Deadbeat, defaulting Dem’s fishy deal with WaMu
I have yet to hear a single member of Congress question the ongoing financial and ethics scandal involving deadbeat, defaulting Democrat Rep. Laura Richardson. How much more dirt has to be dug up before the “most ethical House” ever takes action on this corruptocrat?
To recap: A local Sacramento paper first reported three weeks ago that Richardson had walked away from a half-million-dollar-plus, second-home mortgage, “letting the house slip into foreclosure and disrepair less than two years after she bought it with no money down.” Meanwhile, she was loaning herself money for her congressional campaign and accepting state per diem housing allowance money as her utility and tax bills piled up. Next, it was revealed that she had defaulted on three home loans, not just one. The total rose to six, then eight defaults on three properties. Unpaid car bills got tossed into the mix. Ethics experts have criticized her pattern cashing out her homes to fill her campaign coffers and failing to disclose the massive mortgage debt.
And now this:
The real estate broker who bought Rep. Laura Richardson’s house at a foreclosure sale last month is accusing her of receiving preferential treatment because her lender has issued a notice to rescind the sale.
James York, owner of Red Rock Mortgage, said he would file a lawsuit against Richardson and her lender, Washington Mutual, by the end of the week, and has every intention of keeping the house.
“I’m just amazed they’ve done this,” York said. “They never would have done this for anybody else.”
York bought the Sacramento home at a foreclosure auction on May 7 for $388,000. Richardson had not been making payments on the property for nearly a year, and had also gone into default on her two other houses in Long Beach and San Pedro.
Richardson, D-Long Beach, has said that the auction should never have been held, because she had worked out a loan modification agreement with her lender beforehand and had begun making payments.
Richardson left nearly $9,000 in unpaid property taxes on the home, which she bought in January 2007 for $535,000, shortly after being elected to the Assembly.
Washington Mutual has declined to comment on the specifics of Richardson’s case because she has not waived her privacy rights…
…York said an ordinary person would be unlikely to get the kind of consideration that Richardson has received from her bank.
“They wouldn’t even get a phone call back,” he said. “They would laugh at somebody who would call and say, `We had some kind of agreement.’ They wouldn’t give you 10 cents’ worth of time.”
Leo Nordine, a Hermosa Beach real estate broker who specializes in foreclosed homes, agreed that the rescission was out of the ordinary.
“It’s extremely unusual,” he said. “Unless (the borrower) filed bankruptcy beforehand, they’d never do it.”
Richardson’s staff did not return a call on Monday.
Calculated Risk has excellent questions:
This smells terrible, indeed. Perhaps reporters could simply ask some general questions of WaMu about its foreclosure workout policies. Like:
* How often are modifications or repayment plans offered to owners of vacant investment properties with no or negative equity that have never been listed or rented?
* How often are modifications offered to borrowers with two other properties currently in foreclosure?
* How often are modifications arranged in the week before the scheduled trustee’s sale, following nearly a year of no contact?
* Does WaMu’s policy on modifications make any reference to requiring a “commitment to homeownership” on the borrower’s part? How, normally, is that established?
* Does WaMu’s policy on modifications make any reference to establishing that the borrower does not display a “disregard for debt obligations”? How, normally, is that established?If, for instance, we had some evidence that stiffing creditors and getting the taxpayers to subsidize her financial imprudence was, like, a pattern of Richardson’s long before the house payments went into default, would that, like, indicate that her mortgage problems may not have much to do with “extenuating circumstances”?
Richardson refuses to answer media calls. Perhaps a call from one of her own colleagues will yield results.
***
Related: The “buy-and-bail” phenomenon is catching on.
Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby.
“I can find the same exact house as what I live in right now for half the price,” says Ms. Augustine, 44 years old, who runs a child-care service out of her home. She says she soon will be unable to afford her monthly payments, which will jump to $4,000 from $3,300 in August, and she doesn’t want to continue to own a home that is now worth $200,000 less than what she paid for it two years ago.
In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the “buy and bail,” in which borrowers with good credit buy a new home — often at a much lower price — then bail out of the “upside down” mortgage on their first home.
Homeowners are able to pull off this gambit — which some lenders and real-estate agents call mortgage fraud — by taking advantage of mortgage-lending practices that allow them to buy a new primary residence before their existing residence has been sold. And with the lending industry in disarray as it tries to restructure millions of mortgages, some boast they are able to pull off the strategy with ease.
In some cases, homeowners are coached through the buy-and-bail process by real-estate agents and brokers who see nothing wrong with it. Some blame the phenomenon in part on lenders’ unwillingness to cut deals or restructure loans made when home prices were inflated. “It’s just a business decision,” says Linda Caoili, a Sacramento real-estate agent who is working with Ms. Augustine and others who are considering walking away from their mortgages. “If you’re upside-down $250,000, why would you keep it? It just doesn’t make sense.”
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There’s no law against “buy and bail”.
Is the conservative solution even more regulation of the mortgage and real estate industries?
