An excerpt from this article:
Riggins, 67, retired early from his career in construction and maintenance for the city of Richmond after a knee injury put him on disability in 2008. But, the income from his tenants helped keep him afloat.
“The building was in good shape, and I had good tenants,” Riggins said. “Everything was just happy. Until. Yeah, until.”
Riggins went through a divorce and sought a modification on his mortgage in 2019. While that was being considered, his lender foreclosed. Everything his parents had worked for seemed to slip through his fingers.
“That sent me through a great depression for a year,” he said. “When you do everything you can do, and it seems like it’s not enough, it’s like everything is against you.”
The ultimate buyer was Southside Neighborhood Stabilization, a limited partnership registered to an Encinitas, Calif., address. The general partner was a Virginia nonprofit, Southside Community Development and Housing Corporation.
It was this partnership with a nonprofit that allowed the organization to buy the house under a 2020 California law, SB 1079. It allows tenants of foreclosed homes, owner-occupants, governments and nonprofits an exclusive 45-day window to match the winning bid at a foreclosure auction. It was one of 15 housing bills signed into law that year aimed at creating more affordable opportunities for renters and homeowners.
Southside’s website states its mission is “advocating for the needs of communities and families” to “stabilize communities throughout the United States.” And while that should have been a relief to Riggins, it wasn’t. He couldn’t understand why a nonprofit, nearly 3,000 miles away, had purchased his property.
“Why would they want to buy something in California?” Riggins wondered. “And I think that’s the part that just really has me just furious. Why would you want to invest in something that you have never seen?”
The two-story triplex, with its salmon-colored stucco and white trim, was one of at least 74 properties Southside Neighborhood Stabilization scooped up since it formed in early 2021.
The organization is one of at least three such entities created in California after SB 1079’s passage to purchase homes in partnership with nonprofits that have the stated goals of providing affordable housing to communities in need. But in a review of nearly 200 property records, and interviews with over a dozen homeowners and investors who’ve purchased properties from them, there’s little evidence these homes are actually being used as affordable housing.
“They’re all just being flipped,” said Jeff Cagle, a Central California house flipper who’s lost dozens of foreclosure auction bids to purchasers who invoked SB 1079. “The whole idea was that if nonprofits bought this, this was supposed to benefit affordable housing, but none of them were being retained as affordable housing.”
Read full article here:
From the article “We do a bill with the best intention, but we can’t always see exactly how it’s going to be put into practice.” – State Sen. Nancy Skinner (D-Berkeley)
DOH!
Wait – there’s a lot of information missing from this story. He sought a mod and the lender foreclosed? You cant leave out so much detail. How long was he behind on his mortgage? Was he not paying? Why in 2008 people got to live in their properties for 5 + years before being foreclosed?
So, a nonprofit (who pays no taxes) is using gov red tape to tie up foreclosure properties at an artificially low price. So they can flip for profit.
Beautiful
Love how the politician who wrote the bill didn’t see it coming, and, of course, made no provisions:
She thought nonprofits would use the homes they purchased through SB 1079 to create more affordable housing, but the bill doesn’t specifically require it. Nor does it include any enforcement or accountability mechanisms to ensure that’s the case.
“We thought we didn’t need to,” Skinner said. “We do a bill with the best intention, but we can’t always see exactly how it’s going to be put into practice.”
Welcome back Shadash – glad to hear from you more often!
The other part of this not mentioned in the article is that there is no accountability for those claiming owner occupier preferential status (“Prospective Owner-Occupant”) under SB 1079. Once someone claims through a submitted affidavit this is the case to get priority, the foreclosure trustee has to recognize it. If it turns out its actually a flipper, no one checks to see what happened, other than curious foreclosure trustees who do nothing but roll their eyes when they see the property was later quickly sold.
Hello again Kingside!