The city of Richmond, Calif., is one step closer to moving forward with a plan to seize underwater mortgages by invoking eminent domain.
August 27th I wrote a post to my blog called “The Poetic Justice of Eminent Domain”. Click here to read.
My article centered on
The citizens of Richmond,
California Richmond, as
in cities all across the United States
have been at the mercy of big banks because their homes are valued at less than
the mortgages held by big banks. The
banks refuse to refinance their mortgages because they are “under water”.
Even though the banks have been bailed out by taxpayers through the TARP program, the banks want to foreclose on mortgages, which is not in the interest of towns like
The city of
has decided to use Eminent Domain to condemn mortgages on property, and give
“just compensation” to the banks holding the mortgages. By doing so the city can reset mortgages to
the current value of the property and allow people to keep their homes and
refinance their mortgages and make affordable payments.
Imminent Domain is the power of government to take private property for the public good. The 5th Amendment to the
U.S. constitution was put into law by James Madison to ensure
property owners would receive “just compensation” for their property. Just compensation as defined by the
Supreme Court means fair market value.
As in all lawsuits there must be precedent or a previous determination in law to support the suit you are bringing. The City of
Richmond is using the 2005 Supreme Court
Decision in Kelo vs. as basis for their suit. New London Connecticut
Prior to the 2005 Supreme Court Decision in Kelo vs. New London Connecticut, eminent domain could only be used to condemn private property for the good of the general public, such as to build roads, or heavily regulated utilities, or for general public benefit such as parks, schools, etc.
Pfizer Pharmaceutical of
was enticed by the City of New London, Connecticut to pull out of Ann Arbor, Michigan Ann Arbor where it was the largest employer to move to Connecticut, where it would enjoy tax incentives to relocate. In 1998 the pharmaceutical giant built a
plant next to and the City of New London, CT. Fort Trumbull
The City of New London, CT used its power of eminent domain to seize the private land from the residents of
to grant the land to a private, for profit development
company, New London Development Corporation (NLDC). NLDC stood to profit
immensely from the acquisition of the historic prime waterfront land at current
fair market value to build stores,
restaurants and hotels. The entire
neighborhood was condemned for demolition for private development with the
nebulous claim of “economic development”. Fort Trumbull
Suzette Kelo was the plaintiff in Kelo vs.
. Kelo had bought
her home on the water in 1997 and had restored the historic little pink
house. Her neighbors, the Dery family
had lived in New London, Connecticut since 1895; Matt Dery and his family lived next door to
his mother and father. Matt’s mother was
born in her house in1918 and had never lived anywhere else. Fort Trumbull
The case of Kelo vs.
eventually reached the U.S. Supreme
Court in 2005. In one of the most
controversial rulings in its history, the Supreme Court ruled in a 5-4 decision
against Kelo and her neighbors. The five
Republican justices ruled that economic development was a “public use” under
the Fifth Amendment to the U.S. Constitution.
(The same court that ruled “corporations
Headquarters 4 Years After Landmark Eminent Domain Case New London
In the end, the historic homes were razed, nothing was ever built and when the tax credits ran out, Pfizer pulled up and left
So the City of
with almost half of the city’s residential mortgage holders under water became the first city in the country to offer to purchase
mortgages of distressed homeowners from Wall Street banks and other lenders
using eminent domain.
The city council approved a plan in April to allow the city to use its eminent domain authority to purchase loans in order to modify them and allow families to avoid foreclosure and stay in their homes.
According to Richmond Mayor Gayle McLaughlin, “We are stepping in by taking these troubled loans off the hands of the banks, and we’re paying them fair market value for these loans. And then we’re working with the homeowners to refinance and modify loans in line with current home values. We call on the banks to voluntarily sell us these loans, and if they don’t cooperate, we will be considering eminent domain”.
Wells Fargo and three other banks as well as the Federal Housing Finance Agency filed two lawsuits alleging that the plan is an illegal abuse of eminent domain.
So the Wall Street Banks and the Obama Administration’s Federal Housing Finance Agency are fighting against
Richmond and the U.S. Citizens who bailed out the
banks. What some assholes.
So anyway, as of
a federal district judge, Charles Breyer dismissed the Wells Fargo suit. Under Richmond’s plan it would be able to buy
624 mortgages at the present market value from investors and modify the loans. The lower mortgage payments would enable some
residents to avoid foreclosure and reduce neighborhood blight and boost home
The city of
Richmond's next step is to try to partner with other cities in
order to split the costs. There are half a dozen potential candidates, ranging
from El Monte and , to places like Vallejo, Calif. Seattle that are exploring the idea.
Well the city of
Richmond’s plan has more hurdles to jump before its plan can be
enacted, but bravo to Richmond and their fight for their city and their people against
the government behemoth that has thus far enriched crooked Wall Street Banks
that have bankrupted cities across the nation.
They have used a crooked Supreme Court ruling to the advantage of their
So the investors, the homeowners and taxpayers took the hit and the banks got bailed out and now want to foreclose and take the property too.
So one for the American people. Let’s hope the city of
Richmond is successful in its endeavor to save their community.
By Patricia Baeten