Eminent domain plan moves ahead despite opposition

by Ryan Smith12 Sep 2013

A California city is moving forward with a controversial plan to save underwater homes using eminent domain, according to an NBC News report.

The Richmond, Calif., City Council voted Wednesday to set up a system to bring more cities into the plan, in which the city, in partnership with the private firm Mortgage Resolution Partners, would buy underwater mortgages, seizing the properties through eminent domain should the note-holders refuse to sell.

The plan has drawn fire from industry groups and government regulators, however. A group of investors including PIMCO and BlackRock last month sought a court order to block the plan. Mortgage bond trustees, including Wells Fargo and Deutsche Bank, filed a complaint questioning the plan’s constitutionality. And the Federal Housing Finance Administration has said it would pressure Fannie Mae and Freddie Mac to curtail or cease business anywhere such a plan was approved.

Legal concerns prompted the city of North Las Vegas, Nev., to kill a similar proposal earlier this month.

Richmond Mayor Gayle McLaughlin, however, said Wednesday she believes other cities will follow Richmond’s lead, NBC News reported. McLaughlin said that the Southern California city of El Monte has expressed interest in the proposal, and she believes other cities will follow suit.


  • by estaban montoya | 9/12/2013 10:52:45 AM

    The classic government solution to a problem,steal from someone.

  • by Rick | 9/13/2013 9:24:35 AM

    So let me get this straight. Homeowner is upside down on their home. City takes over the lender position via eminent domain and homeowner pays city new mortgage payment based on todays value? When homeowner fails to make that payment then city must foreclose. Welcome to the club. Be careful what you wish for.

  • by Anne | 9/14/2013 12:01:58 PM

    I hope they don't get away with it- but its what they call "Partnering." Now that banks are the major property owners, they are now experiencing the pressure what home owners / investors have been under.


Should CFPB have more supervision over credit agencies?