Skip to comments.Foreclosure tale shows that nobody is immune from crisis
Posted on 05/21/2008 11:33:58 AM PDT by Dawnsblood
As the real estate market softened in 2007, the new owner of a three-bedroom, 1,600-square-foot house in Sacramento's Curtis Park neighborhood ran into trouble. The house that was purchased for $535,000 in January had lost equity. The owner fell behind in her payments, and eventually, the bank seized the home.
What makes this story different from the thousands like it is that the owner of this house was a member of Congress.
The story of the foreclosure of Long Beach Democrat Laura Richardson's Sacramento home is a tale of a real estate market gone sour. It is also an illustration of how far many candidates will go to seek elected office, even if it means quite literally mortgaging their own financial future.
While being elevated to Congress in a 2007 special election, Richardson apparently stopped making payments on her new Sacramento home, and eventually walked away from it, leaving nearly $600,000 in unpaid loans and fees.
(Excerpt) Read more at capitolweekly.net ...
“eventually walked away from unpaid loans.”
Sounds like a congressman to me!
What a sleeze ball. They should sue her for mortgage fraud. Any loan that goes south that quickily was fraudulent.
I suppose they will re-elect her..she fits the RAT profile perfectly.
Democrat not being good with money? Hmmm.
Residential real-estate - what a scam. If it goes up in value, pocket up to $500K tax free. If it goes down, walk away and try again in a few years or wait for a bailout from the government. Privatized profit, socialized risk. The hallmark of a free market. /sarc
There are so many aggravating things listed in that article, I couldn’t even pick one to hone in on!
I agree. Kept looking for something to comment on. The whole thing makes me sick.
Here’s a thought Missy - it’s called RENTING. Your job is not permanent in the Assembly in any event - you could be voted out in four years. A $500,000+ house in the Sacto area is nothing to sneeze at, even before the market went south - you could have rented a town house on your @#$%^ per diem and not contributed to the credit crisis.
I’m surprised that the article mentions that she’s a Democrat.
I hope her Republican challenger is taking notes. Long Beach is pretty blue collar - they aren’t gonna appreciate this.
The government doesn’t bail-out these real estate gamblers, many of whom are “flippers”, that land up in foreclosure, we the taxpayers do.
Has the taxpayer foot the bill.
I’m going to make a fair guess that the $535k house was never worth that amount...and likely was probably worth no more than $400k max. What gets me...across high-cost urban areas, in California, Seattle, Florida, etc....house prices simply went beyond logic and nobody questioned paying $400k for a house that worth a $100k less. I know of lots of military folks in the panhandle of Florida leaving this summer and their home value has suddenly lost twenty-five percent and they can’t sell although they must rotate to another base. Even renting is a joke when it barely covers 70 percent of what you have to pay the bank each month.
Everyone got a unrealistic vision of homes gaining seven percent a year, and thinking that was typical and normal...while it isn’t. You go and browse around areas like Flagstaff and Vegas...and things are a joke. Its not a crisis...its an act of stupidity which everyone is a part of. I live in Germany and work for the US government...and the home I bought fourteen years ago is probably valued at four percent above what I paid originally. This is reality...where homes don’t double in price over twenty years.
Foreclosures here have increased in the past year, but not a big jump. We never had "bubble" conditions, and so prices haven't fallen that much (or even at all in the "best" areas). There aren't so many upside down mortgages.
And while she was failing to make payments on the home, she had no problem spending $60K of her own money on her congressional campaign.
I will pick one.
You would think people who are making decisions for others would be able to make good decisions for themselves,” she said. “She should have known what she could afford and not afford. In this neighborhood, you just don’t do that.”
These are the folks that are getting elected, citizens in this country are fools.
There is no shame anymore for defaulting on loans, or debts.
If there was we would not be seeing this crap.
I say that banks should attach her salary,bank accounts,savings and campaign coffers until this debt is payed off.
Why should I have to pay for something she could not afford.
Typical leftist thinking, I want it, someone else will pay.
Even worse. This was NOT her primary residence.
The headline is very misleading no one being “immune” from crisis implies that this congresswoman was helpless.
Quite the contrary - she basically funded her campaign race using a mortgage intended for a home.
I understand that walking away does not absolve a buyer from his/her debt. Wouldn’t she still owes the mortgage holder the amount of the difference she contracted, and its current value?
Probably they were the very ones who needed "Stated Income" or "Liars' Loans".
"Needed" is the point:
"You NEED to live in Pretentia Shores Luxury Estates-You DESERVE TO! For The Children, of course."
To heck with them.
I seem to remember that there’s also a tax hit.
In CA mortgages are no recourse by law, as they are in most states.
She bought the house in January. $350 per square ft is an outrageous price for Sacamena showing how rediculous the Greespan driven real estate bubble had gottne. $600,000 in unpaid loans and "fees" shows what the wolves have tried to tack on on top of the original mortgage less down payment.
Only villains in this story.
This is an example of what happens when banks write high LTV loans.
There should be a federal requirement that mortgages require, without exception, 20% down payment on the property. Requiring people to have their own money tied up in the property is what prevents walk-aways like this.
Now if the lender wants a taxpayer bailout, they can go aim at a rolling donut.
Yeah, it could happen to anyone...BS. She made her choice.
