Author Danny Vinik

Yes, Eminent Domain’s Use in Richmond, CA is Pure Fraud

Danny Vinik 4 Comments

Let the lawsuits begin.

I wrote last week about Richmond, CA had been duped by Mortgage Resolution Partners (MRP) into using eminent domain to “help” underwater borrowers refinance their homes through principal reduction. MRP supplied capital to the city so that it could purchase the mortgages from investors. Except MRP refused to pay more than 85% of the value of the home. For borrowers who were current on their mortgages, this was a blatant rip off. The value of those mortgages would likely be worth more than 85% the value of the original loan, significantly more than the value of the home. The question was: Were borrowers who are current on their loan part of Richmond’s plan?

The answer is a resounding yes and now investors have filed suit against the city:

The initiative has targeted mainly the loans of borrowers who are current on their payments, which make up 444 of the initial batch in Richmond, where the city council still hasn’t formally authorized the use of eminent domain. Mayor McLaughlin vowed to take the step on a July 30 call with reporters.

Richmond is going after 624 loans, of which more than 70% are held by borrowers current on their mortgages! This is an absurd rip off for investors, who are claiming they’ll lose $200 million under the plan. I’m not sure if that $200 million figure is right, but investors certainly will lose a huge amount of money. I can’t see how any judge will be fooled into thinking this is the “market value” of the loans. I’m pretty shocked that Richmond fell for MRP’s idea. This is just so blatantly illegal. It’s fraud. Yves Smith has more here, but all you have to know is that MRP is using Richmond to defraud investors and the city will ultimately pay the price.

SD Mayor Bob Filner Has To Go

Danny Vinik Leave a comment

I should’ve written this post a few weeks ago, but the latest sexual assault allegations against San Diego Mayor Bob Filner leave no doubt that he has to leave office and fast. Better yet, he should be in a jail cell somewhere. This is just truly appalling:

Fernandez, along with Army veteran Gerri Tindley, joins 11 other women who have publicly accused Filner, 70, of making unwanted advances, from groping to verbal passes.

They are also among at least eight female veterans and members of the National Women’s Veterans Association of America (NWVAA) in San Diego who have made accusations against the mayor. Almost all of the women were victims of sexual assault while they were in the military.

The women, like Fernandez, say the former chairman of the House Veterans’ Affairs Committee used his significant power and credentials to access military sexual assault survivors, who they say are less likely to complain.

That’s just so vile. There certainly have been calls for Filner’s resignation over the past month, but they should be even stronger. The evidence against him is solid (he’s already checked himself into therapy, basically admitting he has a problem) and the allegations against him are so nasty. Every newspaper should be out with an editorial demanding that he resign. That’s what makes this graph a little disconcerting:

FilnerThis is a Google Trends search of newspaper headlines over the past 90 days. The first allegation against Filner came on July 11th and the story picked up steam towards the end of the month, but the last couple of weeks have seen a drop in coverage. Maybe this new revelation will cause a firestorm of news stories that force Filner out of office. I hope so. Because this is beyond unacceptable for an elected official, particularly for the Mayor of a major US city. Enough of this: Filner needs to resign. Immediately.