The Man Who Saw the Mortgage Crisis Coming
The Ohio official who sounded an early and frequent alarm about securitized home loans now has a plan for all those abandoned properties those loans helped create.
Jim Rokakis stands in front of a house scheduled to be demolished later in the day. We are the Cleveland suburb of Cleveland Heights. Rokakis, the Cuyahoga County treasurer from 1997 through 2011, is being interviewed by a reporter from Canada’s CBC. “So, you are the guy who saw all this coming?” the reporter asks. He shrugs.
Rokakis has been a main actor in the sub-prime mortgage story since 2000, when he went to the Federal Reserve with his concern about securitized loans. In March 2001, he sponsored a conference on predatory lending in Ohio. No one paid him any mind. “The supposed ‘smartest people in the world’ did not see the folly of giving these loans out,” he says. “This was the Wild, Wild West of lending. By the time the bubble burst in 2006, it was too late.”
In 2009, Rokakis helped create the Cuyahoga Land Bank, modeled on a similar program in Genesee County, Michigan. Through partnerships with Fannie Mae, the U.S. Department of Housing and Urban Development and others, the Land Bank buys blighted properties. Its success — both in creating jobs and holding more than 1,200 properties — inspired other counties. Rokakis is setting up land banks around Ohio as director of the Thriving Communities Institute, part of the Western Reserve Land Conservancy a group previously known for preserving parks and other beautiful spaces.
The media is still catching up: 60 Minutes was here a few days ago, and Rock Center With Brian Williams arrived later last week. Rokakis has the numbers ready: “The average time a house stays on the market in Cleveland is 954 days.” “There are 10,000 vacant properties in the city.” “The auditor has lowered assessments by $1.3 billion.”
The reporter wants to know if he is angry. Sure, Rokakis says, but he is “too old to say ‘I told you so.’” He has moved on.
When he is not talking to the media, Rokakis spends his time raising money to demolish houses he knew a decade ago were doomed. “People walk into the Land Bank with the keys and the deed and say, ‘I give up. You take it.” But taking down distressed properties is costly: it will run the Land Bank about $10,000 to demolish the house Rokakis stands in front of to show the Canadians, and about $750 million for the lot that should go.
“I have learned hard lessons in the last 10 years,” Rokakis says with disarming good nature. “Money rules; power goes to the powerful.” He is not bitter, but he is also not selling lots in a prosperous Cleveland anytime soon. “Those of us left to pick up the pieces have to take steps to prepare the land for the next generation.”
The Land Bank hopes to green the space as it goes, installing new topsoil and perhaps creating wetlands to help a problematic sewage situation. It will take time. Rokakis, who became a city councilman in 1978, at age 22, arrived early for this effort and intends to stay late. “I am doing this in hopes this land will have value again in my children’s time. Or maybe my grandchildren’s time.”