FOR IMMEDIATE RELEASE
Monday, September 16, 2013
Federal Judge Dismisses Wall Street Suit Filed in Response to Richmond, CA Local Principal Reduction Plans
National fair housing groups filed amicus brief last week in support of city’s motion to dismiss lawsuit filed by Wells Fargo and other Wall Street banks
Today’s dismissal comes after Richmond votes to continue with local principal reduction program, “Richmond CARES”
The case, Wells Fargo Bank, National Association et. al. v. City of Richmond, California and Mortgage Resolution Partners LLC, was heard in the San Francisco Division of the United States District Court – Northern District of California by Judge Charles Breyer. Plaintiffs Wells Fargo et. al. had filed a motion for preliminary injunction; in response, defendants City of Richmond filed a motion for dismissal. On Monday, after calling the defendants’ motion a “no brainer” in a Thursday hearing, Judge Breyer dismissed the suit without prejudice on the grounds that the plaintiffs’ claims were not ripe.
“Over the last few months, the Wall Street lobby has tried hard to scare cities from moving forward, but to no avail,” said Amy Schur, Local Principal Reduction Campaign Director for ACCE and the Home Defenders League. “With today’s victory in court, we expect to now see other cities join with Richmond to advance this important foreclosure prevention program. Today is a victory for struggling homeowners over Wall Street.”
Monday’s dismissal follows a dramatic 4-3 vote by the Richmond City Council last Tuesday to continue the local principal reduction program known as Richmond CARES (Community Action to Restore Equity & Stability). Councilmembers voted down a proposal to end the program and instead voted to form a Joint Powers Authority to administer the effort to help homeowners.
Richmond is the first city in the country to offer to purchase underwater mortgages from bondholders and consider the use of eminent domain in the event that the bondholders do not agree to sell. Richmond CARES is an innovative effort to save hundreds of underwater borrowers by purchasing at fair market value hundreds of mortgages held by Wall Street banks, reducing their principal, and keeping Richmond homeowners in their homes. With nearly half of Richmond homeowners underwater on their homes, Richmond CARES is a critical tool for maintaining city services, helping families stem the tide of foreclosures, and keeping wealth in local communities.
An active grassroots campaign by homeowners and organizations in Richmond, led by the Alliance of Californians for Community Empowerment (ACCE) and the Home Defenders League has mobilized to turn back fear-mongering threats and deception from Wall Street banks and a misleading mail and phone call campaign to residents’ homes by opponents of the local principal reduction plan.
Last week, five San Francisco Supervisors announced that they will propose a resolution before the County Board of Supervisors expressing support for Richmond CARES and calling on San Francisco to examine a similar local principal reduction strategy. Support for Richmond CARES continues to grow, with the Service Employees International Union announcing support for the program and other cities like Seattle, WA and Newark, NJ exploring the use of local principal reduction for underwater communities.