in the County Recorder’s database. If you search for “deutsche” and “RELA” from April 1 through June 30 2007, the database finds 523 hits. For January 1 through March 31, 740 hits. For all of 2006, 1,861 hits. For 2005, 973 hits. Add it all up, and Deutsche Bank’s name appeared on a Cuyahoga County mortgage assignment filing almost 4,100 times in the last thirty-six months.

These hits can mean different things. Deutsche might be the mortgage assignor (selling) or the assignee (buying). Deutsche is often a co-assignor (with another part owner) or a co-assignee. Occasionally the Deutsche Bank name appears in both categories.

But in the majority of cases, Deutsche Bank is buying a mortgage from another lender — and its biggest single local supplier is Argent.

So while Argent ends up owning only a handful of foreclosed Cleveland homes, Deutsche Bank — its constant companion — is now the owner of 755 properties in the county, nearly 500 of which are in the city of Cleveland. Argent doesn’t have to go to court much — but Deutsche Bank is the named plaintiff in 848 civil actions (i.e. foreclosures), and has filed more than 600 sheriff’s deeds, since the beginning of the year.

The closer you look, the weirder it gets.

But if it all seems too confusing to think about, here’s the bottom line: Between them, Wells Fargo and Deutsche Bank now own over eight hundred of Cleveland’s one-family and two-family houses — about half of 1% of the city’s total — and they’re foreclosing on hundreds more each month. Either these houses stand vacant or they get sold “as is”. Who’s buying them? Who’s financing the sales? How long will the new buyers last? How much is this sub-market driving the overall depression in neighborhood home values? As far as I can tell, no one has a clue. It’s all happening too fast.

Meanwhile Wells Fargo continues to write more than a hundred new subprime loans in our county every month, and Deutsche Bank continues to buy them up, from Argent and a dozen other lenders.

Is there any way for the city, the county or the neighbors to stop this runaway train, or even slow it down? Is there an “OFF” switch that we haven’t found yet?

The Free Times promises an examination of legal possibilities in its next article on the subject, and I understand the PD will have more to say soon as well. I hope they’ve got something new to suggest. It’s hard to believe there’s a more urgent (immediate, short-term, emergency, can’t-wait-for-another-task-force-report) question on Cleveland’s public agenda right now.

Oh, I’m sorry, I forgot — there’s that Medical Mart thing.

This entry was posted on Sunday, July 8th, 2007 at 9:59 am and is filed under Foreclosure crisis, Poor Cleveland, Shrinking city. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.