S.D. official sues to block foreclosures, wants 'foreclosure sanctuary'

Breaking news, from Reuters: San Diego City Attorney Michael Aguirre said Wednesday that he filed a lawsuit against Bank of America Corp. and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in his city, which he aims to make a "foreclosure sanctuary."

More: "Aguirre plans to file similar lawsuits against Washington Mutual Inc., Wells Fargo & Co. and Wachovia Corp. in an effort to make the lenders negotiate with mortgage borrowers facing foreclosure."

Bank of America had no immediate comment on the suit.

From the San Diego Union-Tribune: "In a press conference held in front of a vacant, partially burnt Skyline home that has recently been taken over by Countrywide, Aguirre said he hopes his suit will be a way to bring other lenders together to work out settlements with borrowers who are about to lose their homes or who already have been foreclosed on.

More: "'We are asking that any additional foreclosures be stopped and that the parties come together and work out a reasonable alternative based on the values of these properties today so we can stop the spread of this foreclosure disease,'" Aguirre said.

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Comments

[Doug in Toronto]

I read the suit (PDF is available by link from the Union-Tribune site). It's not as unreasonable as some here would claim. The suit does give lenders some opportunity to foreclose, but would impose (seemingly) mandatory meetings and discussion before foreclosure proceedings.

Not an unreasonable action to me, but in a country where litigation is the new national sport, who knows for sure?

[Ragnar]

Well, at least Aguirre is bringing free media attention to his city in an attempt to raise awareness that banks are not working with homeowners to create mutually beneficial situations for both parties. The strategy may be more PR than anything.

[dutchtrader]

If I was any of these banks I would either stop lending altogether or charge absurd interest rates for new loans.

[Tony]

Why not just have a press conference and announce that you plan on wasting tax payer money on a frivolous lawsuit that has no legal basis and no chance of success?

Publicity stunt. Nothing more.

[LA-renter]

I APPLAUD the (albeit self-serving too) CITY ATTORNEY.

Blame is everywhere and piled deep.

But the insidious bandits are the bankers and brokers, who truly should have known better for their own (emphasize, long-term) well-being and social stability. The same bandits will now feed on government bailout(s) and fees on those caught in their web.

Until someone here shows me numbers that show otherwise, I refuse to believe that MOST people overpaying for houses were speculators/flippers/con artists. MOST "loan-owners" were people who, in the midst of a bubble, wanted to live life and live in their own home. They listened to fools and fooled themselves about the housing bubble.

[Fourth Generation]

Now that is the most ridiculous plan as of today. This will only make all those involved to loose more money since housing prices are not finished falling yet and will keep squatters on the properties that have no intention to keep paying for a house that is loosing value daily. Stop meddling with the "free market" if you like it when it was going up in a bubble then suck up and live with the burst.

[Mike P.]

So why should anyone keep paying their mortgage in San Diego? You're better off withholding payment and forcing the bank to rework your loan to terms more advantageous to you, regardless of your situation.

[John]

I've finally decided that I will simply stop making my morgage payment today. Why bother since the bank won't be able to foreclose on me anyway? I get to live in my house for free from here on out.

[John]

I've finally decided that I will simply stop making my morgage payment today. Why bother since the bank won't be able to foreclose on me anyway? I get to live in my house for free from here on out.

[William E. Jones]

Why stop at foreclosure? Why can't San Diego (once known as "America's Finest City" - until political scandals made the title look rediculous) become a refuge for people fleeing all of the adverse consequences of their poor decisions? Speeding tickets? San Diego will be a refuge for those fleeing them. Do you eat too much? San Diego will be a refuge for the obese. Drink too much? San Diego will be a refuge for the alcoholic. Forget to pay your taxes? Head to San Diego.

[ocrenter]

why would anyone applaud this guy.

he is attempting to halt ALL foreclosures.

don't you guys realize that a large part of foreclosures going through the pipeline right now were results of fraud and irresponsible speculation? the foreclosure is a necessary process of cleansing to transfer the properties from greedy flippers and speculators back to ordinary families that did not participate in the bubble.

for every family he helps, he also helps a flipper that bought 3-4 homes that became flops.

[Cal]

I don't get Lakers rant, he wants prices to go down. The DA's action will make lenders less likely to lend and interest rates higher.. so prices will drop. And Laker is mad about it.

[sheila]

Aguirre is taking on all the Big Corporate jerks that are ruining our lives. He recently SLAMMED Sempra/SDG & E for their corruption, pricing/supply manipulations in the natural gas markets, and preventing ratepayers from installing solar (surprise, surprise) to personally enrich themselves through unneeded gas "peaker plants."

Now he is not just tolling foreclosures temporarily, he is going after the Profiteers who caused this mess. How that didn't get into the summary above is indeed a mystery. All you haters of Mozilo should be cheering him, so why are you all mad?

Money quote:

" Aguirre's lawsuit, brought in the name of the people of California, names four current and former Countrywide officers, including former CEO Angelo Mozilo, and alleges they personally profited from selling shares of the lender's stock while knowing its subprime loans did not comply with company policies.

"The Countrywide executives who originated these subprime loans were engaged in a massive fraud on homeowners, borrowers and investors," Aguirre said. "They enriched themselves by over $1 billion."

Sorry, but i believe that some responsible people got caught in a crazy crunch by using a normal lending vehicle (ARM), and relying on the kind of refinancing people have been doing for 25 years, even in slumps. it's not just the price drops, it's the sudden, unprecedented lack of credit that screwed them. Those people deserve a shot at negotiating a long-term market rate regular mortgage, so he's forcing lenders to the table. That helps everyone...

[Laker]

Cal,
Let me explain. First i want justice, second i want prices to go down and become affordable.

I agree that if you stop foreclosures, banks will either stop lending or rise interest rate to credit card rates (as i said before). But they will do so to collect money from good people because the bad people refused to pay or got their city attorney to guide them not to pay and stay free in the house. That is not just, and that is why I'm pissed.
We all know that this will not happen, but still, thinking about rewarding the undeserving and punishing the good is bad!

[San Diego dentist]

This is a total wast of San Diego tax payer money! IF lenders cannot act if they are not paid, do you really think they will lend to new San Diego homeowners???

It will take a few more YEARS before California foreclosures taper off. I just read a good article about another wave of home forclosures that will hit next year. Not subprime loans, but more traditional ARM's on mid to higher end homes. The story is about the San Diego real estate market, but, seems it will apply to any California cities that had hyper-inflation in home values. The article is: "San Diego Real Estate … The Coming Next Wave of Foreclosures" published on 7-17-08 at:
http://www.brokerforyou.com/brokerforyou/

[notforthemoney]

Sounds like a terrific scheme to shut down mortgage lending completely. What do you suppose that will do to housing values?