San Francisco committee advances plan to negotiate joint authority with Richmond to help homeowners with troubled mortgages

The San Francisco Board of Supervisors’ Budget and Finance Committee advanced a resolution Oct. 1 to begin negotiations with the City of Richmond on a Joint Powers Authority that would acquire certain private‑label securitized (PLS) mortgages and work with homeowners to refinance or modify loans.

Supervisor John Avalos, who sponsored the resolution, described the JPA as a tool to target PLS loans that are difficult to modify through normal channels. Avalos said about 9,500 PLS loans are in San Francisco, 8,000 of which are owner‑occupied, and cited counts of adjustable‑rate mortgages and upcoming rate resets that place many households at risk. “This resolution will begin the process of creating a program to assist homeowners with stressed mortgages,” Avalos said.

Mayor Gail McLaughlin of Richmond, Calif., told the committee Richmond used a similar approach to reduce blight and stabilize neighborhoods. McLaughlin said the Richmond program acquires mortgages (not property deeds), pairs homeowners with housing counselors and only contemplates eminent domain as a last resort for acquiring mortgage notes. “We would like to do it with voluntary sale from the banks, but we have the eminent domain tool,” McLaughlin said.

City staff and supervisors pushed back on potential financial risks. Nadia Sasse, director of the Office of Public Finance, said the city is still evaluating whether negotiation or participation could affect the city’s access to capital markets or increase borrowing costs. “There’s potential of increased borrowing cost,” Sasse said, and staff will return with more detailed analysis.

Olsen Lee of the Mayor’s Office of Housing said the JPA is a broad tool and urged caution, noting staff had not yet verified spreadsheets of affected loans and citing San Francisco’s difficult history with eminent domain litigation. “We have concerns about whether the eminent domain process will actually result in loans that are affordable and refinanceable for the ultimate homeowner,” Lee said.

Supporters, including ACE organizers and several homeowners, described bank servicing errors, predatory loan features and a gap in federal and state relief for PLS loans. Advocate Grace Martinez said many of the affected homeowners are seniors and that conventional settlements and modifications had failed to provide relief: “Settlements don’t work. None of these people will actually get principal reduction,” she said of many PLS loans.

Committee chair Mark Farrell and others framed the measure as a preliminary, nonbinding step: the resolution authorizes city staff to negotiate terms for a JPA; any final agreement would return to the Board for ratification. After extended public comment and staff exchanges, the committee voted to forward the resolution to the full Board without recommendation and asked staff to provide detailed financial and program metrics before the full‑Board hearing.

Next steps: The committee directed the Mayor’s Office of Housing and the Office of Public Finance to prepare follow‑up materials—loan counts and verification, documentation of modification outcomes, a risk assessment on bond market impacts and the proposed indemnification and governance provisions—for consideration at the Board meeting scheduled the following week.