What would you do if your city was losing over $242 million a year to the ongoing foreclosure crisis in the United States? What if 46% of your city's homeowners were also underwater? Well, if you were civic leaders like Richmond, CA mayor Gayle McLaughlin and Richmond City Councilor Jovanka Beckles, you would put your city on the bold path of Local Principal Reduction, designed to address one major aspect of the underwater mortgage and foreclosure crisis created by Wall Street bankers that continues to decimate our economy. And you just might get the attention of the New York Times for doing it.
Writing in today's online version of the New York Times (and Tuesday July 30th's print version) journalist Shaila Dewan, covers the Local Principal Reduction campaign being led by those two Richmond, CA civic leaders, the Home Defenders League, and HDL partner Alliance of Californians for Community Empowerment (ACCE). The thrust of the campaign is to buy underwater mortgages securitized into what are called "Private Label Securities" for fair market value and then work with the existing homeowner to refinance them to the new value. The key to success is the willingness of cities to use eminent domain to seize the mortgages if the investors refuse to negotiate a fair deal.
To learn more about the historic action Richmond just took, keep reading!
In an historic move, the city of Richmond, CA today became the first city in the United States to start using this approach to keeping struggling families in their homes and revitalizing their communities. They sent offer letters on 626 properties that are severely underwater to the mortgage servicers and trustees that control the mortgages, asking them to negotiate for a fair deal.
Needless to say, Wall Street bankers are trying everything they can to stop this from happening. So far they've hinted darkly at the threat of massive future lawsuits and brazenly spoken about refusing to lend withing the city limits of any jurisdiction that dares stand up to Wall Street this way. A we're seeing in Richmond, however, local leaders aren't willing to be cowed by threats.
But local officials, frustrated at the lack of large-scale relief from the Obama administration, relatively free of the influence that Wall Street wields in Washington, and faced with fraying neighborhoods and a depleted middle class, are beginning to shrug off those threats.
“We’re not willing to back down on this,” said Gayle McLaughlin, the former schoolteacher who is serving her second term as Richmond’s mayor. “They can put forward as much pressure as they would like but I’m very committed to this program and I’m very committed to the well-being of our neighborhoods.”
You can stand up to the bullying Wall Street banks trying to shut down the efforts of cities like Richmond by signing this petition and help ensure this effort spreads to cities around the United States.