Campos urges SF to explore using Richmond's eminent domain plan

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San Francisco eminent domain?
Photo by Joe Fitzgerald Rodriguez
Housing activists and Supervisor David Campos outside of City Hall Monday, September 9, announcing a resolution to explore using eminent domain to save underwater mortgages in SF.

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.”

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."

Comments

Nobody believes this rubbish.

You remind me of a guy back in middle school... the teacher had said something derogatory about the mafia (this was back in a large east coast city), and a flunkie from the back row named Joey Leone pipes up, "Yo! But the mafia does a lot of good! They protect the neighborhood, pay for old ladies' funeral costs, they even sponsor street fairs." Everybody's sitting there thinking that 20 years from now this kid's going to be in the slammer, but nobody dared say a word. Even the teacher demurred.

Posted by Guest on Sep. 10, 2013 @ 11:02 pm

modern day financiers and investors.

Posted by Guest on Sep. 11, 2013 @ 11:57 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into nonsensical, petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 11, 2013 @ 12:15 pm

eulogize about socialist nations in the safe knowledge that you are at zero risk of ever having to live in one.

Posted by Guest on Sep. 11, 2013 @ 12:38 pm

The Wall Street accolytes want us to believe that the only two choices we have are this dehumanizing dog-eat-dog capitalism, and their twisted conception of "socialism" that conjures up images of Stalin and Mao.

The reality is that there is a broad range of in between, like the Scandinavian countries, or the societies that they're trying to build in Latin America in the wake of the havoc wrought by decades of capitalist mismanagement. As a moderate, that's my ideal, and yes I would like to live in a society like that. It's just not feasible for me at this time for a whole host of personal reasons, but I may yet move. Better yet, hopefully we'll move to that kind of a system here.

Posted by Greg on Sep. 11, 2013 @ 9:08 pm

district, as if that is a big number. It is tiny. Call it 60 so, with 11 districts in all, that means about 660 mortgages in SF are underwater. There are probably 300,000 homes in SF so we're talking about a fraction of 1%. Trivial.

Posted by Guest on Sep. 09, 2013 @ 6:17 pm

unlike in Richmond or Fremont. However it fits Campos' political profile - he focuses on the most marginal of issues (free sex changes for transsexuals, free MUNI passes for poor youth) and then hypes them endlessly as a sign of how much he "cares." Anything to keep his name in the media and as long as other people are paying for it - he's there.

Posted by Lucretia Snapples on Sep. 09, 2013 @ 6:42 pm

so the number of SF homes affected is probably significantly less than the 660 that was mooted earlier.

If the only reason why people pay rent is the fear of eviction if they do not, then the only reason people pay their mortgage is the fear of foreclosure. Take that away and you have anarchy.

Posted by Guest on Sep. 09, 2013 @ 6:58 pm

then it shouldn't be a bug deal... right?

So why are all the corporatist trolls squealing like stuck pigs?

Maybe it's the threat of a "good example"... can't have that, can we now...

Posted by Greg on Sep. 09, 2013 @ 8:29 pm

who he wants to bail out because, apparently, they are not white.

Rather I am concerned with the threat this poses to the rule of law and the sanctity of contracts. How would you feel if the city used eminent domain to renege on their pension obligations to the city's workers?

Easily the most important aspect of the Constitution is how it restricts the ability of the government to break contracts, restrict freedoms and pass laws that disadvantage one group over another. This scheme would forge a precedent that, if followed widely, would be disastrous to many key businesses that rely on trust to extend credit.

I can see why you like it because it is a quasi-socialist extension of government power/ That's exactly why it horrifies most Americans.

Posted by Guest on Sep. 10, 2013 @ 8:07 am

If Richmond does this, then San Francisco, what next?

Banks won't be safe from government oversight anywhere? How else are they going to be able to take advantage of people with impunity if they know that government can step in with this sort of a consumer protection role?

Posted by Greg on Sep. 10, 2013 @ 9:47 pm

the supposedly capitalist US, then they will do that. Globalization restricts the ability of any one government to act in a bizarre way, because that just drives business elsewhere.

Posted by Guest on Sep. 11, 2013 @ 6:49 am

...when governments are courageous enough to do the exact opposite of what Wall Street prescribes (see Argentina, Venezuela), they get phenomenal growth and increases in standard of living.

Posted by Greg on Sep. 11, 2013 @ 7:53 am

you could not pay him enough to actually live there.

