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San Diego, "foreclosure sanctuary"? B-a-a-a-d idea

Posted by: Peter Coy on July 24, 2008

Now here is a uniquely bad idea for coping with the housing crisis:

SAN DIEGO (Reuters) - San Diego City Attorney Michael Aguirre said on Wednesday he filed a lawsuit against Bank of America Corp and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in his city, which he aims to make a “foreclosure sanctuary.”

Here’s a link to the whole story.

There are so many things wrong with Aguirre’s idea of making San Diego a “foreclosure sanctuary” that it’s hard to know where to begin.

*If he gets his way, you can bet the supply of new lending to San Diego will dry up instantly. What idiot would make a loan knowing that borrowers are shielded by the city from ever having to pay back?

*A “foreclosure sanctuary” would protect the guilty along with the innocent. And there were plenty of guilty in San Diego, which experienced some of the most extreme speculation in the country. Why should people who bought homes with next to nothing down, intending to flip them for a quick profit, be protected because they got caught swimming naked when the tide went out?

*San Diego would expose itself to lawsuits by creditors, who would have a good argument that the city has no right to prevent them from trying to collect. A big lawsuit is the last thing San Diego needs right now. It has had its share of municipal disasters over the years (a public pension mess caused mayoral candidates to flirt with the idea of declaring municipal bankruptcy in 2005).

I liked this blog on the topic.

Reader Comments

Gordon Weichler

July 24, 2008 3:15 PM

A better idea would be to force the current lenders to allow "innocent" borrowers to reduce their mortgages to a level that they would accept for a short sale to another party.

Damn the investor who wanted to flip the home for profit, they should get what they deserve as they ran the property values up to capture those profits.


July 24, 2008 4:25 PM

San Diego City Attorney Michael Aguirre's idea of a foreclosure sanctuary is an act of desperation. He has inadvertently announced a fire sale in San Diego due to unmanageable foreclosure rates. Any indecisive homeowner sitting on the sideline now must discount his real estate substantially for a quick sale and abandon ship before the impending stampede. Aguirre may have had good intention but in do so he has let the "cat out of the bag." San Diego will join the foreclosure capital of USA with distinguish municipalities: Stockton CA, Kern County CA, Riverside County CA, Las Vegas NV, and Florida. If I were holding IOUs or insurance papers on these loans like BoA, Countrywide, Lehman, MLynch, Citi, Ambac, MBI, Fannie or Freddie, etc, etc, etc, I'll be running scare.


July 24, 2008 8:32 PM

This is nothing. During the wild fires in San Diego last October the same guy suggested the entire city evacuate. Can you picture 1 million refugees arriving in Los Angeles or Phoenix who would have no idea we were coming and no clue in how to shelter and feed a million scared and hungry people. We have had to put up with him for four years. Almost half of his veteran attorneys have jumped ship. His pet civil suits like this one are tied up in the appeals courts. The city's only legal victory was won by a outside firm hired before his election. And that victory came after he attempted to settle out of court for 55 million dollars. November is coming and I pray we will see the last of him.

Lori-anne Cash

July 24, 2008 9:10 PM

San Diego can't rid of this madman soon enough. Is anyone sure Aguirre really HAS a law degree?!!!!!!!!!


July 24, 2008 11:59 PM

Out here in San Diego, many of us refer to Mr Aguirre as "Nifong by the Sea". He shoots from the hip and destroys everything in his path to futher his political aspirations. Never mind the absence of legal substance. Meanwhile, the innocent lie crushed beneath ruined reputations and empty bank accounts from all the legal attacks. Someone, PLEASE, invite him elsewhere. We are weary.

July 27, 2008 3:39 AM

Each case needs to be delt with on case by case basis. America got itself into this problem, we will get ourselves out.


July 28, 2008 4:36 PM

It is amazing what real estate agents will do to sell real estate, including placing their URL address as their Blog identity. We know it doesn't take much qualification to become a real estate saleman these days and their opportunistic behavior shows that shame is not of those quality. I once said without much analyis that real estate saleman were former used car salesmen. Another Blogger corrected my comparison saying used car salemen have higher standards. The real estate bust and liquidity crisis are caused not by "America" as a real estate blogger would have you believe. They are caused by dishonest real estate agents, brokers, appraisers, lenders, and Wall Street investment bankers. One sure sign of guilty is when the perpetrater attempts to disperse his wrong doing upon the general population: America. The assignment of guilty to all is the same old line as "I did what everybody did. Everybody was doing it." Revealing their flawed morality, the real estate agent rationalizes his transgression and then takes on a false modesty by saying "we will get ourselves out." They make Machiavelli a student.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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