FOR IMMEDATE RELEASE:
Tuesday, July 30, 2013
Peter Moskowitz, 917-880-2124, email@example.com
Kevin Whelan, 612-414-9731, firstname.lastname@example.org
Richmond, California First City in U.S. to Offer to Purchase Mortgages that Banks Have Been Unwilling to Fix
City Wracked by Foreclosure Crisis Reaches out to Wall Street Banks to Buy Mortgages and Enact Local Principal Reduction for Distressed Homeowners
Richmond, CA – Today the City of Richmond became the first municipality in the nation to boldly step in where the federal government and the banks have failed, offering to purchase over 600 city mortgages from major Wall Street banks and other servicers in order to achieve local principal reduction for distressed homeowners. Richmond has been hard-hit by the ongoing foreclosure crisis; as of 2013, 46% of all residential mortgage holders in the city are still underwater.
After an unprecedented push by local residents in Richmond to find ways to help struggling homeowners, today’s offers are part of a plan, approved by the Richmond City Council in April, to stem the ongoing tide of foreclosures in the city by offering to purchase underwater mortgages—and be willing to use the city’s eminent domain authority if necessary to purchase loans in order to modify them and save families from foreclosure.
The City of Richmond’s local principal reduction program, launched with April’s vote by the City Council, will acquire certain underwater mortgages, through regular purchase or eminent domain if necessary, in order to restructure the troubled mortgages and help the homeowners modify or refinance, getting them mortgages with reduced principal in-line with current home values. The City is doing this in partnership with Mortgage Resolution Partners, an advisory firm that has lined up the funding and technical support needed to carry out this program.
Supporters, including Richmond city officials, officials of SEIU Local 1021, and local residents, held a press conference at Richmond City Hall announcing the city’s intent to purchase mortgages in order to pursue local principal reduction. “Residents here in Richmond have been suffering for years thanks to the housing crisis Wall Street created and which Wall Street refuses to fix,” said Richmond Mayor Gayle McLaughlin. “We’ve seen too many houses go dark, too many lawns dry up and die, too many families left with nothing after years of hard work. When my constituents started showing up, calling on us to help them save our homes, I knew that this was the right thing for the Mayor and City Council to do.”
This program allows the City to preserve wealth in local hands, especially in communities of color and low-income communities which have been decimated by the foreclosure crisis and see no end in sight. Wrongful foreclosures have caused a catastrophic loss of wealth. Having been targeted by predatory lending, communities of color have been particularly hard-hit, with African Americans losing 53% of their median wealth from 2005 to 2009 and Latinos 66%.
Though the City of Richmond is leading the way nationwide on local principal reduction, other California cities like El Monte and La Puente are advancing this as well, as are grassroots community/labor coalitions in cities including Newark, New Jersey and New York City. Meanwhile, Wall Street lobbyists have pressured Republicans in Congress to sponsor legislation to bar the use of eminent domain. In response, a coalition of over fifty groups, including some of the nation’s largest labor unions and leading fair housing groups, issued an open letter asking members of Congress to rebuff repeated efforts to unfairly bar local municipalities which enact local principal reduction from receiving federally-backed home mortgage loans.
“Richmond is leading the way on local principal reduction, and other cities are lining up to follow suit,” said Kevin Whelan, Campaign Director for the Home Defenders League. “For years, Wall Street has continually resisted fixes to the housing crisis. What Richmond is saying—and what other cities are echoing—is that they’re not going to stand by and wait any longer for a fix that isn’t coming. It’s time for local cities to take matters into their own hands in order to help constituents who are struggling to keep their heads above water.”
A report released by the Home Defenders League, Alliance for a Just Society, and the New Bottom Line, “Wasted Wealth,” which found that communities of color lost a disproportionate share of the almost $200 billion in wealth drained by foreclosures in 2012 alone. The report calls for a robust program of principal reduction to reset mortgages to fair market values—goals that would be achieved through Richmond’s local principal reduction plan.
The Home Defenders League is a national organization fighting against foreclosures and for a just resolution to the mortgage crisis including the mass principal reduction for underwater homeowners. The League includes 26 community-based affiliates such as the Alliance of Californians for Community Empowerment (ACCE), national organizing networks the Alliance for a Just Society and Right to the City Alliance, Occupy Homes groups, and thousands of member families across the country.