Campos urges SF to explore using Richmond's eminent domain plan

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San Francisco eminent domain?
Photo by Joe Fitzgerald Rodriguez
Housing activists and Supervisor David Campos outside of City Hall Monday, September 9, announcing a resolution to explore using eminent domain to save underwater mortgages in SF.

Sup. David Campos is urging the board of supervisors to explore using eminent domain to save San Francisco resident’s underwater mortgages, a plan pioneered by the city of Richmond and its mayor Gayle McLaughlin.

The plan uses the power of eminent domain to seize underwater mortgage loans from banks and investors, saving homeowners from being booted out onto the street when they're behind on their ballooning payments. The plan is controversial and under attack by Wells Fargo and other Wall Street interests, which we explored in last week’s cover story, “Not For Sale." They say that the plan puts money into the pockets of Richmond and Mortgage Resolution Partners, the group that engineered the plan. 

Campos plans to introduce his resolution at tomorrow’s board meeting, but importantly it only asks The City to explore whether or not the plan could work in San Francisco. The resolution would not enact a plan at this point in time.

At a press conference this morning, housing activists and Campos trumpeted the plan as a way to save the homes of San Franciscans. Often those targeted with predatory loans have been people of color, they noted. 

“Our strategies have been, lets be honest, ‘Let’s see what the federal government or the banking industry will do to help these folks,’” Campos said at the steps of City Hall. “We’ve waited long enough.”

Campos rattled off surprising numbers, saying 58 homeowners in his district alone had underwater mortgages at risk of foreclosure, and that 16 percent of homeowners in neighborhoods like Visitacion Valley were underwater. 

Bernal Heights homeowner and activist Ross Rhodes was there supporting the action.

“Dave (Campos) helped me save my home when I was getting nowhere with the banks but frustration,” Rhodes said. 

He was making his payments which were up to $3,500 a month, but while on disability and going through a divorce, it was tough. Campos got Rep. Nancy Pelosi’s office involved, and they talked to the banks on his behalf. In the end, he finally got a principal reduction and what he calls a “real good” modification. “I’m not asking for a handout, I’m asking for help,” he said. 

Now his payments are $1,600 a month. “It just shows the banks can do what they want to do, they control it all, they can work with if you if they want to.”

Campos' resolution also proclaims San Francisco's support for Richmond's eminent domain effort.

The bank asked him why he went to Pelosi and Campos for help, instead of going through them. He was incredulous, as he’d been fighting for a principal reduction on his own for two years. “I’ve been trying to work with you for months,” he told them. “It took that political muscle to get you to move. I went through five different loan agents.” 

The victory made him a convert, going to rallies and speaking to help others suffering with their loans. 

The hounds are coming for Richmond though, and the political muscle needed to enact the controversial plan is at risk. 

Wells Fargo already filed suit against Richmond over its use of eminent domain, saying the plan puts money in the pockets of the city and would put a chill on investments. A Richmond bond with an A- rating was already rejected by Wall Street, finding no financiers, putting Richmond in a possible bind when it comes to public works projects. 

In response, Richmond councilmember Nathaniel Bates has a resolution for tomorrow’s Richmond city council meeting to stall the plan. If it's voted in, Richmond will withdraw all the offers to buy underwater loans and withdraw the plan to use eminent domain to seize them. 

If Bates’ resolution is approved, the whole plan would tank. 

A petition from the Home Defenders League to sand with Richmond’s eminent domain effort has over 7,000 signatures. 

To contact Wells Fargo’s CEO yourself, follow the link here.

The Guardian wrote to the Mayor Ed Lee's office to see if he is in support of Campos’ plan, but didn’t hear back before press time, which was admittedly quick. 

Update 2:20 pm: We asked supervisor Campos' aide Hilary Ronen if San Francisco would be at risk for a lawsuit from Wells Fargo, similar to Richmond, if the city enacted an eminent domain plan. In response, she said "All that we’re doing is asking the city attorney’s office as well as the budget and legislative analyst, 'if we did something similar, what does it look like? What are the financial risks for the city?' This way we can make an educated assessment. After having that information he’ll have to balance what the risks are. We’re not there yet."

Comments

high's again? SF Realtor reports of closings show that most SF zip codes are near, at or above the 2007 high's. Area's like Mission, Noe, Castro and Duboce are ABOVE 2007 high's. The only neighborhood that is still below the previous high is Bayview (duh).

So if ever there was a city that does NOT need this, it is SF. Which proves this is just Campos jumping on (yet another) ideological bandwagon.

There probably isn't much that could destroy the local housing market and economy, but this might just be in. Luckily there isn't a snowball chance in hell of this being approved, nor of it passing legal muster in the courts.