S.C.A.M.
Spending Carelessly Adios Mortgage
Refuse to acknowledge or discuss the matter in any way whatsoever, that’s hows Pelosi’s dem house maintains their alleged ‘most ethical house ever’. What a joke.
What about this lawsuit against Richardson?
#1:
Are you joking or are you serious?
No – the conservative solution is personal responsibility.
The old addage, if something looks too good to be true, it usually is, holds true in many of these instances.
We looked into the ‘interest only’ mortgages and stuff like that at one point, and after only a short discussion about it realized how screwed we’d be after the initial period and stayed with our current mortgage.
These people who try and get more home or less payments through loopholes and tricks that have an expiration date only saw the positives and not the negatives. They didn’t do their homework.
That is not responsible, and their greed or lack of foresight is now biting them in the arse.
The conservative solution is to let the market sort it out and prosecute fraud where it exists. If lenders didn’t follow good underwriting policies, let them take the hit. If borrowers lied on their applications, don’t bail them out. It most definitely is not to have legislators absolve scammers — or as we have seen, make public announcements that encourage more defaults.
Likewise, if owners who actually occupy homes (as opposed to investors hoping to score a quick profit on rising home prices) are having trouble meeting payments, let them work it out with the lender. Lenders are motivated to keep the homes out of foreclosure in weak markets.
Re: Michelle Augustine – wouldn’t the bank simply apply the loss of the house she willingly let go into foreclosure to a lien on her new house? And if that bank so desired, couldn’t they force foreclosure on the new house to pay off the debt of the old (which would be way more than the $200k she’s currently in the hole for).
I just don’t understand the mind of a scoff
lawdebtor.Why would they question anything about Laura Richardson? When this creep from Louisiana was caught with $90,000 in his refrigerator, they defended him on a bi-partisan basis. They’re all a bunch of crooks. An injury to one is an injury to all.
I know its early, but that’s either incredibly sarcastic, woefully ignorant, or just blantantly naive. I’m banking on the naive, since you went right for the “well, conservatives…” angle instead of what the truth.
When you sit down to do a mortgage on a home, or buy a car, or pretty much any major purchase, you sign a contract. That contract is legally binding, of course with some exceptions.
Not wanting to pay is not an exception.
There are laws in place to protect consumers and lenders alike. There needs to be enforcement of those laws, and not just letting people skip out on their obligations. If there are people who are using deceptive or illegal lending practices OR people who are fraudulently gaining loans, then those can be dealt with legally.
There are also legal means in place of dealing with people like this scumbag who don’t want to pay on their contractual obligations. In these cases, the lender has every legal right to take a person to court for something that is illegal, called BREACH OF CONTRACT, and is allowed to remedy that matter within the context of the actual contract and the laws of the state. The lender is allowed to recover their costs, including 3rd party fees such as legal costs for their attorney for example, and would not be a surprise to someone who actually bothered to read the contract at all.
It’s really just that simple. She signed a contract stating she would meet certain obligations. This woman has a chronic problem of shirking those responsibilities when it suits her, and then (from what it appears anyway) using her political position to work sweetheart deals with companies to which she owes money. Anyone on this forum, as the article above points out correctly, would NEVER get that type of treatment. Is that more of the ethical congress you democrats are talking about, or are the rest of us missing something? What’s ethical about someone getting preferencial treatment so they can continually default on their bills with impunity?
Done.
Unlike many if not most liberals, conservatives are for the most part more responsible and pay our bills, do with out luxury items and save, save, save for homes we can afford.
# 1, you’re either kidding or your typical of the liberal mindset that the nanny state government will bail you and all your loser friends out of any trouble you get into. I don’t want to hear that you’re not a loser, you may not be but the fact that you think that there is no crime here tells me a lot about what is in the liberal brain.
Abstractmind said it more eloquently and is giving you the benefit of the doubt.
Yeah that Richardson is sure a trend setter. In Caliphony that is. I make less than half what she earns, and I’m paying all my bills up front and on time. I see sh*! like this and wonder, why bother ? Personal pride, thats why ! I have local, state and feds taxing the crap out of me and I’m STILL paying on time.But she is entitled, I forgot……………Lib.
In my mind, the real problem with “buy-and-bail” is the general acceptance of it. It would also seem to me that while lending practices don’t catch it, once you’ve defaulted on the 1st home, you should pretty much have (willingly!) made yourself a credit pariah, and you should suffer those consequences for a long, long time thereafter. Bottom line is that it is (or should be!) a short-sighted approach to all of this.
I moved out of state during the 80’s and had to place my house on the market for less than what I had paid for it, lost all the money made for improvements and paid the realty commission. I would not have moved except that the job market in my field had gone in the dumper. It wasn’t fair, but I cut my losses and moved on with my intregity and my self esteem. When I moved again, I had 2 houses for 6 months. I managed. When I look at these defaulters and their enabling bankers – IT MAKES ME SICK! They are traitors to the hard work and ethics which made this country strong.
