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.

 
 
 

Sign Up

Article Tabs

Wikileaks, Julian Assange, Ecuadorian embassy, political persecution

The WikiLeaks founder has been arbitrarily detained by the U.K. and Sweden for more than five years and should be released immediately with compensation, according to a Geneva-based UN working group on arbitrary detention.

Keystone XL pipeline, tar sands, bitumen, carbon emissions, TransCanada, Enbridge, Stephen Harper, Energy East pipeline, TransMountain pipeline, Northern Gateway, Warren Buffet, First Nations

A major obstacle facing new oil transport projects is the strong resistance from Canada’s indigenous First Nations, who own or claim much of the land that the proposed pipelines would cross.

income inequality, wealth inequality, rigged economy, economy of the 1%

Economic inequality inspired Occupy Wall Street, which transformed our political discourse with the concept of the “1 percent” and the “99 percent,” and today the presidential candidacy of Bernie Sanders is altering the political landscape.

We need a guaranteed income to ensure that the benefits of 60 years of U.S. prosperity go to all Americans – not just to the few who know how to redistribute the nation’s wealth.

Moyer, who became best known for identifying eight stages of successful social movements, called the Movement Action Plan, envisioned a proliferation of groups each maximizing their strength while supporting a broad movement unity.

The media, which came to the story so late, can only process so much – but if you live in Flint or the State of Michigan as I do, you know all too well that what the greater public has been told about the water crisis only scratches the surface.

Posted 6 days 3 hours ago

Congressional hearings on the Flint water crisis were convened on Wednesday – but two people who should be in the hot seat weren't there. Next up, Iowa Caucus: Is this what Democracy looks like? And Obama signs the TPP.

Posted 6 days 3 hours ago
Flint water poisoning, Flint water contamination, Flint lead poisoning, water privatization, Rick Snyder, Darnell Earley

Incidences of poisoned water, not isolated to Flint, are snowballing into a colossal emblem of government's prioritization of corporate interests and profit over the basic health and human rights of citizens.

Posted 6 days 21 hours ago

Responding to tough talk by presidential candidates about price gouging by drug companies, pharmaceutical executives have told investors that they are working actively to influence the political debate.

Posted 6 days 21 hours ago

Fascinating, creative initiatives around the world – from co-operative finance and crowdequity schemes to alternative currencies and reclaiming the public's control over money-creation – are emerging to strengthen the commons.

Posted 6 days 2 hours ago
Flint water poisoning, Flint water contamination, Flint lead poisoning, water privatization, Rick Snyder, Darnell Earley

Incidences of poisoned water, not isolated to Flint, are snowballing into a colossal emblem of government's prioritization of corporate interests and profit over the basic health and human rights of citizens.

Chinese monetary policy, Asian Infrastructure Investment Bank, Chinese currency, Chinese currency manipulation, Special Drawing Rights, rising dollar

If war and hostilities between the great powers are to be avoided, the future of global capitalism may well rely on a combination of Western markets and institutions backed up by totalitarian institutions like the regime in Beijing.

Congressional hearings on the Flint water crisis were convened on Wednesday – but two people who should be in the hot seat weren't there. Next up, Iowa Caucus: Is this what Democracy looks like? And Obama signs the TPP.

U.K. housing prices, soaring home prices, soaring rent costs, Eviction Resistance, housing bubble mortgage-backed securities, Great Recession, rising homelessness

Housing prices in London have risen by 50% in the last five years – and when the UK property bubble goes boom, it will be proportionally bigger than the U.S. housing bust at the onset of the financial crisis in 2007.

Keystone XL pipeline, tar sands, TransCanada, carbon emissions, pipeline projects, NAFTA, corporate trade deals, Trans-Pacific Partnership, TPP, Investor State Dispute Settlement, ISDS

The Canadian oil giant is suing under the provisions of NAFTA because the U.S. rejected the Keystone pipeline – and demanding an amount that would cover annual community college tuition costs for nearly five million U.S. students.