San Bernardino County Administrative Officer Greg Devereaux is the chairman of a joint powers authority looking at proposals to aid homeowners with underwater mortgages.(Stan Lim/The Press-Enterprise)
BY IMRAN GHORI
Published: 17 July 2012 06:15 PM
A banking industry group continued to press its opposition to a proposal to use eminent domain to seize underwater mortgages, claiming the tactic would not withstand legal scrutiny and could end up costing San Bernardino County.
The Securities Industry and Financial Markets Association, a Wall Street trade group, released a legal memo from its law firm on Tuesday, July 17, that attacked the proposal as impermissible under the federal and state constitutions and the county charter.
“In our view, however well-intentioned this proposal may be, it is very unlikely to be a solution to the housing problem and more likely will do more harm than good because of the serious legal defects in the proposal,” said Walter Dellinger, an attorney for the group, in a conference call with reporters.
The proposal by Mortgage Resolution Partners to use condemnation proceedings to acquire mortgage notes at reduced rates and lower mortgage payments for homeowners has attracted national interest and controversy in recent weeks.
The county formed a joint powers authority that is considering the proposal. The agency, which includes Fontana and Ontario, held its first meeting on Friday, July 13, where it heard from opponents in the financial and real estate industry who said it could undermine the lending market.
Riverside County Supervisor Marion Ashley joined in the criticism at Tuesday’s Board of Supervisors meeting, saying he believed it would hurt the entire Inland economy and indirectly affect Riverside County.
“I think this is the wrong thing to do,” Ashley said. “It’s almost right out of the Karl Marx playbook.”
San Bernardino County officials say nothing has been decided and that it’s premature to judge the plan before it has been discussed.
“The county’s not going to get into a debate about the legalities of something that’s not even on the table yet,” County spokesman David Wert said. “What SIFMA and some of these other parties are trying to do is prevent plans from even being considered, and the JPA has an obligation to the public to consider anything that’s been proposed.”
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