Read

Search form

In Defiance of Wall Street, Richmond, Calif., Declares Eminent Domain For Underwater Mortgages

In Defiance of Wall Street, Richmond, Calif., Declares Eminent Domain For Underwater Mortgages
Fri, 9/13/2013 - by CBS
This article originally appeared on CBS

RICHMOND — An unprecedented plan to buy struggling Richmond homeowners’ underwater mortgages is moving forward.

The Richmond City Council voted 4 to 3 early Wednesday morning to continue pursuing the controversial plan, which could use the city’s power of eminent domain to force bondholders to sell underwater loans, allowing homeowners to restructure their mortgages.

The council rejected an agenda item submitted by Vice Mayor Corky Booze and Councilman Nathaniel Bates to strike down offers to buy the mortgages.

“Many in our community have been targeted by predatory loans, too many have already lost their homes, and all of the city of Richmond has suffered,” said Mayor Gayle McLaughlin, who authored the council resolution in favor of the plan.

About half of the city’s homeowners are underwater on their mortgages, city manager Bill Lindsay said at the start of Tuesday night’s roughly seven-hour meeting at the Richmond Memorial Auditorium.

In a bid to counter that trend, City Mayor Gayle McLaughlin has led the charge toward a partnership with San Francisco investment firm Mortgage Resolution Partners (MRP) to buy 624 city residents’ mortgages that are underwater, or that owe more money than the home is currently worth.

Under the Richmond Community Action to Restore Equity and Stability plan, or Richmond CARES, the city could use eminent domain to force the sale of the mortgages if lenders don’t accept the offer, city officials say.

Four of seven council members voted for the mayor’s proposal to continue Richmond CARES and to set up a joint powers authority between Richmond and any other cities teaming up with MRP.

So far, the Southern California city of El Monte has expressed the most interest in partnering with MRP and has urged Richmond to set a precedent by moving forward with the partnership, McLaughlin said.

The council struck down a measure authored by Councilman Jim Rogers requiring MRP to provide insurance protecting the city of Richmond from all litigation and related damages related to the plan before moving forward with eminent domain action.

Rogers said he drafted the item after learning that MRP hadn’t secured insurance to protect the city from potential litigation stemming from the eminent domain plan.

MRP executive chairman Steven Gluckstern noted before the meeting that the firm is covering legal costs associated with any litigation against the city related to the partnership and said a joint powers authority would provide further protection.

On Thursday, a federal court is set to rule on a lawsuit brought against the city by Wells Fargo and Deutsche Bank over the plan. The suit alleges that the proposed use of eminent domain, which is typically used to purchase private land for public use, is unconstitutional.

The banks say the plan would also harm Richmond in the long run by making it tougher for city residents to get approved for mortgage financing.

But McLaughlin and her supporters describe the plan as an innovative solution to help conscientious Richmond homeowners stay in their homes and as a long-overdue stand against the Wall Street investors that offered predatory loans in the first place.

Groups on both sides of the eminent domain proposal attended Tuesday night’s meeting to make their case.

Many proponents of the plan, including members of the Alliance of Californians for Community Empowerment (ACCE) and the Richmond Progressive Alliance wore yellow T-shirts and hoisted small flags provided by ACCE.

Many of the dozens of speakers who voiced support for the plan during the marathon meeting identified themselves as underwater Richmond homeowners struggling to keep their homes.

Patricia Castillo said her Richmond home, which she purchased in 2005, is on the brink of foreclosure, and that she is holding out hope that Richmond CARES will work.

“I’ve seen a lot of impact in my neighborhood; families moved that couldn’t modify or keep up with their payments,” she added. “We need these programs to help stabilize our neighborhoods, it’s time to stand up to Wall Street and stand up for the city of Richmond.”

On the other hand, Joshua Genser, a lifelong Richmond resident and longtime property and business owner, said the forced sale of a home for 80 percent of its market value under the city’s proposal would harm Richmond property owners, not the banks.

“If we pass this program it will be impossible to get credit in the city,” he said. “The plan is dangerous to every resident, every business owner in the city of Richmond.”

Dozens of others at the meeting, including a group of about ten young men who declined to say whether they live in Richmond, wore red T-shirts that said “Stop Investor Greed,” the name of a group formed against the eminent domain plan.

The group is headed by local real estate broker and past president of the West Contra Costa County Association of Realtors Jeff Wright.

Many residents at the meeting said they had recently received glossy mailers sent out by the WCCAR decrying the city’s principal reduction plan.

Wright said he believes the plan would harm Richmond by making it tougher for homeowners to get credit and said investors who might choose not to lend money in Richmond because of the plan would be exercising understandable caution.

