A controversial proposal by the city of Richmond to buy underwater mortgages from struggling homeowners has the backing of a San Francisco supervisor who said today that he will introduce a resolution expressing support for the plan.
Supervisor David Campos said he plans at Tuesday’s board meeting to introduce the resolution, which would also call on the city to explore how a similar plan could work in San Francisco.
Richmond Mayor Gayle McLaughlin announced in July that her city was teaming with the San Francisco investment firm Mortgage Resolution Partners in a plan to buy more than 600 city residents’ mortgages that were underwater, meaning the residents owed more than the current value of the home.
If the lenders did not accept Richmond’s offer, the city said it would then use its powers of eminent domain to force the sale of the mortgages.
Eminent domain is a municipal power to purchase private land, typically for public uses such as parks or infrastructure.
Wells Fargo and Deutsche Bank in August filed a lawsuit against the plan, saying the city using eminent domain would be unconstitutional and would harm Richmond in the long-term by making it tougher for residents there to get approved for mortgage financing.
Campos said today that banks and the federal government often impede efforts by homeowners to refinance their mortgages.
“We have waited long enough,” he said. “I’m tired of people basically being given the run-around.”
Campos said San Francisco has many homes that are underwater or in foreclosure, including 58 in his district, which includes the Mission and Bernal Heights neighborhoods.
“We have to take care of our own,” he said. “It’s truly an issue of civil rights.”
Mayor Ed Lee said he had not gotten a chance to look at the supervisor’s proposed resolution but said he had reservations about San Francisco adopting a plan like the one in Richmond.
Lee said the city would “have to take a careful look at how this affects our financial information,” noting that Richmond was just rejected by Wall Street in its attempts to refinance its municipal bonds.
“I get the objective, but perhaps we have to work closer with the banks and financial institutions so it doesn’t impact the bond ratings and the credit ratings of cities,” he said.
Richmond may reconsider its own proposal—City Councilman Nathaniel Bates introduced a proposal on this Tuesday’s meeting agenda that would withdraw the city’s offers to purchase the underwater mortgages.
The Richmond City Council meeting is scheduled for 5 p.m. but the mortgage item will not be heard until 7 p.m. at the earliest.
Dan McMenamin, Bay City News