She made no down payment. She fell $18,000 behind in her payments by December. What do you suppose her interest and property taxes added up to each month?
Three months later, on March 19, a notice was filed with the county that Richardson's property would be sold at auction. According to the documents, the unpaid balance and other charges Richardson owed the bank was $587,384.
$535,000 plus $18,000 plus unpaid interest, insurance and property taxes thru March and you're blaming the "wolves"? LOL!
I bought a larger, nicer house in south Texas for 38,500 on 1 2/3 acres in 1989...
Half a mil for a 1600 sq ft house is ridiculous...
I blame all of them. LOL!
Where have we heard that name before. LOL! No wolves, weasels. LOL!!!!
You are I might think somebody has a lot of walking around money from that deal. Baghdad Todd thinks that the whole thing inlcuding about $60,000 in 3 months interest and "fees" is just on the up and up. It doesn't matter, since CA is no recourse and the bank gets to eat it all anyway. Wonder what the property will turn out to be worth really.
Congress: Rank-and-File Members’ Salary
The current salary (2008) for rank-and-file members of the House and Senate is $169,300 per year.
My mistake. When I saw this....
Only villains in this story.
I thought you were saying the bank was the only villain.
that house is currently listed at $600k. Zestimate puts it at $513k.
I suspect it'll still sell for $500k+, even in this market. It's a 1927 home with all the extras in a VERY desirable neighborhood, right across the street from a beautiful park.
I would have purchased there if I could have afforded it.
Let's see, jumbo mortgage, $553,000 plus late fees and penalties from 2007. Plus 3 months of interest, insurance and property taxes (what do you suppose property taxes for a newly bought $535,000 home in CA could be?)
You're right, they charged her $60,000 in fees. LOL!
>I seem to remember that there’s also a tax hit.<
You are right, Mamzelle. A forgiven (?) mortgage debt carries full tax consequences. Thanks for reminding me. :)
One of these days, perhaps civil discourse will be possible between us. It starts with the admission that a lot of folks are to blame for the financial chicanary of the last some many years, bankers, central bankers, borrowers - certainly, though not all borrowing is strictly voluntary in an inflationary economy - brokers, the real estate "industry," homebuilders homeowners and flippers thinking $100 per square foot real estate (based on land, material and cost of labor) is really worth $350 per square foot, economists, presidents looking the other way in return for license to do their own thing (whether it is wars or interns), politicians for their own perverse reasons, etc. etc. It is sytem wide, and none of this nonsense has anything to do with the business of providing money for capital projects to improve quality and quantity of goods and services to be provided in natioanl and international markets.
$535K for a 1,600 sq ft house in Sac is way overpriced, even when it was purchased. That’s $335 per foot - something is wrong here. Yes, Sac RE is high, but this is a fishy deal on its surface.
From which you subtract rents in DC (minimum about $3,000 per month) then multiply by 3 to come up with affordability and from that you subtract the outstanding mortgage on any other property. You don’t come up with the payments on a $535,000 mortgage out of that calculation. But then this was how WAMU apparently did business.
It starts with the admission that a lot of folks are to blame for the financial chicanary of the last some many years, bankers, central bankers, borrowers ... brokers, the real estate "industry," homebuilders homeowners and flippers ... economists, presidents ... politicians
Not just the Fed? You're making progress.
It is sytem wide, and none of this nonsense has anything to do with the business of providing money for capital projects to improve quality and quantity of goods and services to be provided in natioanl and international markets.
Yeah, people make bad investment choices.
Back to the case at hand. She borrowed $535,000. Fell behind $18,000 in 2007. Sounds like her balance is up to at least $553,000. 3 more months this year, probably at least $8,000 in interest and $1,500 in property taxes. Now we're up to $562,500. Her final balance was estimated at $578,384.52.
Yeah, maybe $16,000 in fees and penalties was close to your estimate of $60,000.
I wonder if the loan documents say that? If so - FRAUD.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
I'm sure this is what Pelosi meant by "culture of corruption".
The story published in the Capitol Weekly regarding residential property that I own in Sacramento requires clarification.
Within a 12-month period last year (2007-2008), I was a member of Long Beach City Council, the District Director for California Lt. Gov. Cruz Bustamante, a member of the California State Legislature, and, now a member of Congress. While the transitioning has impacted me personally, the residential property in Sacramento California is not in foreclosure and has NOT been seized by the bank.
I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement -- with no special provisions. I fully intend to fulfill all financial obligations of this property.
On two housing bills that were cited by the Capitol Weekly, the allegation is that I recused myself from these votes. I did not. I was absent from Washington, D.C., and my duties in the House of Representatives due to the untimely death of my father and his subsequent funeral in California.
I understand that these homeownership issues are a reflection of what many Americans are going through as they fight to keep their homes and to remain financially stable.
I am a mortgage banker and deal with these situations daily. I would not have wanted to be WaMu negotiating with this 'Rat.
There never was a real estate "industry" but I heard that numerous times in the pre-crash era
Also heard that real estate is the engine of the US economy
A real industry makes things while the real estate "industry" has been a vast paper shuffle for years. Yes this "industry" built houses, houses were built but now many are empty and abandoned
BTW My father owned a real sheet metal factory, real industry in the real world. I worked there in the summers
Good reply to the toddler