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Saturday, May 24, 2008

"I had to figure out just like every other American"

Those were the words spoken by Laura Richardson in a lengthy interview in the aftermath of it first being exposed that she had recently gone into foreclosure. Of course, she is not like "every other American" but rather a politician and an ambitious one at that. Here is more of the story...

I'm Laura Richardson. I'm an American, I'm a single woman who had four employment changes in less than four months," Richardson said. "I had to figure out just like every other American how I could restructure the obligations that I had with the income I had."

Richardson bought the 1,600-square-foot home in Sacramento's desirable Curtis Park neighborhood for $535,500 in January 2007. It was sold at auction earlier this month to a Sacramento mortgage lender who paid $388,000, according to the Sacramento County Recorder's Office. A default notice sent to Richardson in March put her unpaid balance at $578,384.

Richardson provided the AP with an April letter, which appears to be from Washington Mutual Home Loans, telling her there was a hold on foreclosure sales on her property until June 4. She also provided an e-mail dated Thursday, which she said was from Washington Mutual, that appeared to acknowledge an agreement "to facilitate the recission of foreclosure sale" but gave no financial details.

Now, it appears that Richardson will look to gain sympathy in her plight. That is natural and probably a wise political move. Frankly, I have nothing against Ms. Richardson personally. On the other hand, she is a great example of the excess that has happened to create the mortgage crisis. As I pointed out earlier, the forces, like me, that are against mass bail outs need to make Ms. Richardson the face of the mortgage crisis. It isn't because she is so different from everyone else, but rather it is because she is so similary.

When Ms. Richardson proclaims that she had four jobs in four months that was entirely at her doing. She decided to run in the special election to replace Rep. Juanita Millender-McDonald in April of 2007. She knew that running for Congress would be financially risky and she knew that she was carrying this massive mortgage debt.

As I mentioned in my previous piece, what is striking about her case is how similar it is to most borrowers. Because of her status as a Congress person, she is likely not to get the sort of sympathy that most in the media give the typical borrower. Thus, we, who are against any sort of mortgage bailout, can finally point to a borrower who isn't sympathetic.

The details of her foreclosure are not altogether that important to me. Once you fall behind as Richardson did, you are at the mercy of the bank. What we need to find is a few things. First, did she prove her income in getting this loan or was it stated? Did she claim that the property would be lived in or did she say it would be used for investment purposes? How in the world did she qualify for such an expensive home on her State Senator's salary?

The case of Representative Laura Richardson is a window into the massive excess and out and out fraud that created the mortgage crisis. Somehow she was able to get a no money down loan on a half million dollar plus property on her State Senator's salary. For some reason she decided to take on the financially draining task of running for U.S. Congress while holding on at least to this mortgage and another one. (she also maintains a condo in her own district)

Once these questions are answered I firmly believe that the forces against mortgage bailouts can use this case as the poster child against further bailouts. Now this maybe a contrarian thought given that her home has already been foreclosed in, but in fact, it has merit. Once the details of this case come out, I am confident that not only will it show that Ms. Richardson bought outside her means, but that the only thing left for the bank to do was foreclose. Once that comes out, this case can become the poster child against any mass bailouts.

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