By Ken A. Epstein
Wells Fargo Bank has been lobbying the Oakland City Council to kill a council resolution that backs the City of Richmond “for boldly advancing a local principle reduction program” to provide relief to homeowners who are underwater or facing foreclosure.
Wells Fargo officials have talked to council members and sent information about why the council should oppose the resolution. “They (Wells Fargo) sent out a whole packet of information about an inch thick, with reasons why we should be very careful about the (Richmond) legislation,” said Councilmember Desley Brooks.
“Wells Fargo is taking it very seriously. They’re putting a lot of effort into it, to be sure,” said Anthony Panarese, a staff member of Alliance of Californians for Community Empowerment (ACCE), which supports homeowners who are fighting foreclosure.
The resolution – backed by Noel Gallo, Brooks and Larry Reid – is a limited to a statement of solidarity with Richmond and declares Oakland’s intention “to study whether it should embark upon a similar strategy.”
Richmond on July 30 became the first municipality in the nation to work for local principle reduction for distressed homeowners, when it offered to purchase more than 600 city mortgages from major Wall Street banks and other servicers.
If the current investors are unwilling to sell the loans, Richmond will consider using its eminent domain authority to acquire the loans – still compensating the current investors at fair market value.
“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,” said Brooks, “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.”
Brooks says she is not particularly focusing on Wells Fargo. She said in the past the bank has been responsive to concerns raised by the city. “They’ve reached out and done some good work (in Oakland),” she said. “But as a city, we need to look out for the best interests of those who live here. Something is desperately wrong when so many people are underwater and are losing their homes.”
The majority of council members appear to support the resolution or a similar one proposed by Councilmember Rebecca Kaplan. But the debate over the issue at the Tuesday night meeting degenerated into conflicts among council members, and a final discussion and vote were put off to the council’s Nov. 19 meeting.
Meanwhile, a federal judge recently dismissed a bank lawsuit challenging Richmond’s eminent domain program for underwater mortgages on the grounds that it was premature.
U.S. District Court Judge Charles Breyer said he felt the case, brought by Wells Fargo and Deutsche Bank on behalf of holders of underwater mortgages, was not “ripe for determination” since Richmond had not exercised eminent domain and might never do so.
For more information about Richmond plan, visit: www.saverichmondhomes.org.