Patterico's Pontifications

5/21/2008

Newly Elected California Congresswoman Walks Away from $535,000 mortgage shortly after being elected.

Filed under: General — WLS @ 1:16 pm

Posted by WLS:

 http://latimesblogs.latimes.com/laland/2008/05/report-californ.html

Funny how you only find this information in an LAT Blog and not on the news pages. 

Capitol Weekly reports newly elected California Congresswoman Laura Richardson walked away from the mortgage on her $535,000 Sacramento home, letting the house slip into foreclosure and disrepair less than two years after she bought it with no money down.

“While being elevated to Congress in a 2007 special election, Richardson apparently stopped making payments on her new Sacramento home, and eventually walked away from it, leaving nearly $600,000 in unpaid loans and fees,” the publication reports.

Richardson, a Democrat from Long Beach, declined to comment for the Capitol Weekly story, and her office did not immediately respond to a request for comment from LA Land.

Capitol Weekly, citing tax records at the Sacramento County assessor’s office, reports “… in January 2007, Richardson took out a mortgage for the entire sale price of the house — $535,000. The mortgage amount was equal to the sale price of the home, meaning she was able to buy the house without a down payment, even though the housing market was beginning to turn. A March 19, 2008 notice of trustee’s sale indicates that the unpaid balance of Richardson’s loan, which is held by Washington Mutual, is more than $578,000 –$40,000 more than the original mortgage.”

In addition to 100% financing on the home itself, the report quotes the woman who sold the house to Richardson as saying she also gave Richardson $15,000 toward closing costs.

The weekly also reports Richardson’s residence quickly became an eyesore, angering neighbors. The report says she recused herself on two key house votes on government efforts to address the foreclosure crisis.

There are a couple of interesting facts here that an enterprising reporter might run down. 

First, prior to being elected to Congress, Richardson was a newly elected member of the California Assembly, having won her seat in Nov. 2006 representing Long Beach.  This meant she had to spend a signficant amount of time in Sacramento tending to the business of the legislature.  Most state legislators in California maintain their residences in their home districts, and rent/share apartments or homes in Sacramento which they pay for with a per diem housing allowance provided to them in their office budgets.  They can spend this allowance on hotel rooms or apartments.  

Did I mention that the housing allowance is tax free for members who live more than 50 miles from Sacramento? 

So why did Richardson, two months after being elected, buy a $500,000+ house in Sacramento instead?   

In April 2007, the Congresswoman from Richardson’s district, Rep. Juanita Millender-McDonald succumbed to cancer, creating a vacancy in Richardson’s district.  She was elected to Congress in a special election to fill that seat in June 2007.

Why did she stop paying her mortgage on the Sacramento house?  According to Capitol Weekly:

Richardson declared her candidacy for the seat, and soon found herself locked in a hotly contested, and very expensive race for Congress against state Sen. Jenny Oropeza, D-Long Beach.

While her campaign heated up, Richardson’s house slipped into default. Richardson fell behind on her mortgage payments as she loaned her Congressional campaign $60,000 – money that has begun to be paid back to Richardson personally from her campaign account, according to records from the Center for Responsive Politics.

Rather than continue paying on the loan as the house lost value in the declining housing market of Sacramento, she loaned personal funds to her campaign, and simply walked away from the mortgage.  She still has a four bedroom house in Long Beach. 

When the house was placed in foreclosure, documents show that the unpaid amount owned to the bank that gave her the loan is $587,000.

Considering this LAT story about State Sen. Tom McClintock using a loophole in the per diem housing allowance law to own  houses in both Sacramento and the LA suburb of Thousand Oaks — and receiving $36,000 tax free in per diem in 2007 as a result — wouldn’t it be nice to know of Congresswoman Richardson was receiving tax-free per diem from the State of California to pay for the mortgage on her new home in Sacramento, which she elected not to pay in order to pump money into her campaign for Congress?

You might think a reporter from the LAT or elsewhere might think that was a story.

69 Responses to “Newly Elected California Congresswoman Walks Away from $535,000 mortgage shortly after being elected.”

  1. For shame. You don’t really think that she pocketed the per diem, stiffed the bank, and used the money to get elected, do you?

    You do?

    Yeah, it does sort of smell like that. And this is exactly the kind of digging that a *real* journalist would do best. Not to indulge in too much schadenfreude, but I look forward to the next installment.

