Lawmaker in a financial rut

By Jeff Gottlieb

May 31, 2008 12 AM PT

Times Staff Writer

When news surfaced that Rep. Laura Richardson had lost her home through foreclosure, the Long Beach Democrat blamed the problem on her year-long rocket-ship rise from city councilwoman to Assembly member to congresswoman and the crumbling real estate market.

“I understand that these homeownership issues are a reflection of what many Americans are going through as they fight to keep their homes and to remain financially stable,” she said in a news release.

But while the foreclosure of the two-story Sacramento home she bought shortly after being elected to the Assembly in 2006 may have been the first time she lost a house, it was not the first time Richardson had fallen behind on her payments. It continued a pattern started eight years ago.

Since then, the homes she still owns in San Pedro, where her mother lives, and Long Beach have fallen into default six times. The amount she owed ranged from $5,742 to almost $20,000, according to documents on file with Los Angeles County.

“She has this habit of missing payments and then trying to catch up instead of doing it monthly,” said Verla Saylor, who sold Richardson the Long Beach house and carried a second mortgage.

The defaults have come at a quick pace lately, five in the last 13 months and the most recent March 28. The five defaults totaled nearly $71,000. During much of that time, Richardson was bankrolling her political career, lending her campaigns for Congress and Assembly a total of $177,500.

Although candidates sometimes use their home equity to help finance campaigns, experts couldn’t remember anyone losing a house over it. “It’s very surprising a member of Congress would allow it to happen,” said Bob Stern, president of the nonpartisan Center for Governmental Studies in Los Angeles. “It’s also very embarrassing. That’s an understatement.”

News of Richardson’s troubles with the Sacramento house was first reported this month by Capitol Weekly.

Not only has Richardson missed house payments, but she is behind on her property taxes, a lien was placed on her Sacramento house because of an unpaid utility bill, and she angered her neighbors by not keeping up her home.

Many state legislators and members of Congress have the added expense of needing two places to live, one in their district and one in Sacramento or Washington, D.C. California lawmakers receive a per diem of $170 to defray the costs, in addition to their salary. Legislators in both capitals often will share a house or apartment in order to keep the costs down.

Despite her payment problems, a subject that has become a favorite in the political blogosphere, Richardson has few worries about Tuesday’s Democratic primary, where she faces two relative unknowns. The 37th District is so solidly Democratic -- it went 74% for John Kerry in the last presidential election -- that no Republicans are running for the seat.

“She has a couple years to let it be forgotten and settle whatever problems are still alive,” said Gary Jacobson, a UC San Diego political science professor and expert on congressional elections. “And assuming she does so, she’ll probably be all right.”

After telling a Times reporter she would be interviewed, Richardson declined the next day and instead offered two prepared statements.

“Earlier this year, I was notified that the mortgages on properties that I own were in default,” she said. “At that time, I began continuous and ongoing discussions with the lenders to reinstate and modify these loans and to reinstate my ownership of the properties. Since those discussions were initiated, I was not notified of any preemptive sales of any of the properties.”

She might want to tell that to James York, owner of Red Rock Mortgage, who bought the three-bedroom, 1 1/2 -bath Sacramento house at a public auction for $388,000 on May 7. He recorded the deed May 19 and has had a crew at the house fixing it up.

Richardson, who bought the house in early 2007 for $535,000, owed about $9,000 in property taxes. She owes Sacramento $154.03 after the city utilities department put a lien on the house for an unpaid bill.

Asked about the congresswoman’s statement that she knew nothing about the sale, York said that’s an excuse he hears all the time: “She doesn’t know what happened, but she’s an educated woman who hasn’t made her payments for 12 months and she doesn’t know why she lost her house? That’s the joke.”

Neighbors in the upper middle-class Curtis Park neighborhood said they were glad to see Richardson leave because she had let the house fall into disarray.

“I don’t care who it is, that’s irresponsible to let it go like that,” said Sean Padovan, a retired Sacramento police sergeant who lives three doors away. “This is our neighborhood. It becomes personal when it’s a few houses down and you’re junking up the neighborhood.”

Padovan, 61, said that when the grass grew nearly a foot high, he knocked on her door. “I finally went down there and said, ‘Would you mind if I mowed your lawn for you?’ She said, ‘I’ve been awful busy. Sure.’ ”

Padovan said his hand mower could barely make it through the grass.

Richardson’s two-story craftsman-style house in Long Beach’s historic Sunrise Boulevard district, where neighbors say she stays on weekends back from Washington, also has fallen into disrepair. The beige paint is peeling, a garage window is broken, and the grass has turned brown.

Richardson bought the four-bedroom, two-bath house for $135,000 so she could run for an open seat on the Long Beach City Council. Before that, she lived in the San Pedro house.

Richardson won the council election in 2000 and worked for then-Lt. Gov. Cruz Bustamante until she won the Assembly seat in 2006, lending her campaign $100,000, which eventually was paid back to her.

She barely had time to get a good meal in Sacramento, although she did have time to buy a house, before Rep. Juanita Millender-McDonald died in April 2007. In August, Richardson won a special election for the seat, this time lending her campaign $77,500.

“She obviously extremely wanted to win this race, and this was the way she invested in it,” said Stern from the Center for Governmental Studies.

Many blogs have pounced on the Richardson controversy. LA.cityzine.com called it “One of the more bizarre political scandals in recent years.”

Calitics.com said, “It seems like she’s engaging in what amounts to a pyramid scheme -- buying new homes with little money down, and at the same time lending her campaigns for state Assembly and Congress tens of thousands of dollars. So the money that would be used to pay off the loan is paying for her political upward mobility.”

Since she has moved on to Congress, Richardson doesn’t have a mortgage to worry about there. She’s renting.

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