Just getting to do the Sweetheart deal/elitist/”smarter than the rest of us”/fraudulent/criminal acts that the rest of America won’t do…..
(apologies to the “open borders” crowd)
#1 corona said:
I don’t understand your comment.
The law of “bailing” is that your credit score drops so far below 650 that you can’t “buy” another loan again. Isn’t that how it works?
No, the “conservative” solution would be to enforce already existing regulation, just like illegal immigration and other laws that already exist on the books.
Something tells me that when licensed brokers in California are advising their clients to bail out on their existing mortgage contracts with banks:
1. They stand to lose their licenses.
2. California bank oversight is in such disarray that such stories are in the media and nothing is being done about it right now.
I guess that when you are elected to Congress, you get this special “shield of infallibility” so you can do or say whatever you want with the comforting knowledge that nobody can hold you accountable for it. So, have fun guys and gals in Congress. Steal, lie, play footsie with cops in airport bathrooms, take bribes, hide the “cold cash” in your freezers, and ignore the “deadbeat defaults” and other crimes of your fellow congressional buttwipes. What models of honesty and high moral stature you are for the citizens who elected you. After all, YOU are the only ones you really care about, right?
Right on prendad!!!
I can’t believe I’m defending Republicans….I’m really not…but…
It seems that Rs are the ones that are brought up on charges…by both the STUPID party and the EVIL party …
Duke Cunningham comes to mind…and……..
Wouldn’t Michelle Augustine still be liable for the balance owed to the bank after the forclosed property was sold, in addition to the costs associated with a foreclosure?
If a car is repossessed, the principle owed, plus penalties and costs are subtracted from the proceeds of the sale of the car. Any mopney left over goes to the defaulter. If the proceeds from the sale are less than what is owed, the person must still pay that back.
Maybe I’m wrong…I’ve never defaulted on a loan, but it seems like that is how it should be. I didn’t think you could walk away from an outstanding debt without filing for bankruptcy.
I’ve got some accounts at WaMu; hmmm, this gives me some ideas…. oh, wait, I’m a Republican, never mind.
The problem is specific California bankruptcy laws.
The Feds smashed Florida’s b-law deficiencies, but carved exclusions for Kali’s. Wipe those exclusions and allow the first home lender to go after equity in the second home and you will have less of a problem. It won’t stop negative equity walk-aways, but it will stop buying the same home for less and then walking away from the first.
Wouldn’t hurt for mortgage industry practices to take negative equity into account when considering additional housing units.
At the least the IRS should be going after her. All these losses she is getting away with are taxable income. Not that she will care, she got elected, she will get “campaign donations” to help her out with her bills.
These criminals should be locked up!
Indeed. This is the other half of the mortgage irresponsibility equations: the lenders apprently find it easier to let the deadbeats off the hook for whatever the foreclosure auction brings. Their losses are then covered by the interest and fees paid by their responsible customers, and of course the federal taxpayers. Yet another reason to NOT bail them out (the borrowers OR the lenders).
We have a mortgage and bank accounts with WAMU. One week I screwed up and got an overdraft fee of $35. I called to politely ask their forgiveness and get my $35 back. They refused of course. So I’m guessing they wouldn’t be too happy about us not paying on our loan for 12 months. Normal people don’t even get off the hook for $35, but I guess “ethical” congress people get to walk away from $100K+ in debts. Makes perfect sense to me!
And people trust this woman with their children after this disclosure? And we wonder where some of our kids get their ideas? Wow!
California homes are down!!!
PLEEEEASE –you conservatives in other states…..
come on over to the Pacific coast…
The weather is great….
We can get this great state back
More evidence that the banks and this serial defaulter have some sort of quid-pro-quo going on.
I’m interested in hearing what WaMu gets out of this deal.
Unless that lady plans to BK when she walks away from her existing house and buys a new house down the street, she is going to get a nasty IRS surprise. The will be given a 1099 form for the “forgiven” part of the mortgage she walked away from. It is considered taxable income by the IRS. So $200K in 1099 income will result in probably a $100K tax she is going to owe to the state and the Fed. HAHA.
The important questions to ask: What legislation pending before congress will benefit WAMU? How will the cleptocrat congresswoman from Long Beach vote on the legislation? She could excuse herself from voting…..hold on….I just saw a pig fly by the window! Wow!
Ms. Augustine should be calling her mortgage company to see what type of modifications they have for pre-deliquency borrowers. The bank I work for allows you to lock in a minimum payment rate or fixed rate.
Ms. Caoili should be called in front of an ethics board and lose her real estate license and be investigated for fraud.
No – Banks are not allowed to do that with mortgages. The mortgage is tied to the specific property. So if the bank takes a loss on that property then it’s the banks loss.
“Buy and Bail” isn’t illegal, and likely shouldn’t be illegal.
It is, however, shameful. Provided the transgressor has a sense of shame. Laura Richardson: call her Sinverguenza.