Richmond is 66th on the top 100 list of U.S. cities with the highest percentages of underwater mortgages, according to a report released last week by the University of California, Berkeley.
The report, “Underwater America: How the So-Called Housing Recovery is Bypassing Many Communities,” attempts to tackle the problems facing homeowners whose homes are worth less than the amount owed on their mortgages.
Hartford, Conn. topped the 100 list with 56-percent of its homes underwater. Richmond was 66th with 28 percent, better than Vallejo’s 36 percent. Fairfield and Antioch also made the list. (full list below)
While economists have noted that home prices have been bouncing back since the housing crisis, that isn’t true for many jurisdictions, according to Saqib Bhatti, one of the report’s authors. He noted many of the cities on the 100 list had significant low-income or minority populations.
In Richmond, a few ideas have been proposed to rescue underwater homeowners and distressed properties. The most well-known proposal – and also the most controversial – is Mayor Gayle McLaughlin’s Richmond CARES program. The program would have the City of Richmond acquire more than 600 underwater mortgages at fair market value, possibly using eminent domain powers if creditors refuse to sell.
But the plan has stalled following vehement opposition and warnings from financial institutions, which promised legal action against any city that attempts to use eminent domain to acquire mortgages. The institutions warned the plan would halt mortgage lending in any city that employs it. The threat of costly litigation forced some Richmond councilmembers to vote against Richmond CARES.
Hoping to rescue the program, McLaughlin has for months been trying to convince other cities to form a Joint Powers Association with Richmond that could strengthen its legal authority against mortgage lenders. The mayor expressed frustration at a progressive event in San Francisco late last year that other cities did not seem willing to participate.
In an email to Bay City News, McLaughlin said she thinks the UC Berkeley report “makes it clear that Richmond and other similar cities are still struggling big-time with the housing crisis” and that current federal solutions have been “woefully inadequate.”