    Don (f1f737)

  2. Well sure, a real reporter would investigate that …

    SPQR (26be8b)

  3. A quick search at the Long Beach Press-Telegram turned of nada, zip, zilch!
    But hey, it’s all right, she’s a member of a protected class – a Liberal Politician.

    Another Drew (8018ee)

  4. She didn’t even wait till she took office to start stealing from the taxpayers–she’s a natural!

    I wonder if she can be indicted for anything…

    Patricia (f56a97)

  5. Isn’t there a gal with the last name of Busch who might have the skills a reporter might possess?

    Scott Jacobs (fa5e57)

  6. It’s a shame it is too late for someone to mount a primary challenge against her, using corruption as an argument.

    aphrael (e0cdc9)

  7. if i understand correctly, there is as yet no evidence that she wasn’t paying taxes on it. if she made any false statements on her returns, yes, that would be illegal and reprehensible. if there’s some kind of law providing that the housing component of per diem actually be spent on housing, then there’s a case, otherwise…it’s just a game, and she’s winning so far.

    i don’t think there’s any moral component to a homeowner walking away from an upside-down mortgage, any more than there is in the bank foreclosing on him. if the bank offered me 100% financing in a rising market, i would buy as many houses as i could. if i wanted to spend a lot of time in washington and had sufficient local support to knock off my current congressman peter defazio (doing a pretty good job in my estimation), i’d jack money into my campaign from whatever source i could reach.

    unless she’s broken the law, her constituents are her only judge. statements on the internet by non-constituents are weightless.

    assistant devil's advocate (c0b71b)

  8. I think , ADA, that the point is the lack of reporting, as this would be front page news if the perpetrator was Republican.

    SPQR (26be8b)

  9. After I got done reading your post, but before following the link, I read again your rhetorical question. Why ain’t the LATimes looking into this?

    And I thought to myself, “I bet she’s black.” And then I clicked the link, and yup, she is.

    Minority Congressmen such as this lady or “Dollar” Bill Jefferson get a pass from the MSM on impropriety — IF they are Democrats.

    Steven Den Beste (99cfa1)

  10. Well, theLA Times is not ignorant of the subject

    By Patrick McGreevy, Los Angeles Times Staff Writer
    March 23, 2008
    SACRAMENTO — State Sen. Tom McClintock, a fierce critic of government spending, has accepted hundreds of thousands of dollars in tax-free per diem payments from the state that are meant to help legislators who, unlike McClintock, live far from the capital.

    The Republican lawmaker said he is entitled to the $170-a-day payments because his legal residence is a family home in his Senate district of Thousand Oaks, where he is registered to vote.

    McClintock and his family live year-round in Elk Grove, 14 miles from the state Capitol. He moved to the Sacramento suburb in 1996, when he was elected to the state Assembly, and he bought a five-bedroom, 4,090-square-foot home in 2004. His children attend Elk Grove schools and his wife works at a Baptist church there.

    The intent of the payments is to help defray the living costs of lawmakers attending the eight-month legislative session far from their homes.

    Legal experts say McClintock is taking advantage of a loophole that gives him a right to the tax-free payments even though he lives near the Capitol.

    “This certainly strikes me as an example of the abuse of the per diem system,” said Derek Cressman, government watchdog director for California Common Cause.

    The state elections code requires legislators to maintain a residence in their district, and presumes that a senator is “domiciled” where he or she is registered to vote, said Lance Olson, an attorney with expertise in government and political law. It is partly on that basis that McClintock has claimed the tax-free payments.

    The U.S. tax code’s definition of legislative per diem also supports McClintock’s position.

    Topsecretk9 (5537e5)

  11. steven den beste’s comment #9 is racist bullshit. “dollar” bill jefferson did not get a pass from the msm; the freezer cash episode was publicized far and wide.

    a congressperson is the sum of all their votes and the legislation they introduce/co-sponsor, and if i like the votes and the positions, 90 grand in their freezer means nothing to me unless you prove it’s graft in a court of law.

    assistant devil's advocate (c0b71b)

  12. …90 grand in their freezer means nothing to me unless you prove it’s graft in a court of law.

    Your a politician’s dream ADA.

