Mary Kay Henry, the President of SEIU (Service Employees International Union), the nation's largest union, is calling on investment firms PIMCO and Blackrock to end a campaign of threats and litigation against the City of Richmond's plan to refinance underwater mortgages and instead negotiate with the City over the sale of underwater loans.

SEIU President Mary Kay Henry said in a statement:

SEIU calls on the PIMCO and Blackrock to stop using litigation and threats to attempt block the City of Richmond's innovative program to assist underwater homeowners, Richmond CARES. Instead, PIMCO and Blackrock should negotiate with the City of Richmond and its representative to sell loans held in PLS trusts in which it has an interest at a fair market price--a solution that can benefit investors, homeowners and the community.

"The City of Richmond has offered to pay fair market value for underwater mortgage loans based on an independent appraisal, and its offer letter asked the owners of these mortgages to make a counter proposal or engage in negotiations to arrive at a fair price.

"If the City of Richmond, or other cities, successfully completes the refinancing program that it has proposed, the result will be not only a reduction in harmful foreclosures and a boost to economic growth, but new, more sustainable mortgages on refinanced, equity-positive loans that a variety of investors could purchase and service.

"SEIU and its members call on Blackrock and PIMCO to be constructive partners in achieving a healthy economy that will increase the value of investors assets while protecting sustainable homeownership in communities still reeling from the mortgage crisis."

On Tuesday, October 3rd representatives of SEIU and the community organization ACCE publicly confronted the heads of PIMCO and BlackRock, Bill Gross and Larry Fink, who were giving a talk about the state of finance industry at a UCLA alumni event held at the Beverly Hilton Hotel in Los Angeles, calling on them to "negotiate not litigate" with Richmond. In his response (broadcast on CNBC, and made after the community and union representatives were removed) Larry Fink said, "We are doing this on behalf of our clients. We are doing this for the pension funds."

SEIU is clearly stating that it has not asked PIMCO and BlackRock to sue the City of Richmond, CA and calling on them to drop their lawsuit and work with the City of Richmond, our members in Richmond and our community allies to find a solution that keeps hardworking families in their homes," Henry said.

PIMCO and Blackrock, two major private capital firms, manage billions of dollars in union members pension funds along with trillions of dollars of other assets. The California public employee pension funds CalPERS and CalSTRS have over $12 billion dollars invested with Blackrock, making SEIU members important stakeholders in the firms.

PIMCO and Blackrock filed suit against the City of Richmond, California, after that city, hard hit by foreclosures and with 50% of all homeowners still underwater, sent a letter to the investors and servicers offering to buy 624 underwater mortgages held in PLS Trusts. The city's program, Richmond CARES seeks to help the homeowners by acquiring troubled mortgages in order to write-down the mortgage principal and get the homeowners into sustainable mortgages.

The lawsuit by PIMCO and Blackrock, along with Wells Fargo and Deutsche Bank concerned the city's express willingness to use its power of eminent domain if necessary to help pull the mortgages out of the PLS trusts--a form of joint ownership of mortgages. In dismissing the investors' lawsuit, Federal Court Judge Breyer noted that the City has yet to officially decide to use eminent domain.

Millions of homeowners across America continue to drown under the financial weight of underwater mortgages. Economists from across the political spectrum agree that resetting mortgages to current market value is fundamental to preventing foreclosure and fixing the economy as a whole.

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