Some speculate that the city’s failure last month to sell $34 million in bonds is a sign of Wall Street’s early retaliation against the plan.

But Amy Schur, an ACCE campaign director, said the mortgage acquisition program “is actually a win-win-win for everybody,” including banks, which stand to lose from homes going into foreclosure.

“This is not about anyone making money, this is about saving homes,” she said.

Schur also echoed statements from the mayor and other council members who have said any retaliatory action from banks against Richmond would equate to redlining – a term used to describe a discriminatory practice by banks that raise costs or decline to do business in minority communities.

“We can’t let fear stop us from stabilizing our community and we can’t let fear keep us from boosting our local economy,” Councilwoman Jovanka Beckles said, drawing applause and cheers from the audience, which dwindled from several hundred Tuesday evening to several dozen by early Wedmesdau morning.

The mostly peaceful meeting, punctuated with applause and cheers, devolved by the early morning into insults and personal attacks on fellow council members from Booze and Bates, causing the mayor to call for a brief recess before the council’s final vote.

Under the Richmond Community Action to Restore Equity and Stability plan, or Richmond CARES, the city could use eminent domain to force the sale of the mortgages if lenders don’t accept the offer, city officials say.

Four of seven council members voted for the mayor’s proposal to continue Richmond CARES and to set up a joint powers authority between Richmond and any other cities teaming up with MRP.

So far, the Southern California city of El Monte has expressed the most interest in partnering with MRP and has urged Richmond to set a precedent by moving forward with the partnership, McLaughlin said.

The council struck down a measure authored by Councilman Jim Rogers requiring MRP to provide insurance protecting the city of Richmond from all litigation and related damages related to the plan before moving forward with eminent domain action.

Rogers said he drafted the item after learning that MRP hadn’t secured insurance to protect the city from potential litigation stemming from the eminent domain plan.

MRP executive chairman Steven Gluckstern noted before the meeting that the firm is covering legal costs associated with any litigation against the city related to the partnership and said a joint powers authority would provide further protection.

On Thursday, a federal court is set to rule on a lawsuit brought against the city by Wells Fargo and Deutsche Bank over the plan. The suit alleges that the proposed use of eminent domain, which is typically used to purchase private land for public use, is unconstitutional.

The banks say the plan would also harm Richmond in the long run by making it tougher for city residents to get approved for mortgage financing.

But McLaughlin and her supporters describe the plan as an innovative solution to help conscientious Richmond homeowners stay in their homes and as a long-overdue stand against the Wall Street investors that offered predatory loans in the first place.

Groups on both sides of the eminent domain proposal attended Tuesday night’s meeting to make their case.

Many proponents of the plan, including members of the Alliance of Californians for Community Empowerment (ACCE) and the Richmond Progressive Alliance wore yellow T-shirts and hoisted small flags provided by ACCE.

Many of the dozens of speakers who voiced support for the plan during the marathon meeting identified themselves as underwater Richmond homeowners struggling to keep their homes.

Patricia Castillo said her Richmond home, which she purchased in 2005, is on the brink of foreclosure, and that she is holding out hope that Richmond CARES will work.

“I’ve seen a lot of impact in my neighborhood; families moved that couldn’t modify or keep up with their payments,” she added. “We need these programs to help stabilize our neighborhoods, it’s time to stand up to Wall Street and stand up for the city of Richmond.”

On the other hand, Joshua Genser, a lifelong Richmond resident and longtime property and business owner, said the forced sale of a home for 80 percent of its market value under the city’s proposal would harm Richmond property owners, not the banks.

“If we pass this program it will be impossible to get credit in the city,” he said. “The plan is dangerous to every resident, every business owner in the city of Richmond.”

Dozens of others at the meeting, including a group of about ten young men who declined to say whether they live in Richmond, wore red T-shirts that said “Stop Investor Greed,” the name of a group formed against the eminent domain plan.

The group is headed by local real estate broker and past president of the West Contra Costa County Association of Realtors Jeff Wright.

Many residents at the meeting said they had recently received glossy mailers sent out by the WCCAR decrying the city’s principal reduction plan.

Wright said he believes the plan would harm Richmond by making it tougher for homeowners to get credit and said investors who might choose not to lend money in Richmond because of the plan would be exercising understandable caution.

Some speculate that the city’s failure last month to sell $34 million in bonds is a sign of Wall Street’s early retaliation against the plan.

But Amy Schur, an ACCE campaign director, said the mortgage acquisition program “is actually a win-win-win for everybody,” including banks, which stand to lose from homes going into foreclosure.