Posted by Guest on Sep. 11, 2013 @ 8:39 am

that matter, any investor or person or entity doing business in SF? It says that if something goes wrong, and a SF resident owes you money, we may force you to sell us your debt for pennies on the dollar via eminent domain.

So for me to now do business in SF, knowing that you might do that, I have to either take on only the most pristine of borrowers, crowded out the middle-classes and the non-professional non-whites, and/or charge a much higher rate to cover those potential losses.

Throw in that Fannie and Freddie may simply refuse to deal in these loans and you have a very serious problem.

It will not come to that because the courts will reject this as blatantly unconstitutional. But that people like you and Campos actually think it is viable is deeply disturbing, even if you are both a fringe extremist minority.

Posted by Guest on Sep. 09, 2013 @ 6:15 pm

These lenders knew they were giving people a raw deal. The threat of a city government willing to take action on behalf of people will force them to deal more fairly. They won't go anywhere. If one leaves, another will take their place. There's too much money to be made in the San Francisco market. They'll just be on notice to be more fair and transparent in their dealings. It's the only thing that keeps them honest. Without the threat of government action, it's just anarchy.

Personally I wouldn't mind if they took a hike. It might help Avalos's good idea of a municipal bank come to fruition. But they won't go anywhere.

And no, don't hold your breath for the courts to come to the rescue.

Posted by Greg on Sep. 09, 2013 @ 8:19 pm

We are already familiar with businesses leaving SF, and California, to flee anti-business rules and taxes. This will be one more inducement to do that.

Now, you are correct that SF is a wealthy place and so can probably withstand more economic shocks like this than, say, Richmond or Oakland. Same goes for our unfunded pension liabilities which can be sustained longer by our prosperity than in Detroit which is already in BK.

But it's a further step in the same direction. If I can lend in Marin without risk, then I'll need higher rates in SF to choose that instead. Are you willing to pay more interest, or more rent, just so deadbeats can stay in their home?

Posted by Guest on Sep. 10, 2013 @ 6:38 am

Campos introduced a resolution upon Hugo Chavez's death to commemorate the great man. So he's got good progressive credentials; he supports military coup planners.

The problem in SF, however, is that homes/condos are now priced higher than they were in 2007. So anybody who has an underwater loan is underwater because he/she has used the house as an ATM.

In other words, they took out additional loans after buying the home on the assumption that real estate prices would continue rising and they could sell later. They were speculating.

Rewarding speculators by covering their bad bets on the real estate market would set a terrible precedent.

Posted by Guest Lecturer on Sep. 09, 2013 @ 3:04 pm

There is a private finance company who will handle all the transactions on Richmond's behalf, in return for a fat cut of course.

So this scheme simply lines the pockets of the brokers and hedgies again.

Posted by Guest on Sep. 09, 2013 @ 3:11 pm

Even though I support this scheme because it will give real relief to the homeowners, it should definitely be something we keep our eye on, that the private company involved is just in it to make a buck.

In fact Willie Brown, is one of those somebodies...

Scrutiny of anything that joker is involved in should be our watchword.

Posted by Eric Brooks on Sep. 09, 2013 @ 4:34 pm

Where is everyone coming up with this "house as an ATM"? Why isn't there a "International Banking Industry Using Toxic Home Loans to Depress Real Estate Market, Then Take Advantage of Market to Resell More Loan Products to Speculators to Create an Increased Rental Market that Effectively Pushes San Franciscans out of San Francisco", or "Consumers, Americans as base for Banks to Profit" or "Middle Class: Bank's revolving fund" or "People who need anything worthwhile and requires a lot of money: Bank's ATM?

Posted by Guest reader of Guest Lecturer on Sep. 09, 2013 @ 3:40 pm

mess. And explains why some borrowers are under water even though they bought 20 or 30 years ago, when home prices were a fraction of what they are now.

Instead of finishing paying off their loan and owning their home free and clear, they kept withdrawing equity with cash-out refi's and HELOC's, adding more and more debt without ever thinking that one day they might fall on hard times.

We cannot punish the prudent borrowers to bail out the feckless ones. That sends totally the wrong message. These borrowers should lose their homes, which wipes out any extra debt in CA because it is a non-recourse State, so it is a good deal for them too.

We cannot just go around seizing this and seizing that and nationalizing out housing stock. Heck, even Eastern Europe didn't do that.

Posted by Guest on Sep. 09, 2013 @ 4:04 pm

International banks and financiers used the home mortgages of millions of American homeowners as their personal ATM, and now they want only the homeowners to pay the price of their collapsed Ponzi derivatives scheme; a scheme to essentially counterfeit trillions of dollars in profits for themselves while sticking everyone else with the risk and aftermath.

