A Democrat congresswoman bails on her half-million-dollar-plus, second-home mortgage; Update: Dem denies report; “I fully intend to fulfill all financial obligations of this property;” Update: She’s a Hillary superdelegate
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Well, hell, why not?
As I noted earlier this month, Jose Canseco did it.
And as I told you back in January , more and more Californians were doing it.
So now comes word, through Capitol Weekly via L.A. Land, that California Democrat congresswoman Laura Richardson “walked away from the mortgage on her $535,000 Sacramento home, letting the house slip into foreclosure and disrepair less than two years after she bought it with no money down.”
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.
Richardson’s decision to let the house slip into foreclosure was set in motion by an unlikely chain of events, only some of which had to do with Sacramento’s crumbling real estate market. Richardson was elected to the Assembly in November 2006, and purchased her new capital home two months later. But in April 2007, Rep. Juanita Millender-McDonald succumbed to cancer, creating a Congressional vacancy in Richardson’s district.
Richardson declared her candidacy for the seat, and soon found herself locked in a hotly contested, and very expensive race for Congress against state Sen. Jenny Oropeza, D-Long Beach.
While her campaign heated up, Richardson’s house slipped into default. Richardson fell behind on her mortgage payments as she loaned her Congressional campaign $60,000 – money that has begun to be paid back to Richardson personally from her campaign account, according to records from the Center for Responsive Politics.
It’s not her primary residence. According to Capitol Weekly, “[s]he also owns a four-bedroom house in Long Beach, in her Congressional district. Real estate records show she purchased that house in 1999 for $135,000. An estimate from Zillow.com puts the current value of that house at $474,000.”
Like I said four months ago:
The stigma of default is gone. Political rhetoric absolving borrowers of their responsibilities — and encouraging them to spend, spend, spend even more — has made it possible. And so has federal legislation intended to “help.” The omnibus spending bill passed last year prevents the IRS from taxing mortgage forgiveness as income up to $1 million for a two-year period.
Finance blog Calculated Risk reported last week that increasing numbers of homeowners are walking away from their homes by choice. A Wachovia executive noted during a conference call that they are “people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they’ve lost equity, value in their properties…” Some are bailing for cheaper homes in the same neighborhoods. There’s even a term that’s become popular over the last couple of years — “Jingle Mail” — that describes when homeowners cut loose and mail in the keys to the bank. Ho, ho, ho.
The true victims in this “crisis” are those who paid for homes within their means and those who waited to enter the housing market.
Congresswoman Richardson is a welcher who embodies the ethos of Washington and the bailout culture:
Spend, borrow, screw over, repeat.
WLS at Patterico’s blog has some good questions:
There are a couple of interesting facts here that an enterprising reporter might run down.
First, prior to being elected to Congress, Richardson was a newly elected member of the California Assembly, having won her seat in Nov. 2006 representing Long Beach. This meant she had to spend a signficant amount of time in Sacramento tending to the business of the legislature. Most state legislators in California maintain their residences in their home districts, and rent/share apartments or homes in Sacramento which they pay for with a per diem housing allowance provided to them in their office budgets. They can spend this allowance on hotel rooms or apartments.
Did I mention that the housing allowance is tax free for members who live more than 50 miles from Sacramento?
…Considering this LAT story about State Sen. Tom McClintock using a loophole in the per diem housing allowance law to own houses in both Sacramento and the LA suburb of Thousand Oaks — and receiving $36,000 tax free in per diem in 2007 as a result — wouldn’t it be nice to know of Congresswoman Richardson was receiving tax-free per diem from the State of California to pay for the mortgage on her new home in Sacramento, which she elected not to pay in order to pump money into her campaign for Congress?
You might think a reporter from the LAT or elsewhere might think that was a story.
California Rep. Laura Richardson today denied a published report that her $535,000 Sacramento home had slipped into foreclosure, saying she had renegotiated her loan to keep the home.
The house “… is not in foreclosure and has NOT been seized by the bank,” Richardson, a Democrat from Long Beach, said in a statement. “I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement — with no special provisions.”
L.A. Land has her full statement, which also claims: “I fully intend to fulfill all financial obligations of this property.” In addition, Richardson denies recusing herself from voting on two mortgage crisis-related bills in the House.
Responsible homeowners and taxpayers in her district–and the rest of the country, for that matter–deserve more details. The story’s not adding up.
Update: McClatchy Watch points out that Richardson is a Democrat superdelegate pledged to Hillary Clinton.blog comments powered by Disqus
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