A federal judge says a neutral third party — known as a special master — should weigh in on whether Cleveland has the right to stop Fannie Mae from auctioning 14 deteriorating apartment buildings near Shaker Square that are in foreclosure and remain an ongoing source of frustration in the neighborhood.
Magistrate Judge Jonathan D. Greenberg filed the order Feb. 26. The government-sponsored lender foreclosed on the $22.6 million mortgage for the buildings, known as the Steiner properties, in 2024. (A 15th building is in neighboring Shaker Heights.)
Fannie Mae wants to auction the buildings, most of which are vacant, later this month. But Cleveland wants to acquire the buildings from Fannie Mae for an amount that reflects their dilapidated condition. The city then plans to oversee nonprofit organizations finding local companies to redevelop the buildings.
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“We have been clear through and through,” reads a statement Mayor Justin Bibb’s administration emailed Signal Cleveland. “These properties should be controlled locally by someone who actually knows the challenges that these buildings present and is committed to restoring them to a state the entire community can be proud of.”
City officials fear that if Fannie Mae auctions the buildings, the outcome could be disastrous. The email says the photos of the properties on the auction website do not accurately depict the state of the buildings and may mislead potential buyers.
“This increases the possibility that it could be purchased from some out-of-state investor who doesn’t know what they’re getting themselves into, which creates real risk for the future of the property,” the email states.
Kevin M. Hinkel, a local lawyer, was appointed special master. He will be paid $525 per hour, according to the order. Fannie Mae and real estate investment companies, which were led by the late Mendel Steiner of Brooklyn, N.Y. when the buildings were purchased, will pay for the special master. If Hinkel recommends granting Cleveland authority to intervene with what happens to the Steiner properties, the cost of the special master will be split three ways with the city.