Posted by Eric Brooks on Sep. 09, 2013 @ 4:27 pm

would be the wrong phrase or acronym to use anyway.

Posted by Guest on Sep. 09, 2013 @ 5:33 pm

I agree that big lenders need to be punished for stoking the 2008 debacle.

My comment about "using home equity as an ATM" stands.

How can you deny it? Anybody who was paying off a single loan during the housing bust now has a home floating above water in San Francisco.

Anybody who took out a second (and perhaps 3rd and 4th) loan is using home equity as an ATM.

In any case, anybody applying for this eminent domain freebee needs to have his/her loan history examined. Nobody who has second/third mortgages on property should be admitted to the club

Posted by Guest Lecturer to Guest Reader on Sep. 10, 2013 @ 7:28 am

those who have borrowed and repaid prudently, who are current on their loans, who have a job, who have no convictions for fraud, with good credit and a history of stability.

IOW the exact opposite of everyone who is squealing for a bailout.

Posted by Guest on Sep. 10, 2013 @ 8:00 am

Not sure if I believe that, but if he did then my opinion of him just went up.

And fyi, Chavez was elected 4 times. Military coup planners are the guys America supported in 2002.

Posted by Greg on Sep. 09, 2013 @ 8:26 pm

But of course you would never want to live there.

Posted by Guest on Sep. 10, 2013 @ 6:32 am

America is full of people who mouth off about things they know little to nothing about.

The throwaway comment about living there... pure rhetorical masturbation. Venezuela has a whole host of problems that have nothing to do with Chavez. Chavez started off with a country that was way more fucked up than the US. It'll take a long time to fix that. But it's gotten better by leaps and bounds. In '98, the standard of living was about even with neighboring Colombia. From there the paths diverged, and you can see the result. It's twice as high in Venezuela now, and a whopping 4 million Colombians have now voted with their feet and fled their capitalist paradise for Venezuela.

Posted by Greg on Sep. 10, 2013 @ 7:30 am
Posted by Guest on Sep. 11, 2013 @ 6:47 am

Same misspellings, same micro-themes. The only thing that changes is the name... guest, guest lecturer, anon, anonymous... I see you've been trolling for a very long time on this site.

Posted by Greg on Sep. 11, 2013 @ 8:37 am

in the Us is the ultimate in trolling. Quite why you think such places have anything to teach the richest and most successful nation on the planet defeats me/

Posted by Guest on Sep. 11, 2013 @ 8:46 am

Greg likes military coups as long as they emerge from the left:

WIKI: "Chavez founded the secretive Revolutionary Bolivarian Movement-200 (MBR-200) in the early 1980s to work towards overthrowing the Venezuelan national government."

Greg studied Spanish is a tourist in Spain once and is a big supporter of Chavez's PartiDA Causa Radical.

Posted by Guest Lecturer on Sep. 10, 2013 @ 7:38 am

They'd be so much happier as a civil servant in some junta in the third world, perhaps running the secret police or suppressing the press there.

Posted by Guest on Sep. 10, 2013 @ 7:58 am

The fringe right and lefts love affair with kleptocrats, authoritarians, dictators and general thugs is always odd because there love is always is followed by a rant about the other sides kleptocrats, authoritarians, dictators and general thugs.

It's really, the enemy of my enemy is my friend.

Posted by Matlock on Sep. 10, 2013 @ 4:39 pm

Venezuela should serve as a lesson to spectator "democracies" like the US. The capitalist narrative is that Chavez was just a power hungry coup plotter because he wanted power for the sake of power. Well delude yourselves at your own risk. Chavez's coup didn't come out of the blue. It was preceded by years of efforts under a US-style two party pseudo-democracy where parties traded power but the agenda of the Washington consensus always got implemented no matter which one of the two parties got in.

In the 1980s, living standards were falling and neoliberal reforms only made things worse (sound familiar?). This, in a country that once had one of the highest living standards in the world, so we're not talking about a people who were unfamiliar with what it's like to live in prosperity. People eventually elected a president who railed against the banks and the IMF under the hope that something would change. But when he got in, he started implementing the same neoliberal agenda. So they protested. Massively. When things got bad enough that the government feared losing control, they opened fire, massacring 2000 people in 1989.

That's the context of the radicalization of the armed forced and the 1992 coup attempt.

