AP Interview: Rep. Laura Richardson says home foreclosure sale 'improper' - Owes $578,384

By ERICA WERNER, Associated Press Writer

• Default Documents [HERE]
  

Rep. Laura Richardson claimed Friday that her Sacramento home was sold into foreclosure without her knowledge and contrary to an agreement with her lender. She said that she is like any other American suffering in the mortgage crisis and wants to testify to Congress about her experience as lawmakers craft a foreclosure-prevention bill. In a lengthy interview with The Associated Press on Friday night, the Southern California Democrat struck back against several days of negative publicity over reports she defaulted on her mortgage, allowing the house to be sold at auction.  Richardson, elected in a special election last August, acknowledged turmoil in her life in the months after an incumbent's death in April opened up the Los Angeles-area House seat. She used her money to finance her campaign and fell behind in mortgage payments. But Richardson said that makes her like other Americans who have to deal with a sudden death or birth that throws a wrench into their finances. Now, Richardson said, she has renegotiated her loan to pay it off and promised to fully comply with all its terms. She also said she will pay nearly $9,000 in delinquent property taxes. She insisted she's not getting special terms because she's a congresswoman.

"I'm Laura Richardson. I'm an American, I'm a single woman who had four employment changes in less than four months," Richardson told the AP. "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 was a member of the Long Beach City Council when she won a California state Assembly seat in November 2006, months before she bought the three-bedroom, 1 1/2-bath Sacramento home. She won the congressional seat the next year in the special election to replace the late Juanita Millender-McDonald.

The problem is that the 1,600-square-foot home she bought for $535,500 in January 2007 was sold at auction earlier this month to a Sacramento mortgage lender, who paid $388,000. The sale was officially recorded on Monday, according to documents on file with the Sacramento County Recorder's Office.

A default notice sent to Richardson in March put her unpaid balance at $578,384.

Richardson, 46, makes nearly $170,000 as a member of Congress and was paid $113,000 during the eight months she served in the state Assembly in 2007 before her election to Congress. She also received a per diem total of $20,000 from California, according to a financial disclosure form she filed with the House of Representatives clerk.

Although others struggling with mortgages make far less, Richardson said it was "very misleading" to compare her earnings to the national median household income of around $50,000. The reason: Lawmakers are required to maintain two residences while other people don't have to, she said.

Others also don't have to depend on winning an election to ensure their livelihood, she said.

Richardson provided AP with an April letter that appears to be from Washington Mutual Home Loans telling her there was a hold on foreclosure sales on her property until June 4 of this year.

She said she got another letter asking for payments May 2 and paid them, but did not know the sale was going to happen five days later.

Richardson also provided an e-mail dated Thursday she said was from Washington Mutual that appeared to acknowledge an agreement "to facilitate the recission of foreclosure sale."

She did not provide documentation of the structure of her new loan.

A Washington Mutual spokeswoman, Sara Gaugl, told AP earlier in the day that the company had "not received consent from Ms. Richardson that would allow us to discuss her loan situation."

Asked later to respond to Richardson's specific comments, she reiterated that the savings and loan could not discuss the matter without the congresswoman's consent.

Meanwhile, the current owner of the property told AP that his ownership of the house is not in doubt.

James York, owner of Red Rock Mortgage Inc. of Sacramento, declined to discuss any possible negotiations that might be ongoing.

"I've taken possession on the home," York said. "I've been working on it, fixing it up. It had been vacant. It was in cleaner and in better repair than most foreclosures."

The home, built in 1926, is in Sacramento's Curtis Park, a desirable, upper middle-class neighborhood near downtown that sits under a canopy of decades-old trees.

Not long after getting to Congress, Richardson voted in favor of the Mortgage Forgiveness Debt Relief Act of 2007, which subsequently became law. It allows homeowners to escape paying income taxes on debts forgiven by a lender, as happens in foreclosure.

Richardson was absent earlier this month for votes on the Foreclosure Prevention Act, which she said was because of her father's funeral. But she could have another opportunity to vote on the foreclosure package as the House is expected to bring it back up in June once agreement is reached in the Senate.

In most cases, congressional ethics rules don't prevent lawmakers from voting on legislation that might affect or help them economically. Such votes are essentially impossible to avoid.

Rather than shy away from voting on mortgage-related bills, Richardson said her experiences could help her craft legislation to make sure others don't experience what she did. For example, she sees a need to add steps to inform property owners before their property can be sold.

"We have to ensure that lenders and lendees have the tools with proper timing to resolve this," she said.

Melanie Sloan, executive director of the Washington-based Citizens for Responsibility and Ethics, criticized Richardson for falling deeper into debt while choosing to spend more than $75,000 of her own money on her campaign suggesting that it's more important to win a seat in Congress than to be fiscally responsible, a point Richardson disputed.

Sloan also said Richardson should not be in the situation she is while making a congressional salary, when homeowners around the country making $50,000 or less are struggling to pay their debts.

"Truthfully, it's appalling," Sloan said.