    Perfect Sense (b6ec8c)

  13. ADA, evidently you have a higher burden of proof for politicians’ corruption than you do for calling people racists.

    Noted.

    SPQR (26be8b)

  14. and i thought to myself, “i bet she’s black.” and then i clicked on the link, and yup, she is. then he mentioned congressman jefferson, also black. no mention of tom mcclintock’s race.

    all i care about is the votes and the positions. i’m willing to overlook race, physical appearance, bad table manners and 90 grand in the freezer if i like you.

    assistant devil's advocate (c0b71b)

  15. ADA, corruption “for the public good” is just grand, I know.

    SPQR (26be8b)

  16. #11 bet you have a different spin if they are the evil repubs, eh laddie? If they are black and liberal, there’s a whole other standard in play. Look at cokehead Marion Barry- his denizens knew he was a convicted and still re-elected him. I recall when Street was mayor of Philly there were shenanigans going on in his office that were swept under the rug. Years prior to that in the Jack and Jill Africa camel dung Move back to nature controversary, Frank Rizzo was a bad guy and later black mayor Wilson Goodes was given a pass even though a bunch of underlings took a fall. Gotta love how liberals love to enable bad behaviors ad infinitum. Hilarious how some dems now are starting to believe that charges repubs made about the Clintons in Bill’s POTUS years. And now you same sensitive, pacifist souls want to foist god damn America Obamaturd on us, overlooking fact he is a child of Daley’s corrupt chicago machine politics. Yes, asshat Bill O’reilly says we cannot see what is in Barack Hussein’s caring heart. Screw them both and call me a racist bigot for knowing in my own heart that Obamaturd is rotten to the core.

    Talk about cluelessness.

    madmax333 (f5affc)

  17. Per diem paid to a legislator whose home is within 50 miles of the Capitol building is considered taxable income. Since he is citing Thousand Oaks as his home, McClintock has taken the money tax-free, atop his annual Senate salary of $116,000.

    and a little outdated but

    The State Board of Control sets the level of per diem paid to the legislature. In 1992, the per diem allowance for living expenses while on legislative business was raised from $92 to $100 per day. A legislator is eligible for living expenses for each day spent on state business in Sacramento. A specific request must be made for living expenses for official time spent outside of Sacramento.

    My guess is, she almost immediately walked away from the home but if she still excepted or requested per diem that’s pretty close to fraud in my book.

    Topsecretk9 (5537e5)

  18. Add in that you’ll also overlook breaking any law and you’ve got the core of the democrat party platform.

    all i care about is the votes and the positions. i’m willing to overlook race, physical appearance, bad table manners and 90 grand in the freezer if i like you

    Kenny (76922b)

  19. She still owes the money unless she has a no-recourse mortgage which is very unlikely. (In fact, if she has a no-recourse mortgage, coupled with the $15,000.00 closing credit, we might be looking at a Rezko/Obama situation.) So if there is any deficiency after the foreclosure, she has to pay that off. On the plus side for her, the fact that she still owes the money tends to make it not fraud legally.

    nk (d7f5f5)

  20. NK

    But if she excepted per diem and didn’t pay expenses with it? I wouldn’t be a bit surprised if it weren’t, but it sure smells bad.

    I read she took out $40,00 against the home too – wonder if that was to finance her campaign she loaned $60,000 to?

    Topsecretk9 (5537e5)

  21. Topsecretk9 —

    Working from memory, and without time to google up the details, but here are some thoughts about the per diem issue that I remember reading about from the days of Willie Brown:

    An issue that arose with respect to the per diem payments — a portion of which is for housing and a portion of which is for food and other incidentals — was how legislators arranged to receive the per diem even if the legislature didn’t formally conduct business on a given day and even when they weren’t in Sacramento.

    My recollection is that they amended the per diem rules to provide that a legislator could receive per diem — whether he was in Sacramento or not –for any period of time where the legislature was not adjorned or in recess for 3 or more consecutive days, including weekends. The effect was that the presiding officer needed to only gavel the Assembly into session for a minute every other day and all the legislators would be entitled to per diem every day — whether they were in Sacto or elsewhere. One rationale was that a legislator from Los Angeles might spend a day in San Diego or SF on state business, and that legislator should be entitled to per diem expenses even since he was on official business but not in Sacramento. It was simpler to pay every legislator per diem for everyday according to the new rules, rather than have the legislators individually account for their daily travels and work schedules.

