underwater mortgage small.jpgAs the late, great sports broadcaster, Harry Caray, used to say, “Holy cow!” It appears my observation in our September 12, 2013 post, that “a lot has happened on this topic since our July 29, 2013 post!,” was an understatement. This story has moved fast! Between the time we began preparation of the September 12 update and the time we posted the update, the hearing on the plaintiffs’ motion for a preliminary injunction and the defendants’ motion to dismiss in the Wells Fargo Bank v. City of Richmond, California and Mortgage Resolution Partners, LLC lawsuit had been moved from September 13 up to September 12 and the court had orally ruled at the hearing!

To break it down in slow-mo, let’s take a look at the replay:

  • As reported by Reuters, on September 12, 2013 “[a] federal judge . . . said a lawsuit to stop a plan by the [C]ity of Richmond, California, to use its power of eminent domain to protect homeowners from foreclosure should not be heard at this time.” According to Reuters, Judge Charles Breyer said, “‘I don’t believe it’s ripe for determination.'” Reuters reported that Judge Breyer “would rule by Monday on whether the lawsuit should be dismissed or put on hold.”
  •  On Monday, September 16, Judge Breyer dismissed the lawsuit, as reported by the San Francisco Chronicle. A copy of the Order Granting Defendants’ Motion to Dismiss and Denying Plaintiffs’ Motion for a Preliminary Injunction can be found here. The Judgment, which dismissed the Plaintiffs’ Complaint without prejudice, can be found here.

Around the same time, reports circulated about San Francisco and Seattle considering the use of eminent domain to acquire underwater mortgages. In Seattle, there have been some questions about the actual number of underwater mortgages. The report prepared for Seattle’s City Council by Cornell University Law School Professor Robert Hockett identified “‘about 42,000 underwater mortgaged homes.'” But according to Seattle Weekly, Professor “Hockett explained that he had used a number about half as big—24,000—in a draft report submitted to [Seattle’s City] [C]ouncil.” Seattle Weekly said “a working group providing input to the [City] [C]ouncil urged [Professor Hockett] to go with the 42,000 figure, which was contained in a previous report . . . .” According to Seattle Weekly, Professor Hockett said he was told “[t]he higher number would convey more urgency.”

Even PBS got in on the action, with PBS NewsHour reporting about Richmond’s plan to use eminent domain to acquire underwater mortgages.

That’s it for the slow-mo replay!  Stay tuned to our blog for further developments!