Donate

San Francisco Weighs Joining Richmond to Help ‘Underwater’ Homeowners

| July 10, 2014
  • Share:
  • Facebook
  • Pinterest
  • Reddit
  • Email
Richmond is attempting to use eminent domain to help 'underwater' mortgage holders. (Justin Sullivan/Getty Images)

Richmond is attempting to use eminent domain to help ‘underwater’ mortgage holders. (Justin Sullivan/Getty Images)

Members of the San Francisco Board of Supervisors say they want the city to join Richmond in a controversial effort to help homeowners facing foreclosure. In a program facing legal threats and stalled by a City Council minority, Richmond wants to use its power of eminent domain to seize “underwater” homes — properties for which mortgage holders owe more than the homes are currently worth.

San Francisco Supervisor John Avalos says he’s working with the city attorney’s office to draft legislation to create a joint powers authority with Richmond that could help deflect lawsuit threats and allow the program to go ahead. At the Board of Supervisors meeting Tuesday, Avalos postponed a vote on a resolution commending Richmond for its eminent domain program and declaring San Francisco’s intention to sign on to a joint powers authority. Co-sponsors include Supervisors David Campos, Jane Kim and Eric Mar.

Under Richmond’s plan, the city would work with an outside investment firm to take over as many as 600 underwater properties or buy them at current market value, and then grant new, affordable mortgages. The banking and real estate industries and federal home loan authorities oppose the plan. Supporters of the plan on the Richmond City Council, which voted to set up the program last year, have been unable to get the supermajority of members they’d need to actually go ahead with seizing properties. The main worry expressed by opponents: the city’s possible liability if it’s sued.

But the program might proceed if other cities sign on to the plan — especially one with the financial clout of San Francisco.

“San Francisco joining that effort, especially when we are a center of financial institutions, would send a strong message that creating these tools to protect households against defaults and foreclosures is essential,” Avalos said Wednesday.

Avalos said the program would also help people San Francisco residents. He hopes to introduce the legislation to the board by the end of the month.

“This will be an enormous boon for a lot of working-class communities of color,” he said. “We have a huge out-migration of African-Americans in San Francisco, and many African-American households see this as a real strong tool that will enable them to stay in the city.”

Richmond City Councilman Tom Butt has supported the eminent domain plan from the beginning — he calls it a creative and brilliant solution to the city’s housing problems. But he says he’s not expecting San Francisco or any other city to join Richmond soon.

“We’ve been two weeks away from having a partner for the last nine months,” he said. “So every time some city takes an interest in this, I sort of take it with a grain of salt. It’d be great if it happened but it would also, I think, surprise me.”

Butt said even if another city signs on immediately, unresolved legal issues mean it could take years before eminent domain could bail out a single household.

Related

Explore: , ,

Category: Housing

  • Share:
  • Facebook
  • Pinterest
  • Reddit
  • Email
  • dongosney

    I wonder if it will be the same in San Francisco as it is in Richmond where a large number of the homes on the list are owned by upper cast people who used their homes like ATMs and sucked the equity out so they could live large. Then, when the bubble burst, they’re crying foul claiming they were duped into mortgages that, in the long run, were unfavorable to them. How many times can progressives go to the well in the guise of taking care of the poor only to subsidize the wealthy.

    And whether the progressives want to admit it or not, owning a home may not be in the cards for everyone. In the world we live in today, large families (meaning large expenditures) may not have the financial wherewithal to afford to own their own home. Adjustments to their lifestyles may need to be made in order for them to afford a home of their own. Just because they may want a home of their own it does not mean that they have the right to their own home at the cost of other people.

    And please do not go off on Big Banks owning the paper on these homes. Most of the paper was sold off almost immediately and most of these mortgages are now owned by investment portfolios largely owned by pension plans. So these people–the well off and the less well off–want working people to bail them out by taking it in the shorts in their own pension plans just so the people who mismanaged their personal finances can have something given to them?

  • Marcy

    Such a resolution is to be expected in a progressive city like San Francisco, where private property and the rules of the marketplace are ignored. However, even if expected, the resolution needs to be opposed. The City will face expensive lawsuits mounted by lenders protecting their investments. Investors will avoid the City or raise the cost of borrowing in order to make up for the City’s property grab. More egregiously, San Francisco is forging ahead on its road to replace legitimate government by governance which removes decisions from voters’ hands and places them into bureaucrats’ purview. Several other cities have declined Richmond’s invitation to join in the regional authority — not San Francisco.

  • Aubrey

    Which crisis are we talking about now? Here in San Francisco housing prices are going up by the minute. I just received a real estate flyer in the email showing a house in my neighborhood (solid middle class, not upper class) that sold for $955K when the asking price was $849K. I can’t imagine why politicians feel the need to get involved in this at all. If someone was silly enough to overextend themselves with a loan they couldn’t afford, at least here in San Francisco they shouldn’t have to wait too long to get out from “being under water.” Let them take personal responsibility for their own decisions and not get city/county government involved.

    • WhiteRabbit660

      Personal responsibility in San Francisco! How dare you! ;)

      This falls under two wrongs don’t make a right. Banks and those who mislead investors and packaged bad loans need to pay ($$$, prison). Those who bit off more than they could chew (no one forced them to buy or refi or take out equity) need to pay as well. Not get mommy and daddy to help them not face the consequences of their actions.