CAREFUL! Quick carrer changes can cause financial troubles.

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Pelosi comments on Laura Richardson defaults

By Erica Werner The Associated Press

Article Launched: 06/12/2008 10:10:37 AM PDT

Rep. Laura Richardson

WASHINGTON - House Speaker Nancy Pelosi, asked Thursday about fellow California Democratic Rep. Laura Richardson's multiple home defaults, said that "every member of Congress is responsible for living up to the highest ethical standards."

Pelosi said she was not familiar with the details of the controversy surrounding Richardson, who won a special election last year to replace the late Rep. Juanita Millender-McDonald in the 37th Congressional District in Long Beach.

But every lawmaker must make "the fullest disclosure of his or her assets as is required by law," Pelosi said.

"Many people in our country are caught in the foreclosure crisis. Members of Congress maybe are as well," she added.

Late last month reports emerged that Richardson, a former state Assemblywoman and member of the Long Beach City Council, had lost her Sacramento home to foreclosure and has two other homes in Southern California that have fallen into default six times.

Last week the Long Beach Press-Telegram reported that Richardson had also left car repair bills unpaid.

Richardson easily won her Democratic primary June 3 and is running unopposed in the November general election, although at least one of her Democratic primary opponents is making plans to challenge her as a write-in candidate.

Richardson defended herself after the first reports of the foreclosure on her Sacramento home, saying it never should have happened and she'd worked out a deal with her lender to buy it back. However the purchaser of the property, James York of Red Rock Mortgage in Sacramento, complained in published reports this week that Richardson had been given favorable terms because she's a congresswoman and that he planned to sue over the issue.

Richardson's spokesman, William Marshall, had no immediate comment Thursday.

California Assembly Speaker Karen Bass, D-Los Angeles, also addressed the Richardson situation Thursday during a visit to Washington. Bass and other Assembly leaders had endorsed Richardson's congressional bid but Bass told reporters she'd had no idea about Richardson's financial issues.

Richardson had a quick rise in politics, moving from the Long Beach City Council to a state Assembly seat in 2006 and to Congress the next year.

"Given the rapid pace of all of that I can understand the financial difficulties, but now more is coming out," Bass said. She said she'd hoped while in Washington to talk to Richardson about the situation but hadn't had the opportunity.

Is Karen Bass serious? So it's not her fault that she is in financial trouble for not taking care of her obligations to lenders, it could be related to the fact that she has had such a "rapid pace" when it comes to career change. Uh-huh, wow, we should all be thankful that we never advance in our careers at a fast pace or we would be in some serious trouble.

Whatever happened to living within your means and being responsible with your money?

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Pelosi comments on Laura Richardson defaults

California Assembly Speaker Karen Bass, D-Los Angeles, also addressed the Richardson situation Thursday during a visit to Washington. Bass and other Assembly leaders had endorsed Richardson's congressional bid but Bass told reporters she'd had no idea about Richardson's financial issues.

Richardson had a quick rise in politics, moving from the Long Beach City Council to a state Assembly seat in 2006 and to Congress the next year.

"Given the rapid pace of all of that I can understand the financial difficulties, but now more is coming out," Bass said. She said she'd hoped while in Washington to talk to Richardson about the situation but hadn't had the opportunity.

Is Karen Bass serious? So it's not her fault that she is in financial trouble for not taking care of her obligations to lenders, it could be related to the fact that she has had such a "rapid pace" when it comes to career change. Uh-huh, wow, we should all be thankful that we never advance in our careers at a fast pace or we would be in some serious trouble.

Whatever happened to living within your means and being responsible with your money?

I know you didn't mean to, but never ever overlook the importance of this. California Assembly Speaker Karen Bass,D-Los Angeles. That should straighten up any and all misunderstandings. Thank you, thank you very much, I'm always happy to help.

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Pelosi comments on Laura Richardson defaults

California Assembly Speaker Karen Bass, D-Los Angeles, also addressed the Richardson situation Thursday during a visit to Washington. Bass and other Assembly leaders had endorsed Richardson's congressional bid but Bass told reporters she'd had no idea about Richardson's financial issues.

