The latest front has opened in the ongoing (and spreading) issue about Mortgage Resolution Partners' efforts to convince municipalities to use their powers of eminent domain to take underwater mortgages.
Here's the Complaint, filed today in the U.S. District Court for the Nothern District of California, which seeks public disclosure by the Federal Housing Finance Agency of its relationship with banks. As reported in this story, "[t]he agency has threatened legal action against Richmond [California] and other cities planning to use the eminent domain tactic and may deny credit to locals seeking mortgages[.]"
The article quotes the Executive Director of New Jersey's ACLU:Using money from private investors, Ofer said towns would pay the mortgage holders' fair market value and then restructure mortgages into lower principal payments that are more favorable for homeowners. About 700 to 1,000 homes in Irvington could potentially benefit from eminent domain takeovers, according to Irvington Mayor Wayne Smith."For years, communities of color across the nation have been targeted by banks peddling toxic, subprime mortgages," Ofer said. "This greatly contributed to the foreclosure crisis." The FHFA "is suppose to help struggling homeowners who are attempting to stay in their homes and is not suppose to stand in the way," he said.
To us, this seems like an attempt to find ammunition for a ramped-up public relations war, since the fight is currently about convincing reluctant municipalities to trust MRP that its plan will withstand the inevitable legal challenges.
Check it out.