Typically when you read about a politician and foreclosure, it’s in relation to some piece of legislation created to combat the recent surge in foreclosures.
But the topic of foreclosure recently became much more personal for one Long Beach, Calif., politician.
Multiple media outlets are reporting that U.S. Rep. Laura Richardson has lost, via foreclosure, the 1,600 square-foot, two-story Sacramento home with three bedrooms and 1.5 bathrooms on a 4,800 square-foot lot she purchased after being elected to the state assembly back in 2006.
Located in the upscale Curtis Park neighborhood of Sacramento, the property has gone through the foreclosure auction process and reportedly been purchased by Red Rock Mortgage for $388,000, a far cry from the $535,000 Richardson paid for it back in January 2007. RealtyTrac estimates the current market value of the property at $503,000.
Details of the property’s history on the RealtyTrac website show that a Notice of Default was recorded against it on Dec. 14, 2007 for $18,356, followed by a Notice of Trustees Sale being recorded on March 19, 2008. The Trustee’s Deed transferring the property to Red Rock was recorded on May 19, 2008, according to the Long Beach Press-Telegram.
At the time of sale Richardson allegedly owed her lender, Washington Mutual, more than $578,000 thanks to the 100 percent financing used to purchase the home and the additional fees and costs incurred by foreclosure. The home’s former owner also claims that she kicked in $15,000 towards Richardson's closing costs, according to the Los Angeles Times.
A story released by Capitol Weekly says that Richardson let the property slip into default when she was running for the seat she now occupies in the U.S. Congress — a seat that was vacated because of the untimely death of Rep. Juanita Millender-McDonald due to cancer.
In addition to defaulting on the mortgage payment, the MercuryNews is reporting that Richardson had a lien against the property for unpaid utility bills in the amount of $154, and was delinquent in property taxes to the tune of almost $9,000.
In a statement released by her office, Richardson denies being foreclosed on or that the bank ever seized the property. Published by the Times, Richardson’s statement says: “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.”
Still, Red Rock’s recorded deed seems to contradict Richardson’s statement.
In the same statement Richardson answers her critics who claim she recused herself from voting on some key pieces of legislation dealing directly with the foreclosure issue.
Politically correct or not, this case goes to prove just how fast personal finances can get out of hand in the current economic environment. Fortunately for Richardson, her primary residence is in Long Beach. Still, few people can afford to walk away from a home like this — unless you’re someone famous like Jose Canseco, who has more than one home.
Real estate investors and potential home buyers who want to find the type of deal that Red Rock apparently realized at the foreclosure auction of Richardson’s property can start mining the foreclosure marketplace. But they should be very cautious in doing so given that there is no clear sign the housing market has reached bottom yet.