Sup. David Campos is urging the board of supervisors to explore using eminent domain to save San Francisco resident’s underwater mortgages, a plan pioneered by the city of Richmond and its mayor Gayle McLaughlin.
The plan uses the power of eminent domain to seize underwater mortgage loans from banks and investors, saving homeowners from being booted out onto the street when they're behind on their ballooning payments. The plan is controversial and under attack by Wells Fargo and other Wall Street interests, which we explored in last week’s cover story, “Not For Sale." They say that the plan puts money into the pockets of Richmond and Mortgage Resolution Partners, the group that engineered the plan.
Campos plans to introduce his resolution at tomorrow’s board meeting, but importantly it only asks The City to explore whether or not the plan could work in San Francisco. The resolution would not enact a plan at this point in time.
At a press conference this morning, housing activists and Campos trumpeted the plan as a way to save the homes of San Franciscans. Often those targeted with predatory loans have been people of color, they noted.
“Our strategies have been, lets be honest, ‘Let’s see what the federal government or the banking industry will do to help these folks,’” Campos said at the steps of City Hall. “We’ve waited long enough.”
Campos rattled off surprising numbers, saying 58 homeowners in his district alone had underwater mortgages at risk of foreclosure, and that 16 percent of homeowners in neighborhoods like Visitacion Valley were underwater.
Bernal Heights homeowner and activist Ross Rhodes was there supporting the action.
“Dave (Campos) helped me save my home when I was getting nowhere with the banks but frustration,” Rhodes said.
He was making his payments which were up to $3,500 a month, but while on disability and going through a divorce, it was tough. Campos got Rep. Nancy Pelosi’s office involved, and they talked to the banks on his behalf. In the end, he finally got a principal reduction and what he calls a “real good” modification. “I’m not asking for a handout, I’m asking for help,” he said.
Now his payments are $1,600 a month. “It just shows the banks can do what they want to do, they control it all, they can work with if you if they want to.”
SF supe David Campos announces support of Richmond ED plan https://t.co/iZdIQcT4lz
— Joe A. W. Fitzgerald (@FitzTheReporter) September 9, 2013
Campos' resolution also proclaims San Francisco's support for Richmond's eminent domain effort.
The bank asked him why he went to Pelosi and Campos for help, instead of going through them. He was incredulous, as he’d been fighting for a principal reduction on his own for two years. “I’ve been trying to work with you for months,” he told them. “It took that political muscle to get you to move. I went through five different loan agents.”
The victory made him a convert, going to rallies and speaking to help others suffering with their loans.
The hounds are coming for Richmond though, and the political muscle needed to enact the controversial plan is at risk.
Wells Fargo already filed suit against Richmond over its use of eminent domain, saying the plan puts money in the pockets of the city and would put a chill on investments. A Richmond bond with an A- rating was already rejected by Wall Street, finding no financiers, putting Richmond in a possible bind when it comes to public works projects.
In response, Richmond councilmember Nathaniel Bates has a resolution for tomorrow’s Richmond city council meeting to stall the plan. If it's voted in, Richmond will withdraw all the offers to buy underwater loans and withdraw the plan to use eminent domain to seize them.
If Bates’ resolution is approved, the whole plan would tank.
A petition from the Home Defenders League to sand with Richmond’s eminent domain effort has over 7,000 signatures.
To contact Wells Fargo’s CEO yourself, follow the link here.
The Guardian wrote to the Mayor Ed Lee's office to see if he is in support of Campos’ plan, but didn’t hear back before press time, which was admittedly quick.
Update 2:20 pm: We asked supervisor Campos' aide Hilary Ronen if San Francisco would be at risk for a lawsuit from Wells Fargo, similar to Richmond, if the city enacted an eminent domain plan. In response, she said "All that we’re doing is asking the city attorney’s office as well as the budget and legislative analyst, 'if we did something similar, what does it look like? What are the financial risks for the city?' This way we can make an educated assessment. After having that information he’ll have to balance what the risks are. We’re not there yet."