That's why the coup attempt in 1992 was a manifestation of the popular will. In fact, at the very next election, the presidential candidate from the traditionally more conservative party managed to win election by pandering to the popular will promising to release Chavez. At that point, momentum for change was great enough that it was impossible for the elite forces to credibly rig the next election, and the rest is history.

Chavez proved himself in subsequent years to be thoroughly committed to democracy -much moreso than the elites of the old regime. But in the 1980s and early 90s, real democracy was impossible under the two party system controlled by the elites. Exactly what alternative do people have, when you vote and nothing changes? You win the vote, and nothing changes? You protest, and nothing changes? Then what?

You corporatists are sitting here smugly thinking that this could never happen here. Well, neither did supporters of the old Venezuelan capitalist regime. The patience of the people is not limitless.

Posted by Greg on Sep. 11, 2013 @ 8:29 am

advocate Venezuela as a model state. Or, for that matter, anywhere else in Latin America.

Probably the only nation that works down there is Chile, and they have adopted western-style monetarism and privatization.

Posted by Guest on Sep. 11, 2013 @ 8:44 am

We can't read both sides of the Venezuala "lesson", since Chavez eliminted the independent news agencies that were critical of some of his policies.

Posted by Richmondman on Sep. 11, 2013 @ 1:26 pm

That tells you everything you need to know

Posted by anon on Sep. 11, 2013 @ 1:38 pm

The Venezuelan private media routinely, to this day, say things that would get them taken off the air (or thrown in jail) in the Land of the Free. Shit, they advocate military overthrow of the government!

Posted by Greg on Sep. 11, 2013 @ 8:53 pm

@Greg: I truly appreciated your essay detailing a short-socioeconomic history of Venezuela and I think that Naomi Klein who wrote Shock Doctrine would corroborate your observations. Thank you very much, Greg!

Posted by Awayneramsey on Sep. 12, 2013 @ 12:38 pm

^

I've been looking for a definition of "progressive." How about - "one who rewards irresponsible behavior?"

Posted by Guest on Sep. 09, 2013 @ 4:59 pm

TARP and too big to fail are.

Round 2 (at least) coming soon.

Posted by Guest on Sep. 09, 2013 @ 5:30 pm

We do not have to have irresponsible borrowers.

Posted by anon on Sep. 09, 2013 @ 5:37 pm

I wouldn't mind the whole sector being nationalized. The banksters need to the borrowers far more than we need them.

Posted by Greg on Sep. 09, 2013 @ 8:21 pm

It doesn't necessarily need the exact same banks that we had ten years ago and, indeed, many have vanished like Wachovia and Washington Mutual as a result of the mortgage crisis.

But modern society could not exist without a banking system. Bush and Obama had no choice but to do what they did. And you know what? It worked. RE and stock prices have recovered to all-time highs.

Posted by Guest on Sep. 10, 2013 @ 6:34 am

The economy is bouncing at the bottom. Real Estate is only at highs in very limited areas. Equity markets will fall once the Fed stops goosing the market with QE.

40% of the world's banking sector is publically owned.

Posted by Guest on Sep. 10, 2013 @ 6:55 am

but SF certainly is, and various other pockets of affluence. And the most bombed out places, like Vegas and Miami, are substantially off their lows.

But it's SF we are talking about here and now, and the red hot RE market has bailed out many, if not most, of those who were underwater. That doesn't mean that everyone can afford their mortgage, of course, but then thatw as the case before the bust as well. There are always going to be some foreclosures and 58 in one SF district isn't a big number.

40% of the world includes all the communist, socialist and fascist nations. Better to look just at the West for representative figures. The US didn't nationalize any banks but they did take stakes in some, which are now being sold back to the private sector.

Finally, and anecdotally, my property is nor worth 200K than in 2007 and meanwhile I have refinanced at a record 3.25% low for a 30 year note. So there are winners as well as losers from this.

Posted by Guest on Sep. 10, 2013 @ 7:53 am

Could the city force lenders to sell car loans cheap? Credit card balances? Medical debts? Court judgments and awards? Liens?

This opens a Pandora's Box of potential municipal intervention into almost every aspect of our financial life if eminent domain can be used to revoke contracts.

And why stop there? How about city's freezing and confiscating bank accounts of the wealthy if they cannot pay salaries and benefits for city workers.

This will undermine trust in our economic system if we allow the city to have more power than places like Cuba. It's a fundamental assault on property rights and the odds of a Roberts SCOTUS allowing this is trivial.

Posted by anon on Sep. 09, 2013 @ 6:38 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 8:21 pm

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