More than 7,000 abandoned buildings in the city can be traced in part to a massive rate of foreclosure brought on by personal bankruptcies, job losses and illicit real estate schemes. The schemes were enabled when mortgage lenders throughout the nation funneled cash to shady investors under the easy loan standards that were common earlier in the decade, real estate experts say.
In September, one of every 109 houses in the Indianapolis metropolitan area was in the process of foreclosure, ranking the area 24th in the nation in foreclosures. Two years earlier, the area ranked first.
Alarmed by the rapid pace of foreclosures, the U.S. attorney's office in Indianapolis convened a law enforcement task force aimed at stamping out real estate fraud in the metro area. Since 2002, prosecutors have convicted 59 individuals for defrauding lenders of more than $40 million.
Donna Eide, a retired assistant U.S. attorney who prosecuted most of the cases, has said more than 2,000 real estate fraud cases came to her attention. She said the 59 were selected for prosecution because they were among the largest frauds or easiest to investigate.
The housing agency, which manages a federal rent subsidy program for 27,000 city residents, is pursuing the plan with HUD because the heavy foreclosure rate has taken hundreds of houses off the market that could have been rented out. That's created a shortage of affordable rentals for poor families in the three zip codes, Myers said.
HUD takes possession of foreclosed property that had been purchased by private buyers using loans guaranteed by the U.S. government. In zip codes 48201, 48203 and 48218, home to about 100,000 people, HUD takes over about 80 houses a month.
The zip codes 48201, 48203 and 48218 referenced in this last sentence from the story are all located in Detroit. Hat tip to the observant Advance Indiana reader for passing this glaring error on to me.