By Erik Jones, Lorain Daily
LORAIN, OH — A newly proposed ordinance could soon give the City of Lorain the authority to forgive outstanding home rehabilitation loans—particularly those tied to deceased borrowers or homeowners experiencing financial hardship.
During this week’s city council committee meeting, the Building, Housing, and Planning Department presented a proposal that would allow the Safety Service Director to evaluate and forgive unpaid loan balances on a case-by-case basis. These loans were issued through Lorain’s Home Investment Partnership Program (HOME), which helps residents afford critical home repairs and improvements.
“This ordinance doesn’t compel us to forgive any loan automatically,” explained Director Leon Mason. “It simply gives us the flexibility to act when we know repayment is unlikely or unfair—especially in hardship cases or when the borrower has passed away.”
The ordinance organizes borrowers into three groups:
Exhibit A includes 22 borrowers who are now deceased. In many cases, their properties changed ownership through inheritance or quitclaim deeds without settling the debt. Only two properties were transferred with title insurance. The Law Department is assisting in recovering funds from those cases through the title companies.
Exhibit B represents borrowers who repaid their primary loan obligations but still owe deferred interest balances. Under the new policy, the city would be allowed to forgive these interest-only debts in situations of hardship.
Exhibit C includes active borrowers who remain current on their payments. These individuals may become eligible for partial loan forgiveness in the future, depending on financial need and other factors.
Mason emphasized that any funds recovered will be reinvested directly into housing assistance programs for local residents. These include home repair support, down payment assistance, and other forms of aid.
“These dollars go back into helping future residents,” he said. “We’re just trying to be practical.”
The U.S. Department of Housing and Urban Development (HUD) has approved the city’s plan. The Law Department is now reviewing each account to ensure compliance before any forgiveness takes place.
Many council members expressed support for the ordinance, noting that the cost of legal action might outweigh the loan amounts being pursued.
“We’d spend more money in court than we’d recover,” one councilwoman pointed out. “It just doesn’t make sense.”
To ensure fairness, city officials said they will create a formal process to determine which loans qualify for forgiveness. The plan will take into account the borrower’s financial condition, remaining home equity, loan amount, and hardship claims.
“We want to make sure decisions aren’t based on emotion or opinion,” said Safety Service Director R. Gary Kariotakis. “This will be a structured, transparent process.”
Some council members requested updates on progress as loans are reviewed and resolved.
“We don’t need a line-by-line report,” said Councilman Josh Thornsberry, “but just let us know when a batch has been closed out—and how much has been recovered or forgiven.”
The ordinance passed through committee with unanimous support and now moves to the full council for approval. If adopted, it could offer long-overdue relief for families burdened by inherited debt and allow the city to finally close the books on loans that have gone unpaid for years.
Do you support forgiving old housing loans in cases of hardship or death? Let us know your thoughts in the comments.