Not for sale

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

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Guardian photo by Brittany M. Powell

news@sfbg.com

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.

 

DESPERATE TIMES

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.

Comments

Don't pay attention to the trolls here. If you're reading the SFBG for the first time, then you probably aren't familiar with the fact that a few trolls have basically been allowed to have the run of the place, creating sock puppets and the like. They don't represent the readership, and they don't represent the views of ordinary people, who are overwhelmingly in favor of this.

In the end it doesn't matter. Richmond is going forward with it, the people are overwhelmingly supportive, and in the end the mayor and her allies will be proven right. As has been proven on a national scale in places like Argentina, the more you do the exact opposite of what's prescribed by Wall Street, the better your economic prospects are. The more the pigs squeal, the more you can be sure that Richmond is going down the right path. A few years from now I suspect statistics will bear out that this was the correct route for economic recovery.

Posted by Greg on Sep. 08, 2013 @ 8:55 pm

your argument is in more trouble than you know. Amusingly, Eric made the same error the other day, invoking Venezuela as if it was a model nation rather than a third world basketcase.

Moreover you do not speak for most people, let alone the "overwhelming majority of ordinary people" who you claim support this. Last time I checked, we haven't had an election on this but, since most Americans are homeowners and most of them are current on their mortgage or have paid it off, a more reasonable assumption is that most Americans do not think that defaulters should be rewarded at the expense of those who have been prudent and showed restraint.

And finally, Richmond is not "going through with it". It is being challenged in the court as unconstitutional, which it seems fairly clear to me that it is. And Fannie and Freddie have said they will pull out of Richmond if this goes through, which would cause massive harm to Richmond homeowners wanting to borrow or refinance.

In all, you could not have been more wrong.

Posted by Guest on Sep. 09, 2013 @ 8:48 am

IMF orthodoxy, saw their economies improve and largely avoided the effects of the 2008 bankster caused financial crisis.

It is you that is ignorant of current events and recent history.

Carry on with your petty attacks and your uninformed commentary.

Posted by Guest on Sep. 09, 2013 @ 9:20 am

starting at a far lower level. Iceland had a massive banking crisis a few years ago, while Argentina has been a debt basketcase since forever.

Neither is a relevant model here.

Posted by Guest on Sep. 09, 2013 @ 9:57 am

Joe,

At the top of this article it says that you wrote it but when I click on the “PRINT” button it credits authorship to Kate Conger.

Something doesn’t look right.

Posted by Don Gosney on Sep. 06, 2013 @ 11:11 am

... I'm the author, but Kate Conger is a web editor at SF Newspaper company, and "authors" all posts for articles that appear in print. The same is true for most articles the SFBG and Examiner have in print. Articles that appear exclusively online are usually posted by staff of the respective papers.

Posted by Joe Fitz on Sep. 08, 2013 @ 11:29 pm

If he bought the property for $290,000. how does he now owe $450,000? Did he use his house as an ATM? That is a problem I have with all these articles. Should the bank have done a better job and not lent this money? Yes, but that DOES NOT mean the homeowners are innocent. When you borrow against your home, you are taking a chance and in a lot of cases people lost out on that risk but they ARE partially to blame.

Posted by Guest on Sep. 09, 2013 @ 10:40 am

I'd have some sympathy for someone who bought recently. But these people who bought long ago, and should be sitting on a fat profit, are instead suffering only because they kept taking cash-out refi's and HELOC's.

They had their good times and now they should pay the piper, not get bailed out.

Posted by Guest on Sep. 09, 2013 @ 11:15 am

I'm relaly into it, thanks for this great stuff!

Posted by Trixie on Apr. 10, 2014 @ 2:17 pm

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