underwater-mortgage-small.jpgWell, it’s the beginning of a new year, and this a good time to tell you the state of the proposed use of eminent domain to acquire underwater mortgages. While no local government has actually begun condemnation proceedings to acquire underwater mortgages, a few things have changed since our last update in October. Additional cities do, however, appear to be interested in the concept. As outlined by lawyer Anthony F. Della Pelle, Newark, New Jersey and Irvington, New Jersey have expressed an interest in using eminent domain to acquire underwater mortgages. According to The New York Times, Robert Hockett, the Cornell University Law School professor associated with the concept, said “things seem to be picking up steam in Minnesota, and I’ve just been contacted in the past couple of weeks by two cities in Pennsylvania as well.” The San Francisco Chronicle reports the California towns of El Monte, Baldwin Park, and Pomona are also considering the use of eminent domain to acquire underwater mortgages.

The ACLU has even tried to get in on the action, filing a lawsuit against the Federal Housing Finance Agency, as reported in the same San Francisco Chronicle article. As Anthony Della Pelle explains, the ACLU “suit was filed under the federal Freedom of Information Act, and seeks copies of public federal records relating to the efforts of the FHFA to use its regulatory powers over mortgage agencies Fannie Mae and Freddie Mac, which control most residential mortgages in the United States, and also relating to communications between FHFA and various financial institutions, associations and organizations.”

And then there is Richmond, California . . . .  Rather than getting the five-vote supermajority required to begin the condemnation of underwater mortgages, the Richmond City Council could try to form a joint powers authority with other local governments in order to move forward with the use of eminent domain to acquire underwater mortgages, as reported in the San Francisco Chronicle. As shown in the article, a Richmond City Council member opposed to the use of eminent domain to acquire underwater mortgages believes a joint powers authority amounts to “an end run around the [City Council] supermajority requirement.”

Stay tuned to our blog for further updates!