It’s hard to know who exactly will be targeted by Richmond’s radical principal reduction program—which proposes buying or seizing 624 underwater mortgages, possibly through eminent domain.
The list hasn’t been made public, but Richmond Confidential obtained a list of 602 of the 624-targeted mortgages, which we’ve mapped above. When comparing a map of the homes the city has targeted for assistance to a map of foreclosed properties in the city, one thing is clear: They’re pretty different. The areas with the most foreclosures aren’t necessarily the neighborhoods that Richmond has targeted for relief. “A lot of the people that think they will be helped by this program will not be helped at all,” said Jeff Wright, a realtor and one of the plan’s most vocal critics.
Inevitably the city cannot assist every struggling homeowner in Richmond, leaving many curious if and how they will benefit. Vicky Conway is one of them. She and her husband bought a home in the North & East neighborhood in 2004 for $325,000. She estimates their house is now worth less than half that amount. “I know that we’re not going to be able to retire and continue with the same mortgage payments,” she said.
You could say that Conway can’t afford her own house, but actually it’s worse than that: She could afford the current value of the house just fine — it’s the bubble-based mortgage that may break her. Any unforeseen expenses could spell disaster. “God willing nothing catastrophic happens,” she said. “My husband and I have talked about it…and if it got really bad we would probably walk away from the house.”
Like Conway, nearly half of Richmond’s homeowners are underwater—meaning their house is worth less than their mortgage. To prevent another wave of foreclosures, the city has proposed buying 624 underwater mortgages at fair-market value. If the banks refuse to sell the mortgages, the city has threatened to invoke eminent domain to seize them. The program is called Richmond Cares, and it would let the city substantially reduce the principal owed on the homes, making it easier for underwater owners to stay current on their payments.
While many of the 624-targeted mortgages are in the North & East neighborhood, Conway’s isn’t one of the homeowners on the city’s list. Despite reaching out to city officials, she has no idea why not. “They’ve given very little information on how they’re determining which homeowners are initially being selected.”
The criteria for selection are complex, as Richmond Confidential previously found. You can read those details here. But essentially, Richmond chose the properties strategically: They are the ones most likely to allow Richmond’s eminent-domain scheme to succeed in court.
That strategy bothers some people. “I’ve seen the list of the properties that would be targeted, and it concerns me greatly,” Wright said. “This plan is being promoted to help hard-hit homeowners, and this list of mortgages is not representative of those areas.”
Supporters of the plan say that the 624-mortgages would only be a starting point for the program, which could eventually expand. “We would like to do a lot more than these 624,” Mayor Gayle McLaughlin said. “But there was an approach to do these first—they’re all severely underwater—and from there we will move on.”
The city compiled the addresses for 602 of the 624-targeted mortgages. After mapping these locations, it’s clear that certain areas with high incidents of foreclosures will receive little relief from the principal reduction plan. While the Shields-Reid neighborhood had 16 homes in some form of foreclosure in September–meaning that they either received a notice of default or a notice of trustee sale–according to data from RealtyTrac, only three are targeted by the plan.
The Iron Triangle and Santa Fe neighborhoods also have many foreclosures and won’t receive much attention from the Richmond Cares program. “I think it’s important that the city puts a plan in place that helps all of us, not just some of us,” said Marena Brown, an activist in Shields-Reid.
Meanwhile, some more well off neighborhoods near Hilltop Mall, in South Richmond, and in Marina Bay will receive a lot of relief despite having fewer homes in some form of foreclosure in September.
There could be a number of causes for this discrepancy. Some of Richmond’s hardest hit areas may not have many Private Label Securities mortgages—which are the types of loans the city is targeting. Many homeowners in these neighborhoods may also have large second liens or not be current on their payments, which would exclude them from the program, said Steven Gluckstern, chairman of Mortgage Resolution Partners.
Still, it’s clear that the mortgages were chosen using a formula that excluded some of the city’s most desperate residents.
While only 624 homeowners would receive direct relief, the entire city would benefit, Gluckstern said. “If we take the 624 mortgages that are going to be foreclosures, and turn them into people continuing to live in Richmond, preserving their homes, preserving their tax value, that benefits all of the citizens,” he said. “You don’t say, ‘if I can’t help everybody then I’m not going to help anybody’.”
In the meantime, Vicky Conway is waiting to see how the plan unfolds. She’s upset that she’s not one of the 624 homeowners that will initially receive relief from the city. However she still supports the plan, and is optimistic that her home will eventually be targeted. “I’m hoping that something is going to give one way or the other, either the banks work with the city or the city goes down the eminent domain road,” she said. “In either case, I’m holding my breath.”
There are ways to find out of you’re eligible to receive assistance. You can email the city and leave your address. Within two weeks the city should mail you a letter, telling you whether or not you’re one of the targeted homeowners.