Fair housing groups ask courts to squelch investor lawsuit against Richmond
By Robert Rogers
Monday, September 9th, 2013 at 5:04 pm
Fair Housing Groups Ask Court to Deny Banks’ Effort to
Stop Richmond’s Mortgage Rescue Plan
Industry threats constitute illegal, discriminatory lending practice, and would lead to redlining in Richmond
A coalition of fair housing and civil right groups filed an amicus brief in federal court today, supporting the City of Richmond’s opposition to a motion for preliminary injunction filed by trustees Wells Fargo Bank and Deutsche Bank. The trustees (Wells and Deutsche Bank) seek to block the City’s plan to help homeowners by restructuring underwater mortgages.
The brief, filed by the law firm Relman, Dane, & Colfax PLLC, on behalf of the National Housing Law Project, Housing and Economic Rights Advocates, Bay Area Legal Aid, the Law Foundation of Silicon Valley, and the California Reinvestment Coalition, argues that the actions the securitization industry has threatened to take to block the program, known as Richmond CARES, would amount to illegal redlining and would violate federal and state fair housing and fair lending laws, including the federal Fair Housing Act.
Richmond is 40% Hispanic and 25% African-American, and the fair housing and civil rights groups argue that the Securities Industries and Financial Markets Association’s (SIFMA) plan would therefore have a disparate impact on minority borrowers.
Kevin Stein, Associate Director at the California Reinvestment Coalition, explained: “Banks continue to fail at keeping Richmond families in their homes, without any real consequences from their regulators. Instead of fighting the city and threatening to redline Richmond, the banks should refocus their efforts on helping homeowners, especially since more than half (51%) of them are underwater in Richmond.”
Last summer, the Securities Industries and Financial Markets Association (SIFMA) announced that in response to Richmond’s plan to help homeowners, SIFMA would block any future mortgages made in Richmond from being accepted in the most desirable part of the secondary market for mortgage-backed securities (MBS). By restricting access, the cost of credit would likely rise dramatically for Richmond borrowers.
Marcia Rosen, Executive Director of the National Housing Law Project, explained: “The Banks’ attempt to prevent Richmond from responding to its foreclosure crisis is especially egregious given their role in the predatory lending underlying the crisis. And the assertion that the injunction is necessary to protect the public interest from their own threatened redlining of the city must be seen for what it is — discrimination in violation of the Fair Housing Act that would further harm this beleaguered city and its residents.”
“What the securitization industry says it will do to the people of Richmond if it loses in the city council and the federal courthouse is racially discriminatory redlining, and it is illegal under federal and state law. We fully expect that if the industry ever tries to go forward with its redlining plan, a court will step in and stop it,” said Glenn Schlactus of Relman, Dane & Colfax, a civil rights law firm based in Washington, D.C.
Maeve Elise Brown, Executive Director at Housing and Economic Rights Advocates, explained, “The mortgage servicing industry has lost money for investors for years by failing to work with homeowners on foreclosure avoidance options, particularly principal reduction. The industry knows that principal reduction is the wise financial choice for investors and homeowners alike. But now, disingenuously, the industry claims that a plan with principal reduction will hurt investors. The fact is, the eminent domain proposal is likely to save investors money over the years to come, as well as maintaining communities and saving the city from tremendous losses.”
Hearing: A hearing on the trustees’ motion for a preliminary injunction and the City of Richmond’s motion to dismiss the case will be held on September 12, 2013, at 10:00 a.m. at the U.S. District Court for the Northern District of California, the Honorable Charles R. Breyer, presiding.
San Francisco Resolution supporting Richmond introduced: A resolution supporting the City of Richmond’s program was introduced today by San Francisco County Supervisor David Campos, recognizing the damage done to local communities by the foreclosure crisis, and supporting Richmond’s efforts to confront the problem head on.
The City of Richmond’s local principal reduction program Richmond CARES, launched with a vote by City Council in April, 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. Community, labor and faith groupssupporting the program say it will allow the City to preserve wealth in local hands, especially in communities of color and low-income communities that have been decimated by the foreclosure crisis and see no end in sight. In Richmond, 51% of all residential mortgage holders are still underwater.
