CLEVELAND — A lender is delaying the auction of 14 distressed apartment buildings around Shaker Square, as the city of Cleveland fights to stop an online sale to the highest bidder.
It’s unclear what prompted Fannie Mae, the government-sponsored mortgage giant foreclosing on the properties, to push back the auction date. The sale, previously set to run from Jan. 19-21, is now scheduled for March 23-25, according to the auction website.
On Monday, a spokesman for Mayor Justin Bibb’s administration cheered the move.
“This allows time for further discussions with Fannie Mae on a path forward that ensures a beneficial neighborhood outcome,” Tyler Sinclair, the spokesman, wrote in an emailed statement. “The residents of the Shaker Square neighborhood deserve to live in a vibrant and stable neighborhood.
“The fate of this portfolio will deeply influence the future of the neighborhood,” he added, “and we are determined to protect the interests of our residents by ensuring that these buildings are brought back into full code compliance.”
RELATED: Cleveland tries to stop auction of 14 troubled apartment buildings near Shaker Square
Members of the auction and marketing team did not respond to inquiries about the two-month delay. Fannie Mae is trying to sell the rights to a foreclosure judgment, giving a buyer the right to step into the lender’s shoes and acquire the heavily vacant buildings.
The Bibb administration wants Fannie Mae to consider turning over the properties to local nonprofits – or a local developer that neighbors trust. A New York investor bought the buildings, spanning 308 units, in 2018 and took out a $22 million loan on them in 2020.
On his watch, the properties deteriorated. The landlord – 33-year-old Mendel Steiner – died by suicide a year ago, leaving behind a trail of troubled properties across the country.
A court-appointed receiver took control of the Shaker Square-area apartments, and Fannie Mae is trying to recoup what it can through a sale.
But city officials are fighting for a voice in the process. In December, the city filed a civil nuisance lawsuit on the properties, asking a Cuyahoga County Common Pleas Court judge to force a clean-up of the properties and to block any sale without a court-approved plan for fixing more than 300 code violations.
Now the city is trying to insert itself into the foreclosure litigation in federal court.
In a motion to intervene, the city’s lawyers say the auction website paints an overly rosy picture of conditions at the properties. They also point out that Fannie Mae’s mission includes boosting access to high-quality, affordable rental housing.
The federal court judge has not weighed in yet on the city’s request to intervene.
A status conference on the foreclosure litigation is scheduled for Jan. 30.
Michelle Jarboe is the business growth and development reporter at News 5 Cleveland. Follow her on X @MJarboe or email her at Michelle.Jarboe@wews.com.
