Not for sale

Richmond to seize hundreds of mortgage loans from banks to revive its communities

Guardian photo by Brittany M. Powell

From the Chevron refinery explosion to deepening pain of the housing crisis, the city of Richmond has endured a lot.

Walk through Richmond's Iron Triangle neighborhood and the signs of economic turmoil are everywhere. Homes there have been foreclosed or abandoned for years. Some windows are boarded up, others shattered. In lieu of decorations, signs bearing "DO NOT ENTER" warnings are posted on every other door. Bedding peeks out from beneath one of the abandoned homes.

Despite the neighborhood's struggle, life goes on.

Families still live here. Just around the corner from the worst of the crumbling houses children ran after an ice cream truck, whose music could be heard blocks away. The ice cream man, Ank Talwar, said that the crumbling neighborhood had seen progress.

"It's better than before," he told the Guardian. Speaking through a metal barricade in his window, he said five years ago the neighborhood was nearly uninhabitable due to crime.

It's that tenuous progress that Richmond Mayor Gayle McLaughlin points to when justifying Richmond's controversial plan to use eminent domain to seize over 600 underwater mortgages, which would allow families to make payments to the city instead of the banks.

The most important aspect of this plan, she says, is that those families get to stay in their homes.



When Richmond's plan to use eminent domain to seize mortgages was first unveiled, it triggered a national debate. It's a legal tactic typically used by governments to seize land needed for public use — parks, freeways, or other major infrastructure projects.

The seizure plan's opponents say that this is a twisted use of eminent domain and a government overreach meant to siphon money rather than benefit the public good. But however one views the city's solution, nobody can argue that the underwater mortgages haven't caused trouble for Richmond.

In a legal declaration, City Manager William Lindsay detailed the lingering pain in the wake of the housing crisis.

"According to the city's research, Richmond has one of the worst situations in the country, with approximately 51 percent of homeowners underwater on mortgage debt," he wrote. In the past three years, Richmond has been slammed by more than 2,000 foreclosures.

Like a spreading infection, the disease of debt doesn't just affect homeowners.

There are hundreds of vacant homes in Richmond, Lindsay wrote, attracting rats, criminals, and dumping from neighbors. One of the abandoned properties the Guardian visited had a sea of garbage that filled the entire yard: mattresses, broken televisions, baby seats, and other abandoned items.

Property values took a hit too, which Lindsay wrote had a "catastrophic impact" on Richmond's tax base, declining from $48 million in 2007 to $41 million in 2012, a more than 14 percent decrease. Lowered tax revenue forced Richmond to cut its city staff by about 200 workers.

Families were losing their homes, neighbors were living in wrecked neighborhoods, and the city hemorrhaged money. To put it bluntly, Richmond was desperate.

That's where Mortgage Resolution Partners came in.