“This is not about anyone making money, this is about saving homes,” she said.

Schur also echoed statements from the mayor and other council members who have said any retaliatory action from banks against Richmond would equate to redlining – a term used to describe a discriminatory practice by banks that raise costs or decline to do business in minority communities.

“We can’t let fear stop us from stabilizing our community and we can’t let fear keep us from boosting our local economy,” Councilwoman Jovanka Beckles said, drawing applause and cheers from the audience, which dwindled from several hundred Tuesday evening to several dozen by early Wedmesdau morning.

The mostly peaceful meeting, punctuated with applause and cheers, devolved by the early morning into insults and personal attacks on fellow council members from Booze and Bates, causing the mayor to call for a brief recess before the council’s final vote.

 
 
 

Add new comment

Sign Up

Article Tabs

Democratic National Convention, DNC, DNC protests, Hillary Clinton, Bernie Sanders, Bernie supporters, Food & Water Watch, March for a Clean Energy Future

More than 10,000 people calling for a “clean energy revolution” filled the streets here Sunday.

All Lives Matter protesters come together for a group hug with join Black Lives Matter activists in Dallas at Park Ln & Fair Oaks Ave. July 10th.

In recent weeks, the Southern Poverty Law Center has received a number of requests to name Black Lives Matter a hate group. In our view, these critics fundamentally misunderstand the nature of hate groups and the BLM movement.

employees with criminal records, criminal justice system, Dave’s Killer Bread, Hot Chicken Takeover, POP! Gourmet Foods, Drive Change, Greyston Bakery, banning the box

Companies like Hot Chicken Takeover, POP! Gourmet Foods, and Greyston Bakery are breaking down barriers.

anti-fracking protests, Keep It In the Ground, protester arrests, undercover agents

Emails obtained through an open records act request show that the Lakewood Police Department in Colorado collected details about a BLM oil and gas lease protest from undercover officers as the event was being planned.

Greek privatizations, transit privatization, Panhellenic Railway Association, TrainOSE, water privatization, Thessaloniki Water Supply & Sewage, Greek austerity policies

Late last month, the Panhellenic Railway Association took to the streets to protest a slew of public transport privatizations scheduled to take place later this year. "The government defiantly and shamelessly gives away the national wealth," it said.

This week we prepare activists for what they might encounter as they take to the streets for justice and equality.

Posted 5 days 9 hours ago
Sherry Hernandez, Senka Huskic, housing crisis, foreclosures crisis, mortgage-lending crisis, Countrywide, PennyMac, CitiMortgage, Trustee Corps, foreclosures fraud, banking crimes, TARP, HAMP

"If we had known from the beginning how corrupt the system was, we probably never would have started."

Posted 6 days 9 hours ago
Greek privatizations, transit privatization, Panhellenic Railway Association, TrainOSE, water privatization, Thessaloniki Water Supply & Sewage, Greek austerity policies

Late last month, the Panhellenic Railway Association took to the streets to protest a slew of public transport privatizations scheduled to take place later this year. "The government defiantly and shamelessly gives away the national wealth," it said.

Posted 3 days 10 hours ago
#23ways, 23 ways, Black Lives Matter, police brutality, We Are Here Campaign

Beyoncé, Alicia Keys, Rihanna, Jennifer Hudson, Pink, Bono, and others explain why it's time to take action to heal the long history of systemic racism in America.

Posted 6 days 10 hours ago
anti-fracking protests, Keep It In the Ground, protester arrests, undercover agents

Emails obtained through an open records act request show that the Lakewood Police Department in Colorado collected details about a BLM oil and gas lease protest from undercover officers as the event was being planned.

Posted 3 days 9 hours ago
anti-fracking protests, Keep It In the Ground, protester arrests, undercover agents

Emails obtained through an open records act request show that the Lakewood Police Department in Colorado collected details about a BLM oil and gas lease protest from undercover officers as the event was being planned.

Universal Credit, Citizen’s Advice Scotland, U.K. austerity policies, welfare benefits reform, Citizen Advice, New Policy Institute, welfare payment delays

Claimants are facing hefty delays in receiving benefits and unfair sanctions.

“Reverse redlining” flooded communities of color with toxic mortgages, practically ensuring default.

This week we prepare activists for what they might encounter as they take to the streets for justice and equality.

Black Lives Matter, police brutality, police killings of blacks, police killings of Latinos, Andy Lopez, David Sal Silva, National Council of La Raza, Jorge Ramos, Latino activists, Latino Donor Collaborative, Community Alert Patrol, Chicano activists, Bl

Is the media to blame for Latinos’ absence in the debate about police-community relations?