A Long Beach congresswoman who fell behind on her payments on a $535,000 mortgage in Sacramento lost her home in foreclosure and had the house sold at auction, according to records from the Sacramento County clerk’s offic.
The auction for Rep. Laura Richardson’s house, in Sacramento’s Curtis Park neighborhood, took place on May 7. The transaction was detailed in public records filed with the county.
Ricahrdson said in a written statement that she still owns her Sacramento home, but financial documents show the house was sold at public auction and has been in the possession of the buyer for weeks.
Richardson refused repeated requests to speak to Capitol Weekly for this story, but issued a written statement after her office was shown records on file with Sacramento county.
Richardson, a Democrat, a former Assembly member who was elected to the House last year, bought the 1,600-square-foot, three-bedroom house in January 2007, but soon fell behind in the payments. While being elevated to Congress in a 2007 special election, Richardson apparently stopped making payments on her new Sacramento home, leaving nearly $600,000 in unpaid loans and fees, including nearly $9,000 in property taxes.
Richardson’s decision to allow the loan to slide into default 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.
Richardson’s opponent, Oropeza, loaned herself $115,000 for her run against Richardson. Oropeza’s Congressional committee still shows nearly $200,000 in debt.
Richardson declined requests over several days to discuss her real estate transaction. She also was not immediately available to comment Thursday, according to her office.
In a carefully written statement released Wednesday evening, she challenged Capitol Weekly’s story about “the residential property that I own in Sacramento,” and said that it had not been subjected to foreclosure. She also said that she renegotiated a loan in connection with the transaction, but did not provide details.
“I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement — with no special provisions. I fully intend to fulfill all financial obligations of this property,” she said.
But financial records on file with the county show that Richardson does not own the home. The house was sold on May 7 at a public foreclosure auction for $388,001.
That auction originally had been scheduled for April 7, but was delayed a month, said James York, a Sacramento real estate broker who purchased the house from the trustee, the California Reconveyance Company. That transaction was officially recorded on May 9, and the deed transfer and sale were recorded on May 19. Documents associated with the transaction can be viewed here.
“It was a foreclosure auction. I took possession of the house as of May 7,” said York, who has conducted numerous similar purchases, according to county records. (York is not related to the author of this article).
York, whose firm specializes in foreclosure sales, said that Richardson did not participate in the transaction, that the house had been vacant for some time and that he paid the funds to California Reconveyance, which handles foreclosure property and is owned by Washington Mutual, the original lender.
The sale forced the bank to “take a $200,000 write-off,” York noted.
Tax records at the Sacramento County assessor’s office show that in January 2007, Richardson took out a mortgage for the entire sale price of the house — $535,000. The mortgage amount was equal to the sale price of the home, meaning she was able to buy the house without a down payment. At the time, the housing market was beginning to turn, but the severest impacts had not yet been felt. No-interest, “jumbo” loans-those more than $417,000-were still available from some lenders.
Richardson received a default notice in late 2007. By December 2007, less than a year after Richardson purchased the house, she was behind in her payments by more than $18,000.
Three months later, on March 19, 2008, a notice was filed with the county that Richardson’s property would be sold at auction on April 7. According to the documents, the unpaid balance and other charges Richardson owed the bank was $587,384.
The March 19 notice of trustee’s sale also described the unpaid balance of Richardson’s loan, held by Washington Mutual, at more than $578,000 – $40,000 more than the original mortgage. Tax records show $8,950 in unpaid property taxes.
The Curtis Park house is not Richardson’s primary residence. She 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 many homes that have gone through foreclosure, Richardson’s new residence quickly became an eyesore. With Richardson gone, upkeep on the home lapsed, and neighbors began to get angry.
“The neighbors are extremely unhappy with her,” said Sharon Helmar, who sold the home to Richardson. “She didn’t mow the lawn or take out the garbage while she was there. We lived there for a long time, 30 years, and we had to hide our heads whenever we came back to the neighborhood.”
Helmar and her husband, Mark, sold the Curtis Park home to Richardson because Sharon’s arthritis required the couple to move into a one-story house. With the area’s real estate market slowing down, the house remained on the market for months, and the Helmars, who lived in the house for more than 30 years, were getting desperate to sell.
Helmar said that she has never met Richardson personally, but dealt with Richardson through her realtor. The Helmars wound up giving Richardson $15,000 toward closing costs, she said.
And she is still angry over what happened to a home that clearly she never really wanted to leave. “It’s kind of silly. You would think people who are making decisions for others would be able to make good decisions for themselves,” she said. “She should have known what she could afford and not afford. In this neighborhood, you just don’t do that.”
While Richardson walked away from her loan, she bested Oropeza in a June special election, and moved on to Congress. As a member of Congress, Richardson has been asked to vote on legislation pertaining to the spike in foreclosures around the country.
On the biggest pieces of legislation having to do with government bailouts for people whose homes have entered foreclosure, Richardson did not vote. She also did not vote on legislation by Rep. Barney Frank, D-Mass, which would direct $2.7 billion in government funds to help an estimated 500,000 homeowners who are at risk of foreclosure. Richardson said she missed th
e votes because of the death of her father.
Richardson did not vote on a measure by Rep. Maxine Waters, D-Los Angeles, that would give local governments $15 billion to purchase, rehab and resell foreclosed properties.
While Richardson walked away from her bank loan, she has begun to pay herself back for the money she personally invested in her initial race. Records show that Richardson spent $587,000 out of her congressional campaign committee since declaring her congressional candidacy through March of this year. Of those expenditures, Richardson has spent $18,000 of that money to begin repaying herself for the money Richardson loaned to her campaign.