Report: Odds against Rep. Richardson reclaiming foreclosed house

The latest on the triple-default woes of Rep. Laura Richardson, from Gene Maddaus at the Daily Breeze: "Rep. Laura Richardson will face an uphill fight as she tries to reclaim her Sacramento house, which was sold in a foreclosure auction three weeks ago."

Why the uphill fight? "It's gonna be very, very hard - even if the sale itself was improper - to get the sale reversed," Richard Timan, an attorney who has handled similar cases, told Maddaus. "People who don't make payments are not beloved by judges."

Richardson, for those just joining us, is a Democrat from Long Beach who was reportedly in default on three separate California houses earlier this year. She lost one of those houses, in Sacramento, to foreclosure, but has maintained the foreclosure sale was "improper" because she had reached a loan modification agreement with her lender.  She has yet to release details of the loan modification.

Elsewhere on the Richardson beat: Jared Allen of The Hill matches Maddaus' work, reporting Richardson's office has now confirmed she was in default on three separate California home loans earlier this year. When the story broke eight days ago, her office wouldn't confirm any defaults.

Allen also picks up the trail first blazed by Anthony York at Capitol Weekly, raising the question of whether Richardson borrowed against her homes to finance her campaigns. Allen: "... ethics watchdogs were crying foul over Richardson’s personal finances and questioning how she was able to lend her campaign to Congress $77,500 in the midst of multiple home loan defaults."

More: "Federal Election Commission (FEC) reports show that Richardson loaned her campaign a total of $77,500 — in three installments — between June and July of 2007.... (Richardson spokesman William) Marshall was unable to immediately answer questions about whether Richardson borrowed against any of her home equity — from homes she defaulted on — to finance her House campaign."

Analysis: There are a lot of interesting questions here. An e-mailer familiar with the business of loan modifications questions why Richardson's lender would agree to modify the Sacramento loan, pointing out that it would be rare for a lender to modify a loan when:
a) The borrower does not live in the house, and has no plans to live there.
b) The borrower has multiple additional mortgages and is not current on them.
c) The borrower has not tried to rent or sell the property.
d) The loan is significantly underwater -- that is, the property is worth less than the outstanding loan amount.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: L.A. Times

Comments

[Cal]

Taking money out of the house to get into The House. Now that is some smart thinkin'.

I'd love to see the legal argument for allowing her to get back the home neither the lender nor her own anymore and she wasn't paying on.

[Laker]

Why would she fight to get back the Sacramento house?
It is not worth $200,000 less than the loan amount. Even if the bank modifies the loan down by $200,000, she still could not sell it for more and pocket the difference...There is no way the $550,000 price is coming back soon...
It will be stupid of her to fight to get that house back...
If she wanted the house so much, she should have gone to the auction with cash from her NAR friends and could get it for the $350,000 or whatever it was sold to the 3rd party....
She is a stupid flipper, but not that stupid.

[Milla]

well, at least it was her own money (sorta), her own credit she ruined, her own houses she lost -- all for the campaign. her gamble didn't pay off and she paid the price. case closed.

[Rainman]

I agree with Laker. Why would she want the Sacramento house back? She most likely will never live there, certainly not as an elected official. She's from Long Beach and serves in Congress. She has no need for a home in Sacramento, especially one that she was a fool to buy in the first place. She'll probably never need a house in Sacramento in the future, because while she may keep her House seat because it's hard to knock off an incumbent, she won't get elected to any office based in Sacramento. Also, a Democratic elected official would have to be an idiot to appoint her to anything. Richardson played fast and loose with her finances and was lucky that things didn't catch up to her until she had already landed in Congress.

[CD]

Was it a zero down on all three homes ? How could she get loans on 3 properties ? Did the NAR financed her election campaign, sort of ? The NAR was very good at promoting ownership in low income neighborhood, knowing very well that most people could not qualify.She
must have come out as a hero promising a home for all her constituents and that must have made the NAR very happy.How does one check the NAR for illegal campaign contribution trough real estate donations?

[Duke of Moral Hazard]

Milla,

You really don't get it? This behavior affects all of us. She did new century loans, she did home123 loans, she did wamu loans. You think they kept these loans? Her sub-prime toxicity was put in a sterile bag and sold off to wall street, which *we* are paying for now. You can try to compartmentalize the risks of your own behavior, and that of others, but it generally won't fly on this blog, at least. Case is far from closed.

Case has just opened enough for us to see what's in it. Now we have to deal with it and keep it from getting back in.

