Richmond, CA Meets on Eminent Domain Proposal While Others Review Logistics

On September 11, the Mortgage Bankers Association (MBA) released an alert titled Richmond, CA Holds Meeting on Eminent Domain Mortgage Seizure Proposal, While Other West Coast Cities Review Proposal Logistics.

Richmond, CA Holds Meeting on Eminent Domain Mortgage Seizure Proposal, While Other West Coast Cities Review Proposal Logistics

Late Wednesday night, after nearly seven hours of debate, the Richmond, California City Council voted on three different eminent domain mortgage seizure resolutions that had been proposed for their meeting. Based on reports from sources at last night’s meeting, the specifics are below, but the effect of these votes is that Richmond continues to edge closer to the use of eminent domain.

1. By a vote of 5-2, the City Council rejected a resolution offered by the Vice Mayor and another Councilmember to withdraw the offers made to trustees and servicers of mortgage loans to purchase these mortgages at a constructed “fair market value” prior to potential eminent domain use by the City to seize these mortgages. Rejection of this proposal also means that the City Council did not permanently end its Advisory Services Agreement with Mortgage Resolution Partners (MRP) to consider the use of eminent domain to acquire mortgage loans.

2. By a vote of 4-3, the City Council voted to support a resolution by Mayor Gayle McLaughlin to listen to a report from staff on Richmond CARES – the Local Principal Reduction Program – and to direct staff to:  (1) to work to set up a Joint Powers Authority (JPA) together with other interested municipalities, as a next step forward in the development of the eminent domain mortgage seizure program; (2) to confirm that no loans will be acquired by the City through eminent domain before the City Council votes to approve the action; and (3) to continue working with MRP to resolve legal issues surrounding the proposal.

3. By a vote of 5-2, the City Council voted to reject a resolution to “[c]onsider informing [MRP] that if they fail to provide insurance to protect the City of Richmond from litigation and related damages due to the city exercising its power of eminent domain to acquire underwater mortgages, [that] the city will not proceed with eminent domain actions.”

 

 The City Council meeting also provided insight on the City’s vision for the proposal going forward, as Mayor McLaughlin stated several times during debate that she had a letter from El Monte, California Mayor Andre Quintero, noting that El Monte was requesting the formation of a JPA and would support the effort.  Mayor McLaughlin further expressed hope that larger localities like San Francisco, Seattle, and Newark, New Jersey would participate in a JPA as well. Incidentally, Seattle’s City Council is set to hear a presentation on eminent domain as a possible mortgage seizure tool at their meeting this afternoon. Meanwhile, a first hearing in Wells Fargo Bank v. City of Richmond – one of the lawsuits surrounding Richmond’s proposal – will be held tomorrow in federal District Court for the Northern District of California.

To view the online alert, please click here.

About Safeguard 
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.

OneCommunity

Stay informed about the latest industry news and events with our All Client Alert email newsfeed.

Ask The CEO

Got a question about Safeguard in the industry? Let us know in our Ask the CEO online Q&A section.