Posted by Guest on Sep. 09, 2013 @ 12:13 pm

You take out a mortgage and if, stupidly, you struggle and make sacrifices to pay every month, and don't use your home as an ATM nor take out a stupid loan, then you get no help from the city.

But if you take out a reckless loan, or pay too much for your house, or decide to quit your job in order to produce bad art, then the city will bail you out.

Heads the borrower wins; tails the lender loses. Can anyone spell "moral hazard"?

Campos is a moron.

Posted by anon on Sep. 09, 2013 @ 12:18 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 1:07 pm
Posted by Guest on Sep. 09, 2013 @ 1:11 pm

Right-on, troll barrier. One wonders whether that skin-encased sack of fecal matter who goes by the name "anon" had a lobotomy in gestation or at birth. Either way, the thing appears to be the one of the most dead, unfeeling and cold beings on the earth. Surely no one I would ever want to know or meet.

Posted by Guest on Sep. 09, 2013 @ 5:26 pm
Posted by Guest on Sep. 09, 2013 @ 5:38 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 8:16 pm

You are the troll.

Posted by Guest on Sep. 09, 2013 @ 5:33 pm

Why only people of color, is Campos a racist ?

Posted by Guest on Sep. 09, 2013 @ 12:46 pm

If a politician proposes to do something that benefits only white people then, yes, he is a racist.

But if he does something to benefit only non-white people, then that is social justice. Also known as "playing the race card".

Posted by Guest on Sep. 09, 2013 @ 12:59 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 1:10 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 1:09 pm

It's a question worth asking.

Posted by anon on Sep. 09, 2013 @ 1:12 pm

THAT'S AN AWESOME IDEA. Please do that all the time. I nominate that for idea of the year. 

Posted by Joe Fitzgerald on Sep. 09, 2013 @ 1:33 pm

feel free to copy it yourself and use it strategically elsewhere

and employ the user name and subject of 'troll barrier' for consistency

Posted by racer x on Sep. 09, 2013 @ 1:43 pm

Cannot see any other utility for it, which is why everyone is ignoring you.

Posted by anon on Sep. 09, 2013 @ 2:05 pm

to his comment. Have you ever sought treatment for your sickness?

Posted by Guest on Sep. 09, 2013 @ 2:31 pm

But I wasn't the one calling for anyone to ignore anyone anyway.

Posted by Guest on Sep. 09, 2013 @ 3:09 pm

You need it.

Posted by Guest on Sep. 09, 2013 @ 4:29 pm

You're just stalking and trolling him.

Posted by anon on Sep. 09, 2013 @ 5:34 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 8:18 pm

because there is already one much higher in the thread underwhich all of the cascaded responses are just personal attacks and he-said she-said errata

so the first barrier is enough to warn people that everything below it is bunk

people will get the idea without a second barrier

if we do too many barriers, they will rapidly knock worthy posts out of the 'Recent Comments' list...

Posted by racer x on Sep. 09, 2013 @ 8:48 pm

Seems Compost likes the socialist/communist utopia housing plans, if these fools that bought these houses had gone through the preparatory consoling required and understood it and if the banks giving the loans had checked more most of these people would never have gotten their homes in the first place.

Posted by Guest on Sep. 09, 2013 @ 12:58 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 1:11 pm

But he will get nowhere with this, and in fact it looks like Richmond will abandon their plan as the extra costs of litigation and the inability to float bonds through Wall Street will cripple the city.

Posted by anon on Sep. 09, 2013 @ 1:13 pm

Your comment doesn't address the thousands of homeowners that were solicited loans to make repairs, people with medical debt and seniors who were targeted, etc. who had tons of equity and have been living in their homes for generations.

So this doesn't happen again, you should definitely support those counseling agencies, which are non-profits, and legislation to regulate the banking industry, right?

Posted by Guest in response to other guest on Sep. 09, 2013 @ 3:30 pm

You see this over and over in cases like the cited one, where the borrower kept getting cash-out refi's to boost his lifestyle. Now it's time to pay the piper.

I'm sure there were some dud loans and dodgy brokers but, in the main, this was a case of borrowers stretching themselves too far. And in the end, they have to suffer before we can get a healthy Re market again.

For the rest, the solution is simple. Move somewhere cheaper. Not everyone can afford SF.

Posted by Guest on Sep. 09, 2013 @ 4:00 pm

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into deceptive and petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 09, 2013 @ 4:38 pm

Nothing at all? Pul-leeze. If you're going to play the blame game, at least admit shared responsibility, or are the banks the only victims in your universe?
Because, there were millions of homes that were foreclosed on, millions of families then who over stretch themselves - did they conspire to default? Or did the handful of the banks, who were in the know, have any responsibility in creating a loan product and flooding the market with it?