Richardson had a quick rise in politics, moving from the Long Beach City Council to a state Assembly seat in 2006 and to Congress the next year.

"Given the rapid pace of all of that I can understand the financial difficulties, but now more is coming out," Bass said. She said she'd hoped while in Washington to talk to Richardson about the situation but hadn't had the opportunity.

Is Karen Bass serious? So it's not her fault that she is in financial trouble for not taking care of her obligations to lenders, it could be related to the fact that she has had such a "rapid pace" when it comes to career change. Uh-huh, wow, we should all be thankful that we never advance in our careers at a fast pace or we would be in some serious trouble.

Whatever happened to living within your means and being responsible with your money?

I know you didn't mean to, but never ever overlook the importance of this. California Assembly Speaker Karen Bass,D-Los Angeles. That should straighten up any and all misunderstandings. Thank you, thank you very much, I'm always happy to help.

Thanks TM, that does explain a lot!

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to take a look at the broader issue of this, why should anyone with a Congressional salary have to worry about a foreclosure? Was their house that expensive?I still think the vast majority of foreclosures has to do with people bought more house than they could afford.

Was their bad business schemes? Sure

Did people lose their job and couldn't afford the payments? Sure

Did people have to quit their job due to health and could no longer afford payments? Sure

Again though, I feel the majority of them were people wanting a bigger house that they couldn't afford. Whenever you see a segment on foreclosures on any of the cable news shows, how many 1200-1500sq ft houses do they usually show? Are news stations just being lazy not to find a smaller foreclosed homes or is it really alot of huge homes going into foreclosure?

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to take a look at the broader issue of this, why should anyone with a Congressional salary have to worry about a foreclosure? Was their house that expensive?I still think the vast majority of foreclosures has to do with people bought more house than they could afford.

Was their bad business schemes? Sure

Did people lose their job and couldn't afford the payments? Sure

Did people have to quit their job due to health and could no longer afford payments? Sure

Again though, I feel the majority of them were people wanting a bigger house that they couldn't afford. Whenever you see a segment on foreclosures on any of the cable news shows, how many 1200-1500sq ft houses do they usually show? Are news stations just being lazy not to find a smaller foreclosed homes or is it really alot of huge homes going into foreclosure?

I have to agree with you. I am a Systems Admin and my wife is a teacher, so you know we aren't exactly raking in the big bucks. We have never came close to defaulting on anything. I think a lot of it is people have become "house poor". They have way too much house. We bought a new house in March and when we looking we saw two or three foreclosures in some neighborhoods where houses started at $225K.

I would say that most people bit off more than they could chew, got suckered into a ARM or interest only loan.

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Here is an interesting thought.

UCLA Law Dean Michael Schill is interviewed by the Law Blog for his insights as a real estate finance expert on the subprime mortgage mess.

What’s your broader view of how we got into this mess?

"Fundamentally, what’s happened is that over the past five-to-ten years, people stopped viewing houses as places to live in, and started viewing them as speculative investments, or as hobbies. So you were seeing all these cable TV programs about buying a house and renovating a house, and it became a terrific sport. So people were buying homes and lenders were financing homes and it wasn’t based upon what people could realistically pay."

What’s the right response?

"You want people to have access to credit to take out loans and buy homes. So you don’t want to regulate too much. At the same time, you want to regulate practices that we know are going to lead to trouble. For example, I’ve never understood why banks lend more than 100% [of the purchase price]. You’re creating a huge moral hazard problem on the part of the borrower because they have no skin in the game, so they just walk away. "

"Another issue, which is more tricky, is that you shouldn’t lend to people who have no ability to pay back. Banks were lending on the value of the homes, not on the ability of the borrower. They were doing no-doc loans, so they had no idea what the assets were. So, as a lender, you were lending on property and then just saying you’ll take the property back. But in many cases the property wasn’t worth what it was worth."

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