Putting ones hands on ones hips and declaring smugly, "case closed" does not win arguments; it simply provides insight into the mindset of the person who is trying desperately to close that case.

...and I think bringing party affiliations into this is wrong headed (for those that have done this already). Let's play it where it lays.

[Duke of Moral Hazard]

Who is responsible for checking into the criminality of all this? There are federal *and* state issues here, right? Somehow I don't think the CA DOJ will be doing much serious investigatin' -- right, Edmund G. Brown, Jr.? *Who* is going to be pulling those mortgage applications to take a nice hard look?

[Milla]

Billy said: Her sub-prime toxicity was put in a sterile bag and sold off to wall street, which *we* are paying for now.

don't get me wrong. what i'm saying is that your outrage is misdirected at one congresswoman (who probably doesn't represent your district) when it should be directed at the "bigger fish" you noted above.

what i'm saying is "don't waste your anger on the small fries," but it seems like you have enough to go around.

[Al Ramirez]

I think this entire episode of events warrants a serious investigation by FEC to verify if this was indeed a fraudlent loan scheme and thus a cash out loss that should be reported as income. At the least her peers in Congress should move for Censure.

Much like Barack Obama and, not counting the sweet land deal he made with Mrs. Resko, the campaign contributions he took from Tony Resko helped them gain the traction to potentially win office. It doesn't matter if he gives the money away today to charities or if she even wrties it up as gain on her taxes the fact is both of these people took money that insured their chance for victory and it is plainly unethical.

[Uncle Bill Climbs Mont Pelerin]

Milla, Puh-lenty.

There used to be a cartoon that ran in the L.A.Weekly, week in and week out. It was the same picture every time-- a vicious looking dog that was straining at its chain. Caption: The World's Angriest Dog. Plenty of anger to go around. Plenty of sunshine too, but plenty of anger.

Here, let's put a face on that big bad NAR as well. We've got Dick Gaylord, the new guy from Long Beach (strange when all the major NAR personalities are centered around HQ in VA and DC). What did he do to deserve that position?

And for anyone else that is angry... let me introduce you to the chief lobbyist of the most powerful lobby in the country: Jerry Giovaniello. You know all that housing-related legislation stuff? You can thank him for most of that. If Laura Richardson doesn't do it for you, and all you can do is shake your head at our current admin... he might do the trick.

Are you home sick again? That mortgage ain't gunna pay for itself. No more posting until 10:00 p.m.

[mike d]

This is a pretty easy tale to figure out. Borrow money against a home with no intent to pay it back, finance your election to Congress with the banks money, purposely not pay back the debt so the home is forclosed, complain to the media that you are a victim of bank greed, gain millions in free publicity as a champion against evil big business, guarantee yourself a good income as a Congressman for the next ten years, and a pension for life with full medical benefits, stick the bill for all of this to the bank who intern stops lending, driving all of our house prices down. What is so hard to understand here?

[lbids]

In the big scheme of what happend, Richardson is a small fish. But is also seems clear that some law was violated in one or more of those loan applications. Either she lied about her income and assets or someone higher in the chain approved a loan so irresponsible that it had to violate some bank regulation/law.

The IRS doesn't prosecute every tax cheat- it admits it focuses on high profile cases like wesley snipes. For the same reason I think Richardson (and her enablers) should be prosecuted as poster children for what went wrong in the mortgage industry in the last five years.
And I say this all as a true blue democrat.

[Milla]

i'll save my blame for mozillo and his ilk, as they were the ones holding the purse and allowing this to happen and could have prevented this from happening, NAR lobbying be damned. if we follow the money, we'll notice that it's the lenders going broke now from writing too many bad loans that their underwriters should have known better than to write. the foreclosed homeowners are just collateral damage.

and billy, quit your worrying about my mortgage. i am paying it so you don't have to. promise! but please feel free to send me a housewarming gift or come over and mop my floors.

[campechano]

Can we stop talking about this loser and go back to talking about the housing market? One, two articles, fine....but I am getting pretty bored here...Come on Peter how about some reports on Orange Co. or San Diego or something...

[Uncle Billy Climbs Mont Pelerin]

Milla,

Only if you have 6 months rent in reserve! Btw did you notice how much you just sounded like Laura Richardson as described by LR's assistant's mom? She (or someone claiming to be her) posted under the name dfree.

The appropriate time for the housewarming gift will be at the mortgage burning ceremony. If you agree to host the holiday blog party, I might reconsider this. As for floor mopping, you might consider a personal assistant. I would do it, but I'm already mopping the floors with someone.

