F.O.A.D. wrote:

City Uses Eminent Domain to Rescue
Homeowners from Predatory Lenders, and
Wall Street Freaks Out



The little city of Richmond, California has taken steps to do what
other cities have so far only dreamed of: take on the mortgage
industry to protect its residents. Other municipalities have
considered using the same option as Richmond, but have backed off in
the face of threats and bullying by the corporations and trusts that
hold their citizens’ mortgages.

In an innovative step, Richmond is using eminent domain–a weapon
that’s usually wielded to build sports stadiums and highways in
low-income neighborhoods–to buy underwater mortgages and refinance
them to keep residents in their homes. Richmond is the kind of
community–low-income, with a large minority demographic–that is
typically targeted for predatory lending practices. Many residents
have ended up with mortgages that are three or four times the current
worth of their homes.

Last month, the city sent letters to lenders and mortgage servicers
offering to buy 626 underwater mortgages at the current fair market
value. If the companies refuse, the city will use eminent domain to
seize the mortgages. Refinancing will then be offered to homeowners
via a contract the city has with Mortgage Resolution Partners, a
private investment firm in San Francisco. After refinancing for a
price that’s close to market value, residents will suddenly have a
small amount of equity in their homes rather than being tens of
thousands of dollars underwater–plus, the city can stop a persistent
hollowing out of its population.

On Wednesday, mortgage-bond trustees from Wall Street companies filed
a lawsuit in federal court against the city of Richmond to try and
halt the process. In a laughable statement, a lawyer for some of the
mortgage investors, John Ertman, wrote in an email:

Mortgage Resolution Partners (MRP) is threatening to seriously
harm average Americans, including public pension members, other
retirees and individual savers through a brazen scheme to abuse
government powers for its own profit.

Apparently, ‘brazen schemes to abuse government powers for profit’ are
the sole province of Wall Street–in Ertman’s not-so-humble opinion.
The Federal Housing Finance Agency (FHFA)–a federal regulatory
agency–immediately chimed in on the side of Wall Street, saying it
might insist that Fannie Mae (FNMA), Freddie Mac and the Federal Home
Loan Banks “limit, restrict or cease business activities within the
jurisdiction of any state or local authority employing eminent domain
to restructure mortgage loan contracts.”

The threat that mortgage companies would either forbid the financing
of homes or raise the interest rate to prohibitive levels in
communities that use eminent domain has so far caused other localities
to back off of similar plans. However, Richmond Mayor Gayle McLaughlin
will not be dissuaded from this path. After the companies’ lawsuit was
filed, she said:

“We feel strongly that we’re on legal ground. We’re not afraid of
going into the courtroom. We believe our legal reasoning will prevail.”

While the Wall Street corporations are trying to argue that this use
of eminent domain is not for the good of the whole community, but
rather the gain of specific individuals, the benefits to the community
are clear. Among other things, stopping foreclosures would allow
property values to rise and would stop a drain of the tax base.

John Vlahoplus, an officer for MRP, addressed the threat presented by
the FHFA, saying:

“The FHFA was created to be independent of the mortgage industry
that it regulates. But instead it has been in bed with the mortgage
industry for over a year to oppose this solution to the mortgage crisis.”

Some local governments continue to evaluate the use of eminent domain
as an option, such as North Las Vegas, Nevada, and El Monte,
California. But as Amy Schur, of the national movement Home Defenders
League said:

“Our local electeds can’t do this alone, they need the backup
support from their constituents. That’s what’s been the game changer
in this effort.”

If it only took one David to fell the original Goliath, surely
millions of constituents can fell the opposition of the current
Goliath–otherwise known as Wall Street.

http://tinyurl.com/n689sxu
Kindly STFU until you pay *us* the money you owe *us* due to your
inability to pay your taxes.