The sale of Rep. Laura Richardson's Sacramento home is being rescinded. (The Associated Press)
The real estate broker who bought Rep. Laura Richardson's house at a foreclosure sale last month is accusing her of receiving preferential treatment because her lender has issued a notice to rescind the sale.
James York, owner of Red Rock Mortgage, said he would file a lawsuit against Richardson and her lender, Washington Mutual, by the end of the week, and has every intention of keeping the house.
"I'm just amazed they've done this," York said. "They never would have done this for anybody else."
York bought the Sacramento home at a foreclosure auction on May 7 for $388,000. Richardson had not been making payments on the property for nearly a year, and had also gone into default on her two other houses in Long Beach and San Pedro.
Richardson, D-Long Beach, has said that the auction should never have been held, because she had worked out a loan modification agreement with her lender beforehand and had begun making payments.
Richardson left nearly $9,000 in unpaid property taxes on the home, which she bought in January 2007 for $535,000, shortly after being elected to the Assembly.
Washington Mutual has declined to comment on the specifics of Richardson's case because she has not waived her privacy rights.
In a statement, spokeswoman Sara Gaugl said the company is "committed to treating all of our customers with the same level of consideration and fairness."
Washington Mutual filed a notice of rescission of the foreclosure sale on June 2. That puts the bank squarely at odds with York, who has already put money into cleaning up the house and preparing it for resale.
"They owe me the property," York said. "The sale was a good sale."
York said an ordinary person would be unlikely to get the kind of consideration that Richardson has received from her bank.
"They wouldn't even get a phone call back," he said. "They would laugh at somebody who would call and say, `We had some kind of agreement.' They wouldn't give you 10 cents' worth of time."
Leo Nordine, a Hermosa Beach real estate broker who specializes in foreclosed homes, agreed that the rescission was out of the ordinary.
"It's extremely unusual," he said. "Unless (the borrower) filed bankruptcy beforehand, they'd never do it."
Richardson's staff did not return a call on Monday.
Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, said that while foreclosure rescissions are rarely publicized, they are becoming more common as the rate of foreclosures increases.
"Generally it is going to result in a legal battle," he said. "Basically you're saying, `We're willing to fight for our borrower."'
Hobbs said a lender would be unlikely to go to bat for a borrower who has shown no ability to make future payments. But if the foreclosure was the result of a temporary hardship or a paperwork mix-up, the lender has every incentive to restore the initial loan.
"Lenders are concerned about keeping borrowers in homes no matter who they are," he said. "We're talking about dollars and cents at this point." In Richardson's case, Washington Mutual lost nearly $200,000. If the foreclosure were overturned, the bank would have an opportunity to recoup some of that loss - assuming Richardson is able to make payments on three homes and rent an apartment in Washington, D.C., on her $169,300 congressional salary. email@example.com