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Stop the foreclosures: Main Street takes on Wall Street

United States
Foreclosure sign

Taber Andrew Bain under a Creative Commons Licence

The City of Richmond in California is buying up property to prevent its residents being evicted by their banks. Mayor Gayle McLaughlin talks to Samir Jeraj about the programme which has got Wall Street up in arms.

What prompted you to take action on foreclosures in Richmond? Why is it important to you?

Richmond is a majority minority city and our working class neighbourhoods were targeted by Wall Street for predatory loans. This means we’ve been really hard hit by the housing crisis and by foreclosures. It’s taking a toll on the entire city. In addition to the families losing their housing, home values have plummeted, neighbourhoods are dealing with blighted vacant properties and property tax revenue is down, affecting city services.

We heard about this programme, which could be enacted locally, that will help prevent foreclosures and restore community wealth. We are acquiring troubled loans, reducing the mortgage principal, and getting the homeowners into affordable, sustainable mortgages.

How will it help the people of Richmond?

The programme hasn’t been implemented yet. When it is, we believe we will be able to save thousands of struggling homeowners hundreds of dollars on their monthly mortgage payments.  Fewer foreclosures will occur. We will prevent further destabilization of neighbourhoods.

How is the City working with community groups on this programme?

Very closely. The community organization Alliance of Californians for Community Empowerment (ACCE) is a membership-based community group in Richmond’s lower-income communities of colour.  These are the neighbourhoods hardest hit by the housing crisis. ACCE has been organizing and engaging community residents in general and ‘underwater’ homeowners specifically, to push for this programme and help develop it. They have pulled together a coalition of Richmond organizations that are supporting this effort. I work closely with all these groups and am committed to them being at the table and involved every step of the way.

Do you think this type of programme will become common in US cities?

There is tremendous frustration across the country that so little has been done for ‘Main Street’ – so little has been done to help struggling families save their homes. For over five years we have been hoping that the federal government would offer widespread relief, but they haven’t. Once we show that there is finally a local way to write down troubled mortgages at scale and help thousands keep their homes, many cities will want to follow suit.

How will it affect the City’s finances?

We do not expect it to affect the City’s finances. One of the great things about this programme is that it doesn’t cost the City anything. We have a private partner that provides the funding to acquire the loans and the funding to operate the programme.

The New York Times reported that you are facing opposition from the real estate and banking lobbies. How have you managed to deal with this level of well-funded and well-organized corporate opposition?

The key has been that there is tremendous public support. The community overwhelmingly supports this effort and they’ve been organizing to demonstrate this support. There were over 200 supporters at a City Council meeting in September, when the opposition was trying to kill the programme. And those of us in elected office who are pushing this are not afraid of Wall Street and don’t feel beholden to Wall Street. We are listening to the people who elected us.  

In addition to people power, we are working with lawyers, and local and national policy experts.  There are many people across the country who are motivated to help us, because they know this could set an important precedent.

Gayle McLaughlin has been Mayor of Richmond since 2007, and is a member of the Green Party of the United States. For more information on the Richmond Cares programme please go to the Save Richmond Homes website.

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