    This didn’t last for long once the press got wind of it, but I remember reading that some enterprising legislators would sometimes share the expense of one apartment — 5 or 6 guys — while collecting close to $4000 a month in tax free per diem on top of their salary.

    WLS (68fd1f)

  22. nk — I think California has a “one-action” rule, and for a purchase money mortgage, there is no definciency judgment allowed. The bank assumed the risk that the property would depriciate when they gave her a 100% loan.

    WLS (68fd1f)

  23. It depends on the per diem rules, I guess. If it is actual dollar for dollar reimbursement for living expenses she could well be guilty of fraud and malfeasance if she did not use it strictly for that purpose. If it’s a set allowance, not based on actual out-of-pocket, then it’s just bad family budgeting.

    nk (d7f5f5)

  24. WLS poste while I was typing. Thanks, WLS.

    nk (d7f5f5)

  25. thanks to both NK and WLS.

    then it’s just bad family budgeting.

    but of course.

    Topsecretk9 (5537e5)

  26. Criminal fraud is always a hard case to make. I defended a guy who sold business equipment subject to chattel mortgages. He was not trying to cheat his creditor, he was desperately trying to keep his business afloat during Clinton’s “economic boom”. We did not have to go to trial. The creditor himself believed that that was the truth.

    nk (d7f5f5)

  27. Criminal fraud may be hard to prove, but it should be easier to build a political case that something shady is going on and the people deserve a better representative.

    aphrael (e0cdc9)

  28. Well, actually, I looked up California’s one action rule and now I’m wondering 1) how much higher are California home loan interest rates from the rest of the country’s and 2) how much higher a credit score do you need to get a home loan in California?

    nk (d7f5f5)

  29. ADA is a firm believer in Jesse Unruh’s principle of politicians. I once heard him describe it. “If you can’t take their money and drink their whiskey, and f**k their women, and still vote against them in the morning, you don’t belong here.”

    I guess “take their house” is now the appropriate phrase.

    Mike K (86bddb)

  30. Cali continues to get hosed by elected officials – elected being the key word. This again, speaks volumes about the voters in this state.

    I look as forward to Congresswoman Richardson’s excuses for her bad behavior as much as I do the LATs excuses for neglecting to report on this. Talk about multi-spin.

    Dana (c93fbc)

  31. In addition to 100% financing on the home itself, the report quotes the woman who sold the house to Richardson as saying she also gave Richardson $15,000 toward closing costs

    If the seller kicks back $15,000 to the buyer, it is a fraud on the bank. Was the $15,000 disclosed to the bank?

    TomHynes (6c3e12)

  32. ADA,
    There is a position in Catholic theology about whether it’s permissible to torture an infant if everyone else benefits.You seem to feel one’s behavior is of no matter;only their voting history.Am I correct in this?If not,please explain my misunderstanding.
    Sincerely,COrwin

    corwin (0d1372)

  33. TomHynes #31,

    It’s legal if it’s on the contract and the Hud-1. Fannie Mae rules allow up to 3% of the purchase price for closing costs.

    nk (d7f5f5)

  34. nk–

    In California, a purchase-money loan for an owner-occupied house is ALWAYS non-recourse. Something that loan officers for out-of-state mortgage companies are sometimes surprised to learn.

    Now is it immoral to walk? The law makes it doubly stupid to take any other course if a default is inevitable. If you agree with the bank to short-pay for example, not only do you end up paying some costs, but the short-pay amount is TAXABLE as income. If you just walk, the non-recourse loan means there is NO tax consequence.

    Any lawyer will tell you to walk rather than take any form of forgiveness. Is it immoral to follow the law’s dictates?

    Kevin Murphy (805c5b)

  35. Nope. If there’s anything worse than lawyers it’s lenders. My only reservation is that honest home owners are subsidizing the deadbeats with higher interest rates. The bankers never lose.

    nk (d7f5f5)

  36. You might think a reporter from the LAT or elsewhere might think that was a story.

    That’s the most boring, pointless story I’ve ever heard. Reporters get fired for covering dull, meaningless crap like this.

    Unless… is this congresswoman a sexy co-ed that only makes public appearances in a bikini?