[Cal]

Didn't Milla get a taxpayer assisted down and mortgage? Aren't we already paying for her mortgage?

[Jose]

ALL shady lawmakers should be looked into.

IMAGINE HOW MANY OF THEM ALSO RECEIVED THE KINDS OF INSANE MORTGAGES WE READ ABOUT!

Two birds with one stone:
1. Punish public figures hard may discourage others.
2. Punishing public figures = Schadenfreude.

[shockg]

While I find what she did dispicable, leave her alone already.

[jb]

Duke - I dont get your comments... I think she is irresponsible, etc but not nearly as eggregious as the bank that lent her then money!!!

With an army of highly paid risk assessment professionals whose entire job is to protect the bank against losses!?! Surely they asked for a substantial downpayment to protect their money? They are the professionals with all of the tools - WaMu and the like should go out of business - no more 200K salaries plus huge bonuses for not doing their job...

in case this wasn't clear, my anger is directed at the highly trained banks, not some idiot borrower (note, I dont know or care who this lady is or what politics etc)

jb

[jesse]

an laland blog party. when, where?

[Chip]

Maybe Ms Richardson should contact Maxine Waters and they can expropriate Countrywide and then forgive Ms Richardson's debts or Ms Waters could have Exxon pay the Richardsons debts once she expropriates the oil companies

[Uncle Billy Climbs Mont Pelerin]

Jesse: It hasn't been organized yet as far as I know. So far there's only been "general talk" about having one.
I thought maybe we could do it in conjunction with a downtown walk. Doubt it will work though... we'd just have a bunch of people screaming at each other: "Bitter Renters" and "Opportunist Flippers" "Idiot Real Estate Agents" "Scumbag Lenders" etc.

Cal: Waitasec... the actual cash came out of our pockets? Like one of those local silent second dealeebobs? Oh... Milla... you'd better have hit the lottery.

JB: Well, when we don't regulate lenders... they do that sort of thing. When we don't regulate politicians, they do that sort of thing. I just find it much easier to be angry with individuals than with institutions: With institutions you go round and round in fingerpointing parties. So, we've got another poster child. Let's use her. Definitely can't let her continue on in DC where her delightful take on ethics would most certainly lead us down the garden path to further financial insanity.

See, and they've rigged it so that we can't just let the banks go out of business (well not the big ones, and not a lot of them) because then we'd probalby have a depression on our hands instead of just a horrible recession. Show me more really bad big boys and I'll throw rocks at them too.

In the spirit of doing something constructive -- negative nabobery can get old fast -- how bout we just throw out all the known bad apples, supplement the good ones with a panel of untouchable "tribal elders" that have no incentive to do any evil, and then figure out how to really get this country moving. Easy as 123.

[Milla]

Cal: get over it already. the loan i received was down assistance from the city and it is a LOAN that is to be PAID BACK in full, plus PROFITS from the sale of my house. it's hardly the freebie you make it out to be.

so no, you're not paying my mortgage though i am accepting donations and housewarming gifts -- and still waiting on the Cal poster.

[Cal]

Isn't it a no interest silent second that is to be paid back + shared appreciation of 12%?

Let's just assume 50k at 7.5% (cheap interest rate for a second).

Now lets calculate a miracle scenario where your house appreciates 200k in the next 15 years.

In 15 years 50k @ 7.5% in the bank would be $147,943. You pay back the 50k plus 24k of shared appreciation. 74k versus $147,943. How are we not paying again?

And what happens if you just sell at break even? How are we not paying for this again?

What if you default? How are we not paying for this again?

You got a taxpayer handout. Enjoy it, But don't say we aren't paying for it.

[Milla]

7.5 is pushing it, don't you think? but feel free to use a 10% interest rate to make your example more dramatic. oh no, and what if i default?!?! keep holding your breath. i know i got a good loan, and i'm thankful for it. i bet you look for the lowest interest rate when shopping around for your own loans.

if you expect a big ROI on every dollar you pay in taxes, maybe you should write a few letters to your representative about all the tax dollars wasted on such things as governmental earmarks, the salaries of crooked cops, the $12 BILLION spent each month in Iraq.

but if you still think that a $50K LOAN (still not a gift or handout) that helped a single girl with good credit and a good job take a foreclosed house off the market and fix it up is such a misuse of your tax dollars, then i understand. and i should indeed thank you for your donation. it made all the difference when i was choosing between the terazzo and laminate countertops.