Ohio on front line in U.S. housing meltdown

By Nick Carey

CLEVELAND (Reuters) - The U.S. housing meltdown has struck cities and neighborhoods throughout the country, but it has hit few places harder than Cleveland's Slavic Village.

On some streets in the neighborhood - named for the Polish and Czech immigrants who settled here - only one or two houses are occupied. The rest are boarded up and slowly rotting.

"This is what you get when lenders run rampant," said Mark Seifert, executive director of a local nonprofit, the East Side Organizing Project, referring to what critics call "predatory" lending practices prevalent during the U.S. property boom.

Walking the area recently, Seifert pointed out the street corner where on Sept 1, 2007, Asteve'e "Cookie" Thomas, 12, wandered into a gunfight between drug dealers who had occupied empty houses in area. She was on the way home after buying candy. She bled to death on a neighbor's porch.

Local officials said stricter state and federal regulation of mortgage lenders could have prevented mass foreclosures in Cleveland, in the state of Ohio and across the United States.

Cleveland's city council passed an anti-predatory lending ordinance in 2002. But it was preempted by a state law that blocked municipalities from enacting such legislation.

One result: Until January 2007, no qualifications were necessary to become a property appraiser in Cleveland, a factor local officials said helped lead to thousands of questionable mortgages. Thousand of loans were also offered to people who could not afford them, they said.

"What we needed here was meaningful regulation," said Jim Rokakis, county treasurer for Cuyahoga County, which includes Cleveland. "What we got was the Wild West of lending."