    Levi (76ef55)

  37. “That’s the most boring, pointless story I’ve ever heard. Reporters get fired for covering dull, meaningless crap like this.”
    Where did your comprehension skills fail you? A fact and date heavy story involving intricate details that call into question the ethics of a public official may seem rather “meaningless” to a foul-mouthed, juvenile cretin like you I’m sure. I pre-emptively admire whomever has the patience or masochistic streak enough to point out to you the glaringly obvious substance of the story.

    Jack Klompus (b796b4)

  38. They shouldn’t waste their time. Levi is obviously just trying to provoke and has been for a while. Ignore him.

    Stashiu3 (460dc1)

  39. It’s a black woman, Jack. Racist!

    /sarcasm

    Sweetie (ca63cb)

  40. “That’s the most boring, pointless story I’ve ever heard. Reporters get fired for covering dull, meaningless crap like this.”

    Levi, apparently you did not see the LAT headlines with a cover story on the new Indiana Jones movie. Now that is not a meats and potato story, let alone frontpage material. However, a congresswoman possibly committing fraud certainly is.

    The Readers Rep is fielding complaints.

    http://latimesblogs.latimes.com/readers/2008/05/indiana-jones-l.html

    Dana (c93fbc)

  41. i’m old enough to remember jesse unruh and the quote mike k provided in #29, i was thinking of that just this morning. i am at a loss to understand corwin’s (#32) transition from torturing infants to pragmatic, result-oriented government.

    purchase-money mortgages in california are non-recourse, however, if there was a refinance as suggested in #20, the new loan is recourse.

    assistant devil's advocate (fabd55)

  42. I see that someone has misunderstood what I was saying.

    I didn’t say, or think, “Oh, she’s black; that’s the reason she’s acting improper, because she’s one of those people.” That wasn’t the point.

    I was thinking “Oh, she’s black, and that’s why the politically correct and steadfastly liberal LA Times didn’t look too closely at what she’s been doing.”

    Fact is, if a white male Republican congressman had done what she did, the LA Times would be all over it.

    As to me being racist? Baloney. Holding people to different standards based on the color of their skin is racist. I do her the honor of judging her behavior exactly the same way I would anyone else.

    Steven Den Beste (99cfa1)

  43. I’m just happy there’s no “House Bank” for this Rep. to rape like Barbara “Check Bouncer” Boxer and Red Ron Dellums did.

    PCD (5c49b0)

  44. As I have often stated, and bears repeating, you are all a bunch of racist, sexist homophobes. And you prolly kick kittens. Especially Steven ;-)

    JD (75f5c3)

  45. Steven is a kitten? :P

    Scott Jacobs (fa5e57)

  46. Scott too.
    And, Stashiu.
    But not SPQR.

    JD (75f5c3)

  47. Sure, … if kittens watch Anime.

    SPQR (26be8b)

  48. I could not find a picture of that house. I wanted to see what over a half million bucks will buy you out there.

    JD (75f5c3)

  49. My house was recently reassessed for tax purposes. Ouch.

    JD (75f5c3)

  50. I kicked a kitten, and a puppy. And broke a kite.

    JD (75f5c3)

  51. Yup. I still own that book “1001 Uses for a Dead Cat”

    JD (75f5c3)

  52. I denounce myself, just to save you the effort.

    JD (75f5c3)

  53. Oh, its no effort.

    SPQR (26be8b)

  54. Even with our new property tax assessment being passed, I am going to have to pay almost $10,000. Any savings on the tax plan, I am going to pay approximately $3500 less a year, were almost offset by a marked increase in assessed value. Sorry to stray from the topic.

    I denounce myself, again.

    JD (75f5c3)

  55. Where did your comprehension skills fail you? A fact and date heavy story involving intricate details that call into question the ethics of a public official may seem rather “meaningless” to a foul-mouthed, juvenile cretin like you I’m sure. I pre-emptively admire whomever has the patience or masochistic streak enough to point out to you the glaringly obvious substance of the story.

    Facts, dates, intricate details, and ‘glaringly obvious substance’ is what you want, huh?

