Eminent Domain Lawsuit Against Richmond, CA is Dismissed
On September 16, SFGate published an article titled Banks’ Eminent Domain Suit Against Richmond Tossed.
Banks’ eminent domain suit against Richmond tossed
A federal judge on Monday dismissed a bank lawsuit challenging Richmond’s eminent domain quest for underwater mortgages on the grounds that it was premature.
U.S. District Court Judge Charles Breyer already said at a hearing on Thursday that he felt the case, brought by Wells Fargo and Deutsche Bank on behalf of holders of underwater mortgages, was not “ripe for determination” since Richmond had not exercised eminent domain and might never do so.
“Isn’t this, as we say in the trade, a no-brainer?” he said in court.
But he then gave both sides a chance to weigh in on whether he should hold the case in abeyance or dismiss it outright.
His Monday ruling agrees with points raised by attorneys for Richmond and Mortgage Resolution Partners, the private investment firm assisting its plan to potentially seize and restructure underwater home loans.
The case is about “future events that may never occur,” his decision said. That would mean “the matter could linger in abeyance for an indefinite amount of time.”
In late July, Richmond sought to buy 624 underwater mortgages at steep discounts, and threatened to invoke eminent domain if its offers were refused. But using that municipal power of forced seizure would require the City Council to pass a “resolution of necessity.” No such resolution is currently on the council agenda. The resolution would require a supermajority of five votes to pass. At a City Council meeting last week, only four council members supported continued exploration of the eminent domain plan.
Richmond had argued that keeping the lawsuit on tap would “serve the banks’ purpose of chilling the political process” by discouraging other cities from joining a Joint Powers Authority to consider eminent domain, and by deterring the owners of underwater loans from negotiating with the city on principal reduction.
Attorneys for the banks, which were seeking a temporary injunction halting the plan, argued that holding the case in abeyance would give them a chance to present their arguments in federal court about why they consider the program unconstitutional before the city could seize the loans.
To view the online article, please click here.
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Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.
