In 2008, reckless Wall Street banks caused the U.S. economy to collapse and the housing market to crash. Millions of Americans lost their jobs, their homes and their livelihoods. Five years later, there has been scant relief for families who were foreclosed on nor those who ended up underwater, owing far more on their mortgages than their homes are now worth.
With no real solutions from Wall Street or the federal government forthcoming and millions of desperate Americans still reeling from a crisis they did not create, one bold city has stepped into the breach. Recently, the Richmond City Council voted to move forward with a program called Richmond Community Action to Restore Equity and Stability.
Richmond CARES has mostly been characterized simply as a plan to buy mortgages back from Wall Street to make the mortgages more sustainable and help homeowners stay in their homes. It is much more: It's also an economic recovery program.
The CARES program will reduce foreclosures and blight, which will help to stabilize home values and increase property tax revenue to the city -- money needed to provide basic and essential city services to the people of Richmond.
When this program prevents 200 foreclosures, it is estimated to save the city about $3.84 million. And by reducing the mortgage principal on these 200 homes, an estimated $2.6 million will be pumped back into our local economy.
We stand in support of the city, its elected officials and the residents themselves, who have called on their leaders to find a way to save a community in crisis.
Richmond CARES brings a solution to a city where more than half of homeowners are underwater -- and many more families have already been foreclosed on and evicted from their homes.
Like cities big and small across America, Richmond's families have suffered from a crisis not of their own making. Now, the very entities that orchestrated the financial crash and housing crisis -- Wall Street megabanks -- are working hard to stamp Richmond CARES out of existence. Their lobbyists have pressured Richmond's elected officials; they've sent misleading mailers to residents' homes; they've even sued the city in federal court.
Their attempts to intimidate Richmond's residents have failed.
Residents continued to fight for help. A federal judge threw out Wall Street's court case. And despite the big banks' threats, the Richmond City Council voted to move forward with the program. Now the city wants to negotiate with the mortgage holders -- but they refuse to even talk.
Like many Californians, our members have retirement funds invested in mortgages like those in Richmond. If homeowners default and mortgages aren't paid, that impacts all of our retirement savings. It's far better for investors if homeowners can stay in their homes and continue making payments -- nobody wins when homes are vacant, boarded-up.
In an area as interconnected as the East Bay, the challenges Richmond faces will affect us all. As foreclosures ripple across the city, the displaced families won't contribute to a tax base that funds important services like police and firefighters, and residents will have to rely on the increasingly-strained safety nets of nearby cities.
It's important to the well-being of all of our cities that Richmond thrives.
But most importantly, we all should care because Richmond CARES might be the answer we've been waiting for over the past five years.
Richmond is boldly leading the way on principal reduction, and now other cities across the country are following. If our cities help homeowners stay in their homes, we'll maintain and grow our tax bases, stabilize communities in peril, and ensure that parents and their children aren't left homeless.
Richmond is the one city that may show us all how to finally recover from the housing crisis. That's something worth fighting for.
Roxanne Sanchez is president of SEIU Local 1021.