The tale of Rep. Laura Richardson’s (D) personal housing crisis got even more captivating Tuesday as her office said the freshman lawmaker defaulted on loans she took out for not just one, but three, California homes.

The news of one of Richardson’s properties recently being sold at auction captured widespread attention last week in the wake of the nation’s housing crisis. But that was only part of the story.

A third home that Richardson borrowed heavily to move into in Sacramento was sold at auction earlier this month — at a $150,000 loss to the bank that issued her the $535,000 loan.

William Marshall, a spokesman for Richardson, said on Tuesday that she was still awaiting clarification from her lender, Washington Mutual, as to whether she had secured new loan terms in time and was still, in fact, the owner of the home.

Richardson told The Associated Press on Friday that she was surprised to learn that the home was sold at the May 7 auction. She claimed that the sale never should have happened because she had renegotiated her loan to pay it off.

Even as that was happening, ethics watchdogs were crying foul over Richardson’s personal finances and questioning how she was able to lend her campaign to Congress $77,500 in the midst of multiple home loan defaults.

Federal Election Commission (FEC) reports show that Richardson loaned her campaign a total of $77,500 — in three installments — between June and July of 2007.

Richardson’s year-end FEC filing showed that her campaign still had $331,000 worth of debt but $116,000 cash-on-hand.

Marshall was unable to immediately answer questions about whether Richardson borrowed against any of her home equity — from homes she defaulted on — to finance her House campaign.

But he did not dispute reports that Richardson had done the very same thing the year prior when she borrowed $100,000 against her Long Beach home — whose mortgage she later defaulted on — to loan to her campaign for the California General Assembly. She repaid that personal loan in its entirety, according to Los Angeles media outlets.

Melanie Sloan, executive director of the Citizens for Responsibility and Ethics in Washington, criticized Richardson for falling deeper into debt while choosing to spend more than $77,500 of her own money on her campaign. She suggested that Richardson’s actions only demonstrated her belief that winning a seat in Congress is more important that practicing personal fiscal responsibility.

Sloan added Richardson should not be in the situation she is while making a congressional salary when homeowners around the country making $50,000 or less are struggling to pay their debts.

“Truthfully, it’s appalling,” Sloan said.

Meredith McGehee, policy director for the Campaign Legal Center, said it would be reasonable for the FEC to look into the timing of the loan against the timeline of Richardson’s home loan defaults.

“In situations like this it’s very important for whoever loaned her the money to demonstrate that they treated her equitably, not favorably,” McGehee said. “Otherwise, you’re getting into a situation of a corporate underwriting of a campaign.”

Richardson’s FEC reports do not spell out the terms of her personal loans to her campaign.
Richardson originally came under scrutiny last week when it was learned that a home she owned in Sacramento was sold at auction after it went into foreclosure.

As well as her $535,000 home in Sacramento, a home that Richardson owned in San Pedro — which she borrowed $359,000 to obtain — went into default in September 2007 when she became more than $12,000 behind in her payments.

In addition, Richardson’s primary residence in Long Beach went into default just two months ago after she failed to make a payment for four months and owed nearly $20,000 on the property.

Marshall declined to give details of the new loans that he said Richardson was able to secure.
Richardson last week told reporters in California that her experience makes her particularly well-suited to help Congress legislate a solution to the nation’s housing crisis, saying she hoped to testify before congressional committees on the issue.

And when Congress returns following the Memorial Day recess, reconciling the House and Senate versions of the legislation designed to help the housing market rebound will be on the top of the agenda.

Richardson did not vote on the version of the Foreclosure Prevention Act that passed the House, but said she missed the vote only because she was attending her father’s funeral.

Richardson was a member of the Long Beach City Council when she won a California General Assembly seat in November 2006, months before she purchased the home in Sacramento. She won the congressional seat the following year in the special election to replace the late Rep. Juanita Millender-McDonald (D).