Mike Aguirre (D)
Jerry Brown (D)
SAN DIEGO, Calif. (Legal Newsline)-San Diego City Attorney Mike Aguirre will look for new ways to protect homeowners facing foreclosure despite losing a bitter re-election campaign on Nov. 4, he told Legal Newsline.
Aguirre said the incoming city attorney, Republican Judge Jan Goldschmidt, intends to drop the lawsuits Aguirre, a Democrat, launched against mortgage lenders Countrywide Financial Corp., Washington Mutual and Wachovia Bank.
That decision, he said, will stall efforts to protect homeowners facing foreclosure while removing the legal pressure it put on lending institutions to correct predatory loans.
"These loans were written at values that were dishonest," Aguirre said. "Now you have the federal government talking about paying off these loans. This fraud will be passed along to the taxpayers."
Aguirre said the ballyhooed settlement between California Attorney General Jerry Brown and Bank of America, the financial giant that bought Countrywide in July, will not offer homeowners the protection from foreclosure that Brown promised when the settlement was announced.
"Jerry Brown entered into an arrangement with Countrywide that is different than what he described in his press release," Aguirre said of the Democratic attorney general.
Aguirre agrees with The Greenlining Institute - an advocacy organization that has lobbied extensively to protect homeowners - that the terms of the settlement do not force Bank of America to modify expensive loans. Hedge fund investors who purchased the loan securities are not required to agree to loan modifications unless fraud is proven, Aguirre said.
The terms of the settlement do not admit fraud, he said, giving investors the power to refuse to modify loans.
"The public should know that the promise and the reality of the settlement do not coincide," Aguirre said.
Brown has accused Aguirre of grandstanding. When he announced the settlement in September, Brown said of the $8.68 billion agreement, "This loan-modification program provides real relief for borrowers at risk of losing their homes."
At that time, Aguirre called the settlement "a home run." But his enthusiasm dimmed as the details of the settlement were submitted to the court.
A fight interrupted
Aguirre choose not to settle his own lawsuit against Countrywide. San Diego is the only city to have sued the lender that has been sued by several states over its lending practices.
In October, when a federal panel remanded all loans against Countrywide to the federal court in San Diego, Aguirre said he'd be the legal point man that would push lenders to rework troubled loans.
But voters took away his platform when they voted him out of office. The controversial city attorney was opposed by the county Republican Party, which spent a record $325,000 in supporting Goldsmith, Mayor Jerry Sanders and several business organizations.
Aguirre's political consultant, Chris Crotty, told reporters following Aguirre's defeat that the city attorney had too many enemies.
"Quite frankly, I think that given the political environment, I'm not sure there was anything we could do," Crotty said. "He pissed off everybody."
Aguirre was further hurt by a ballot that did not place party affiliations of the city attorney candidates on it, thus denying Aguirre the opportunity to ride the coattails of President-elect Barack Obama.
Aguirre thought a populist campaign that reached out to minorities, the working class and faithful Democratic voters would be enough to win. He admitted being surprised by his defeat despite the obvious opposition.
"I was not anticipating getting the s--- kicked out of me in the election," Aguirre said. "I got it from every angle: North, South, East and West. I united people who never worked together before. Unfortunately, I united them against me."
Sanders said he worked as hard to defeat Aguirre as he did in his own re-election effort.
"I was out weekends. I was out everywhere," he said after the election.
Immediately following the election, Goldsmith sent a memo to all staff currently working for the city attorney that turnover should be expected when he takes office. He said his management style differs from Aguirre, and he will completely reorganize the office.
"Over the coming months, there will be a transition period," he said in the memo sent the day after the election. "'I'll be straight with you - there will changes and some staff will be let go. I understand the anxiety, but I promise and commit to building a stable and positive work environment."
Despite the political setback, Aguirre said the enormity of the housing crisis and the problems within it will continue to motivate him as he returns to private practice.
"People have no idea of the massiveness of the subprime problem," Aguirre said. "It became literally the financial highway that everyone rode on to create trillions of dollars.
"When I leave office I want to somehow find an appropriate way to keep working on this," he said. "I'm interested in it and here lies the potential for us as a country to do well, or to do very poorly."
Aguirre takes great pride in his efforts to create national momentum to confront the housing crisis, an effort that started last December in San Diego during the first protest against Countrywide's lending practices. Aguirre tried unsuccessfully to have the City Council issue a state of housing emergency for a city facing as many foreclosures as anywhere in the country.
"Mike was the strongest ally Main Street has had among the attorneys general and city attorneys involved in litigation," said Robert Gnaizda, general counsel for the Greenlining Institute. "Unlike most of the attorneys general, he understood that the banks could not stand the daylight of intensive discovery, and therefore would settle on terms highly favorable to the public. The attorneys general seem to settle for less than half of the pie."
Aguirre became a vocal supporter of temporarily freezing foreclosure activity so that expensive and risky loans could be modified to what he called a "fair and reasonable value."
As the housing crisis grew into a national economic crisis, principles touted by Aguirre and activists like the Greenlining Institute were adopted by the Federal Deposit Insurance Corp. and lauded by leading Democrats. Still, Aguirre said efforts to date, including the settlement with Countrywide and the $700 billion congressional bailout have failed in offering adequate protection and compensation to homeowners.
"The power and the money behind not correcting the situation are so massive that it continues today," Aguirre said. "You see it at the national level."
Aguirre was honored by several activist organizations in October for his efforts, but such honors failed to help him win re-election.
"I'm living proof of what can happen to you if you take these people on," Aguirre said. "I'm not the world's greatest politician and the conservative paper down here dominates. But I've seen what they can do."
As for a return to political office, Aguirre freely admits his controversial tenure as city attorney has not created a wave of support, he said with a laugh.
"For four years, we did what was right," he said. "I never allowed politics to enter in. It was glorious and it was fun. But they kicked us out bad. I don't see a groundswell for future office, but you never know. I like to say we were efficient. We got eight years done in four years."