By Joe Nelson, San Bernardino Sun
Posted: 09/15/13, 6:30 PM PDT |
As the city of Richmond attempts to move forward with a controversial proposal to use eminent domain to seize underwater mortgages, San Bernardino County — which seriously considered the proposal last year and triggered national interest — continues moving in another direction.
The Richmond City Council on Wednesday decided to continue exploring the proposal by San Francisco-based Mortgage Resolution Partners to use eminent domain to seize underwater mortgages held in private label securities.
Wells Fargo Bank and Deutsche Bank immediately slapped the city with a lawsuit trying to block those efforts, but a federal judge on Thursday said he would toss out the lawsuit, saying it was filed prematurely because Richmond had not yet invoked eminent domain to seize any underwater loans.
In January, San Bernardino County’s Homeownership Protection Program, a joint-powers authority consisting of San Bernardino County officials and officials from Fontana and Ontario, rejected the proposal by Mortgage Resolution Partners, citing lack of public support and potential market risk.
The proposal generated enormous blowback from lenders and the real estate community, which threatened legal action and to cut off home loans should the county move forward with the proposal. Municipalities nationwide that have considered the proposal have received the same threats.
But County CEO Greg Devereaux said it was potential market risk and lack of community support, not threatened litigation, that prompted the JPA to reject the proposal by Mortgage Resolution Partners.
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