Richmond, CA Votes for Foreclosure Prevention Plan
On December 18, ABC Local News published an article titled Richmond City Council Votes for Foreclosure Prevention Plan.
Richmond City Council votes for foreclosure prevention plan
RICHMOND, Calif. -- Richmond is moving forward with an attention-getting program designed to prevent struggling local homeowners from losing their homes.
The Richmond City Council voted 4-2 at its meeting Tuesday night to adopt a resolution to advance Richmond Community Action to Restore Equality and Stability, or Richmond CARES, and to focus on the neighborhoods and homes that have been hardest hit by the housing crisis.
Dozens of people, including financially embattled homeowners, spoke in support of the plan at the meeting.
Richmond CARES is a plan to buy underwater mortgages from lenders and to invoke the city's municipal power of eminent domain to seize the mortgages if lenders don't accept the purchase offer. Eminent domain is a power typically used by governments to seize land for public use like parks or sidewalks.
Once the city has purchased a mortgage with the financial backing of San Francisco Investment firm Mortgage Resolution Partners, or MRP, homeowners can refinance for a more affordable monthly payment.
The resolution approved on Tuesday night emphasizes the city's commitment to prioritize the neighborhoods of the city that are struggling most when it comes time to implement the program.
"We're not going to use this to bail out a million-dollar house in Point Richmond," Councilman Tom Butt said. "It's going to be used in communities that have significant challenges."
The resolution also includes direction to city staff to boost its efforts to partner with other interested cities to form a Joint Powers Authority.
Other cities that agree to partner with MRP to buy underwater mortgages in their communities could form a JPA with Richmond and act as one entity in court cases, according to city officials.
One lawsuit already filed against the city by Deutsche Bank and Wells Fargo over the plan was dismissed by a federal judge in September.
Aside from legal challenges, the foreclosure prevention plan could face a number of obstacles, Butt said.
With three councilmembers already voicing their opposition to using eminent domain, the council would not have the supermajority required to invoke the power.
Councilmembers Corky Booze and Jim Rogers both voted no on the resolution Tuesday and Councilman Nat Bates, who was absent, has said he would not support the use of eminent domain under the plan.
"There's a lot of things that could sidetrack it ... I still think this is a good thing and it's something the city should be involved in," Butt said.
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