In August, more than 50 fair housing, labor and community groups sent a letter to Congress, declaring that federal agencies should respect the right of cities like to pursue local principal reduction programs without facing redlining or illegal discrimination by the big banks or federal agencies.
San Francisco supervisor proposes support for Richmond eminent domain plan
By Robert Rogers
Friday, September 6th, 2013 at 4:59 pm in business, Cities, Contra Costa County, Politics, Richmond.
Media Alert: EVENT Monday, September 9, 2013
For More Information:
John Eller, ACCE 415-725-9869(cell) firstname.lastname@example.org
Hillary Ronen Legislative Aide to Supervisor David Campos 415-425-9785 Hillary.email@example.com
Nick Sifuentes, 310-866-1692, firstname.lastname@example.org
San Francisco Supervisor Campos Announces Support for Program to Buy Mortgages, Fix Underwater Crisis
Will introduce resolution supporting Richmond’s Local Principal Reduction plan and have San Francisco investigate use of eminent domain to save underwater borrowers
San Francisco: On Monday, September 9, 2013, at 10:00 a.m. (Pacific) San Francisco Supervisor David Campos will announce his intention to introduce a resolution before the County Board of Supervisors expressing support for the City of Richmond’s innovative effort to save hundreds of underwater borrowers (Richmond CARES), and instructing staff to explore opportunities in San Francisco to adopt a similar program.
“For the last few years, we have seen Wall Street Banks challenge every effort to rebuild our hardest hit communities from the foreclosure and economic crisis,” stated Supervisor Campos “today we need to show solidarity with bold leaders of Richmond in their effort to break the status quo as defined by Wall Street and rebuild their communities.”
WHAT: Press Conference to announce a City Resolution that would:
1. Have San Francisco stand with the Mayor and City Councilmembers of Richmond to use similar lawful methods at their disposal as they work to save homes and save neighborhoods;
2. Calls on Wells Fargo – whose home is in San Francisco, SIFMA, and FHFA to stop threatening communities with reprisals and litigation and instead work with them to negotiate principal reduction for underwater mortgages as a way to strengthen local economies and help keep families in their homes; and
3. Explore how a Local Principal Reduction program similar to the one being implemented by the City of Richmond could work here in San Francisco.
WHERE: East Steps of San Francisco City Hall (Polk Street)
WHEN: Monday, September 9, 2013 10:00 a.m.
WHO: City supervisors and leaders from labor, faith, and community; underwater San
Francisco borrowers that received principle reduction and San Francisco borrowers who want the same opportunity.
On July 30, 2013, the City of Richmond became the first municipality in the nation to step boldly in where the federal government and the banks have failed, offering to purchase more than 600 city mortgages from major Wall Street banks and other servicers to achieve local principle 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.
Wrongful foreclosures have caused a catastrophic loss of wealth. Often 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%.
The Richmond program is an innovative program that enables cities 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.
After an unprecedented push by local residents in Richmond to find ways to help struggling homeowners, the Richmond City Council approved the plan in April and sent letters to the banks in late July to offer to purchase underwater mortgages and, if needed, use the city’s eminent domain authority if necessary help struggling homeowners restructure their loans to be in line with the current value of their homes. The City of Richmond is working in partnership with Mortgage Resolution Partners, an advisory firm that has lined up the funding and technical support needed to carry out this program.
“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.”
Though the City of Richmond is leading the way nationwide on local principle reduction, other California cities such as El Monte and La Puente are advancing this as well.
Supervisor Campos is District 9 Supervisor for the Mission and Bernal Heights Neighborhoods of San Francisco, two neighborhoods impacted by the Foreclosure Crisis. Occupy Bernal was formed last year and has already saved dozens of homeowners from foreclosure through principal reduction by banks and servicers. Occupy Bernal has proven that servicers and borrowers can work together to achieve what Richmond is proposing and Banks like Wells Fargo is opposing.
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. In a few short months, a coalition of more than 50 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 that enact local principle reduction from receiving federally backed home mortgage loans. For more information, please visit: www.saverichmondhomes.org.