By Ken Alltucker
The Cincinnati Enquirer

Cincinnati City Council on Wednesday gave preliminary approval to a new "attack team" consisting of a special prosecutor and other city employees to combat blight and derelict properties in five city neighborhoods.

A proposal passed unanimously by City Council's neighborhood and law committees calls for increased scrutiny of problem properties in West and East Price Hill, Madisonville, Westwood and College Hill. The purpose: to focus city resources on nuisance issues in neighborhoods hit hardest by home foreclosures and blight.

"Like a lot of cities, we've experienced population loss and loss of homeownership," said Councilman John Cranley, who introduced the proposal. "We need to do everything in our power to stop that trend."

The full council is expected to approve the proposal at its meeting today.

An Enquirer series published this week showed those five communities had the most foreclosures among all city neighborhoods over the past four years. The FBI is investigating the possibility of mortgage fraud suspected of triggering loan defaults in those neighborhoods and other Greater Cincinnati communities.

READ THE SERIES

Links to the Enquirer Special Report that prompted Council action

The newly formed team would include a special "neighborhood" prosecutor, a police officer, a building inspector and a litter patrol officer. The team would deliver monthly reports on citations or other actions levied against specific properties.

Furthermore, the proposal calls for the city's administration to assist the FBI in its fraud investigation and develop a strategy to curb the city's high foreclosure rate.

It's not the first time City Council hatched a new idea to tackle neighborhood blight.

One year ago, a code enforcement team of city lawyers and inspectors was formed to prosecute the worst cases in housing court. Yet neighborhood activists complain too few cases have been prosecuted, and some council members say it's difficult to judge the team's effectiveness because it doesn't consistently report results.

State lawmakers, too, want to see more action to stem blight and housing problems in many communities. A special Ohio General Assembly committee studying predatory lending released a report earlier this year calling for mandatory licensing of appraisers.

Property appraisers often play an important role in the most prevalent type of mortgage fraud the FBI suspects in city neighborhoods - property flipping. This practice involves artificially inflating the value of properties, taking out a mortgage on the property, and pocketing the difference.

The FBI, which has identified at least 500 suspected flips in Greater Cincinnati, executed search warrants in July at two title companies and two mortgage lenders.

In addition to licensing appraisers, Ohio state Rep. Steve Driehaus plans to pursue other legislative fixes. He wants a state law requiring property appraisals when landlords and renters sign rent-to-own contracts. These deals are prevalent in many lower-income neighborhoods, particularly on the west side. They typically require a buyer to pay an up-front fee and make above-market rent payments for two years before having a chance to purchase a property.

Landlords say these "lease-option" deals offer renters with bad credit a chance to own a home. Consumer and neighborhood activists say onerous terms make it difficult for a renter/buyer to complete a purchase.

"So many of these things fail because (renters) don't know what they're getting into," said Driehaus, D-Cincinnati.

A property appraisal would at least ensure that the tenants aren't signing a contract with an inflated purchase price, he said.

Yet many large investors say the city and state need to enforce existing laws better before adding new ones.

Texas-based HomeVestors is perhaps the highest-profile residential property investor in Greater Cincinnati. The company's yellow "We Buy Ugly Houses" billboards are posted throughout the county. Television and radio ads tout offers to unload residential properties in a hurry.

Ken D'Angelo, chief executive of HomeVestors, urges the city of Cincinnati to better prosecute an ordinance outlawing signs posted on trees, homes or telephone poles.

He believes investors who post "bandit" signs are more likely to be involved in dubious deals. This gives the legitimate investors a bad reputation, he said.

"The tougher a city comes on the bandit signs, the faster problems are going to stop," D'Angelo said.

E-mail kalltucker@enquirer.com