Posted by Guest reader of Guest Lecturer on Sep. 09, 2013 @ 4:41 pm

But there is a reasonable argument that the banks were merely responding to consumer need, as without that there would have been no market for sub-prime loans.

An analogy might be the market for illegal drugs. The drugs trade goes on no matter how many smugglers and dealers we arrest, because there are always other guys to replace them as long as there are millions of American kids wanting to get high.

Then again, how many HELOC's went to buy drugs, drink and so on?

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Posted by eu-unternehmersenat.com on Oct. 02, 2013 @ 11:16 am

People believe that they're going to make it with a huge mortgage, but then someone loses a job. Or something happens that depletes their cash flow. It's no surprise that people get into debt for borrowing so much. People should just live below their means anyway. There's not a lot of stability in certain jobs these days.

Posted by Guest on Sep. 12, 2013 @ 8:29 pm

is so against no-bid contracts that he pushed for a ballot measure to that effect a few years ago, and based his election campaign on that issue ta boot, but now he's on-board with Richmond's no-bid contract with MRP?

isn't there an airport that needs naming or something??

Posted by GuestD on Sep. 09, 2013 @ 1:11 pm
Posted by anon on Sep. 09, 2013 @ 2:06 pm

Why market is at an all time high: AFTER major bank flooded the market with loans, many targeted to seniors (AARP report: Nightmare on Main Street) and people with medical debt (http://www.topclassactions.com/open/516-ameriquest-mortgage-class-action...) and Wells Fargo having settled with the DOJ to avoid criminal charges (http://www.justice.gov/opa/pr/2012/July/12-dag-869.html) for targeting people of color, real estate investors, realtors, and bank backed investors took advantage of the depressed market, from 2009 to present, and have been buying. As the rule of supply and demand goes, this is why the market is up. The same institutions that destroyed the economy are now using the current state to continue to make money.

Home as an ATM: Of course no one should use their home as an ATM, such as actually take out a HELCO (Home Equity Line of Credit), a product that the banking industry created to make it accessible for people to "use their home as an ATM" and had and continue to push on homeowners. As for stupid loans: folks take out loans to make sure they can fix a roof, make basic repairs. They've done so it the past. However, what made this moment in time different was the type of loan that was provided - loans that traditionally went to large scale investors who were building malls and would see a profit with the interest only period. Why would the banks flood the market with this type of loan to folks who want fix their roof? I wonder what happened to the commission on those loans and those brokers and loan officers that sold these loans. Do you think they knew what kind of loan they were selling?

Why only people of color: There was an array of people there, white, black, asian, latino. But then again, that question is a better question directed toward the banks and realtors.

I'm sure that the folks commenting here have nothing to do with the banking industry, the law firm that is suing the city of Richmond, or the realtor associations. Channel 7 just laid off their political reporting department. I'm just wondering where all these non-partisan reporters are going/doing.

Posted by Guest in response to other guest on Sep. 09, 2013 @ 1:17 pm

Not in Richmond, for instance. Nor Oakland. Not even close.

But in SF they are, and that's because of our booming local economy and out pro-jobs policies. SF is a world-class city. Richmond is a dump. Big difference.

Posted by Guest on Sep. 09, 2013 @ 2:39 pm

And there will always be people who are willing to take advantage of homes being foreclosed on. Take Fairfield for instance. There was a pair of homes that were right next to each other and underwater. This one transplant from Maryland via San Francisco saw a perfect opportunity and purchased both of them, evicting one and renting the other out. It was just good business sense.

Posted by Guest on Sep. 09, 2013 @ 5:33 pm

not the city misusing and abusing eminent domain to try and profit at the expense of business.

Posted by Guest on Sep. 09, 2013 @ 5:39 pm

The idea that Richmond will make a 'profit' off of this is ludicrous. Richmond will at best break even - with its only incentive being a somewhat better tax base down the line to make it worth it. Buying a bunch of stressed mortgages is not a good way to make a profit.

[ Unless of course you are a bank or a hedge fund and you package and sell crap mortgages as fraudulent derivatives for a living... ;) ]

In any case, it -is- a market based solution. A company is going to repackage the overpriced mortgages at a new price that is affordable to lower end buyers on the market. This will enable them to stay in the home buying market, and strengthen their overall buying power in the larger market, of all goods and services.

Posted by Eric Brooks on Sep. 09, 2013 @ 8:35 pm

there is a free, open negotiation between the parties. That is not the case is eminent domain is used, because that is a compulsory purchase.

