The latest municipal attempt to seize underwater mortgages by eminent domain is an abuse of this most awesome governmental power.
The plan is being pushed by San Francisco-based Mortgage Resolution Partners, which recently entered into an agreement with the city of Richmond, Calif. And the city has sent offers to several lenders to buy over 600 underwater mortgages, threatening to use its power of eminent domain to acquire the mortgages if the lenders do not sell voluntarily.
Under the plan, MRP will be paid $4,500 for each mortgage acquired by eminent domain. MRP told Richmond that the city itself will be paid 5% of each new loan that replaces the underwater loans. Seems there's plenty of money to be made in underwater mortgages.
Read the article here.