Oakland may soon study the possibility of creating an aggressive program to protect homeowners from foreclosure, inspired by Richmond’s program that includes the possibility of seizing mortgages through eminent domain. In a special session on November 5, the city council decided that at its next meeting, November 19, it would consider two similar but competing resolutions, both of which would commend the City of Richmond for its pioneering program and launch an investigation into whether Oakland should adopt a similar strategy.[jump]
At the special session, ACCE members, representatives from other community organizations, and councilmembers themselves described many ways Oakland’s flatlands neighborhoods have been devastated by the foreclosure crisis, which lifelong Oakland resident Billie Jene Carter described as “terrorism inflicted on us by the banks.”
Patrick Lynch, director of Housing and Community Development in Richmond, described the progress of that city’s initiative, which specifically targets mortgages that have been packaged into securities and sold to investors. Richmond has sent letters to 32 companies that own such securities, which together own about 1,400 mortgages in the city. Richmond offered to buy these mortgages, all “underwater” — the homeowner owes more than the home is now worth. The city would then negotiate a new mortgage with the homeowner, including principal reduction.
If the mortgage holders refuse to sell, the plan is to seize the mortgages under eminent domain, but lenders are now battling this plan in court. In addition, Lynch said, proponents have not yet lined up a majority of “yes” votes on the Richmond City Council, which would allow the eminent domain part of the plan to go ahead.
ACCE activist Ralph Kanz emphasized that the goal of the program is not eminent domain but principal reduction. He and several other speakers at the meeting said current programs to restructure mortgages to keep people in their homes have failed to solve the problem.
But Paul Jung, representing the Oakland Metropolitan Chamber of Commerce, said federal and local governments, banks, and nonprofits have many programs to help homeowners. He warned about the possible negative effects of a Richmond-type program on the value of real estate and buyers’ ability to get loans. Later in the meeting Councilman Dan Kalb remarked that in Oakland’s current housing market, that concern was “laughable.”
Susan Harman of the Public Banking Institute described efforts to spread this approach to other cities: She and Lynch have met with officials in Vallejo and Berkeley; Richmond Mayor Gayle McLaughlin has spoken with San Francisco supervisors; Lynch has met with activists in Sacramento; and there are plans to hold meetings soon with residents of Pittsburg, Merced, and Fresno.
Neither of the competing resolutions would commit Oakland to adopt the Richmond program. Both simply commend Richmond for its pioneering effort and mandate a study about whether a program generally along the same lines would be beneficial to Oakland.
Brooks said in the meeting that she wanted an outside opinion first because she feared the City Attorney’s Office would squelch the idea, citing legal risks. Her motion to vote immediately on her resolution failed, but a later successful motion scheduled discussion of both resolutions for the November 19 meeting.