Now, the caveat is that a market price must be paid for the asset, and if Richmond were buying the house for it's current value, and assuming the current (larger) mortgage, that would be fine.

But instead they are trying to buy these loans on the cheap AND forcing the issue rather than negotiating it. That's the problem.

And yes, Richmond may make some money out of it eventually in the same way that the Feds ended up making a profit out of their holdings in Citi, AIG, Fannie etc. But that profit has then been stolen from the loan issuers.

This program without eminent domain is fine, as long as the voters and taxpayers approve of it.

Posted by Guest on Sep. 10, 2013 @ 6:27 am

You are falsely equating market mechanisms with -unfettered- 'free' market mechanisms.

There is no rule or precedent whatsoever which dictates that markets cannot or should not be regulated. And in fact Adam Smith, the -originator- of the whole concept of natural market mechanisms -expressly- pointed out that markets would fail without periodic government oversight, intervention and management.

'Free' i.e. 'unfettered' markets repeatedly and continuously fall into crisis and fail over and over again when they are allowed to run willy nilly on their own.

Richmond's eminent domain mortgage mechanism is nothing more than governmental management of market forces to guide them out of crisis and back on track, returning a sensible and sustainable market price to customers.

Posted by Eric Brooks on Sep. 10, 2013 @ 7:31 pm

It doesn't mean that the government can break those rules and grab assets on the cheap just by abusing it's power.

There is no crisis in Richmond. There are just some people who cannot afford to live where they currently live, and the market and the rules have a mechanism for dealing with that - foreclosure.

Posted by Guest on Sep. 11, 2013 @ 6:54 am

troll barrier

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into nonsensical, petty, mean spirited, irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 11, 2013 @ 7:25 am

Luckily there is zero chance of the courts allowing it.

Posted by anon on Sep. 11, 2013 @ 8:33 am

value.

the whole point of their plan is to buy these loans for less than market value under their ED plan. This is a flagrant abuse of the ED power and can set a really, really bad precedent the next time the govt wants to come a'callin. Not to mention the fact that a private company is going to be profiting off of the lowballing.

And next time the govt's use of ED may not be for something so "noble" as bailing out underwater mortgages (the vast majority of which, by the way, ARE CURRENT ON THEIR PAYMENTS!)

Posted by Guest on Sep. 11, 2013 @ 9:13 am

Nonsense. The current inflated and irrational market value is not 'fair'. That's why the mortgages will be bought for less; to bring them down to a sensible and sustainable level.

Posted by Eric Brooks on Sep. 11, 2013 @ 9:26 am

So, yes, the sums being offered for these mortgages may be at what those loans would sell for in the secondary market. But there is still a problem if you make an offer at that price, it is declined, and then you use eminent domain to seize it anyway.

The takings clause of the 5th Amendment allows a compulsory use of a private asset only for a public use. This is not a public use. It benefits a private financial company and the private owner - but it is not a valid public use in the normal sense.

Even the famous New Haven case wasn't as bad as this, and only passed muster at SCOTUS because two Justices were missing.

Posted by anon on Sep. 11, 2013 @ 9:36 am

If Richmond goes to a bank with a reasonable offer based on what those homes are actually worth and the bank cynically demands a ridiculously high price, you bet your sweet ass the city should then say "Ok, we gave you your chance and you foolishly tried to extort a higher price, so tough, we are now just going to pay you the minimum the law allows and take the damned property."

And the east coast eminent domain case is a -perfect- precedent for this. In that case, a city claimed that taking property to sell to a private company (and therefore get tax revenue for the city) was a legitimate use for eminent domain and the courts outrageously upheld that nonsense.

In the Richmond case, the city is essentially doing exactly the same thing; taking property in order to ensure a better local economy and better tax revenue.

No difference.

Wall Street real estate financiers actually manipulated to win that outrageous precedent and now the public can use that precedent to slam those same financiers for gaming the home mortgage system.

Those stupid financiers should have considered how their little maneuver would eventually backfire on them ;)

Posted by Eric Brooks on Sep. 11, 2013 @ 10:54 am

In that case, there was a broad benefit i.e. higher property tax revenues.

In Richmond's idea, the benefit is private i.e. the relatively few homeowners who would get a windfall gain. That's a private benefit, not a public benefit.

Incidentally, the New Haven action was opposed by the NAACP.

I suspect SCOTUS would rule differently on this case now. The Kelo verdict was decided by only 7 of the 9 justices, and was pre-Roberts.

Posted by Guest on Sep. 11, 2013 @ 11:11 am

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