    Well the other day, the Inspector General of the Justice Department released a 370 page report all kinds of substance and all sorts of details about this administration’s torture policies. He goes over all sorts of interesting ‘facts’ for you, about how the administration knew about abuse, about how field operatives were objecting to their superiors about detainee abuse, ( by the way, do I have to remind you that detainees aren’t always necessarily terrorists? That’s what happens when you don’t bother charging, prosecuting, and convicting the people you round up). It also talks about the legal concerns these agents were raising, about the morality and effectiveness of the practice, and about how any evidence derived becomes inadmissible.

    And it talks about how the entire administration knew about these things and did nothing. So here we have a story about Republicans attempting to reverse 225 years of of precedence and respect for the law by institutionalizing torture in secret, with all kinds of facts and dates and details and substance, and here you guys want to bitch about some random Congresswoman potentially gaming the system for a few grand?

    You think those are the right priorities to have?

    Levi (76ef55)

  56. Levi – Grow up.

    JD (75f5c3)

  57. Nice threadjack, you mouthbreathing lunatic. Do you enjoy being the punchline of every joke here, are you just playing some elaborate game for attention, or are you just the sniveling, blathering loon that everyone recognizes you to be?

    Jack Klompus (cf3660)

  58. and yes that was directed at the local in-house idiot Levi.

    Jack Klompus (cf3660)

  59. Shorter Levi – I only care about Republican atrocities that I have made up in my head.

    JD (75f5c3)

  60. They shouldn’t waste their time. Levi is obviously just trying to provoke and has been for a while. Ignore him.

    Provoke what? Discussion? That’s a bad thing to provoke, in a comments system, on a political website?

    Levi (76ef55)

  61. I wonder which left liberal website Levi gets his talking points / marching orders from. Who is pimping the torture meme today?

    JD (75f5c3)

  62. Congresswoman Richardson’s local newspaper did cover the story on the front page with a large top-of-the-page headline today. You can read the online version. I see the LA Times continues to yawn at this story.

    JVW (78155f)

  63. Too bad Levi isn’t in Maricopa county, AZ. Sooner or later he’d end up on Sheriff Joe’s chain gang. Probably the only honest work Levi would do in his lifetime.

    PCD (5c49b0)

  64. Hey, Richardson voted herself a benefit. Read the Daily Breeze article. She voted for a bill in which she would directly benefit from the foreclosure of her Sacramento home. Isn’t this a violation of Ethics of Congress.

    Oops, Oxymoron, Ethics and Congress. Double that when you add Democrat to the mix.

    PCD (5c49b0)

  65. Regarding re-assessments: sure would be great if they’d do it downward since development where I live in ‘tony’ east boca raton, fl. the values have cratered by 50%. Still, I can’t complain because we have homestead which limits annual increases to 3%. Bought place in ’98 and newer people pay five times as much tax. The killer for me is extortionate insurance rates.

    Levi is typical of the same kind of cretins who live here, vote in a clown like Bobby Wexler, protest the war at all cost and endlessly bitch about Dubya. Just got a joke about Larry King asking Jon Stewart if we were ready to elect a black ro woman. Stewart says, “Did anyone ask us in 2000 if we were ready for a moron.” So I wrote back and told the liberal bimbo that moron W had better grades than either the goracle or lurch and defeated both even though her heroine Hill just repeated the meme that Bush stole election fron Algore.
    I do wonder how many people might agree that terrorists who embrace a culture of death should exterminated like the cockroaches they are. …no effing recidivism there for sure and pack them in pig grease and feces. Guess I’m just insensitive to my fellow man’s sufferings. People like Levi who vote for libs are to blame for the energy prices and many more bad acts by a lib Congress. They want prices to rise and think Bush is wrong to think rich farmers need corporate welfare, etc.

    And it would be poetic justice for the Levis of the world to be in the hands of the islamomutants he adores and worries about over his own country.

    madmax333 (a1c747)

  66. The Long Beach Press-Telegram carries the story from the Breeze today, and has the foreclosure sale paperwork on its’ site http://www.presstelegram.com/ci_9341463
    Richardson is quoted as saying she is working with her lender, etc etc, and that the home was not forclosed. Yet, it was sold at a $200K discount to a local realtor, who is doing a quick rehab to get it ready for re-sale (Trust Deed reporduced on website)

    Another Drew (8018ee)

  67. AD, Richardson is a Democrat. Of course she’s going to lie when caught red handed.

    PCD (5c49b0)


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