Wednesday, October 2, 2013

Hot News! Richmond, CA Wins Eminent Domain Case Against Obama & Wall Street Banks

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 Richmond, California.  The citizens of 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 Richmond or U.S. citizens. 

The city of Richmond 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. New London Connecticut as basis for their suit.

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 Ann Arbor, Michigan was enticed by the City of New London, Connecticut to pull out of 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 Fort Trumbull and the City of New London, CT.

The City of New London, CT used its power of eminent domain to seize the private land from the residents of Fort Trumbull 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”.

Suzette Kelo was the plaintiff in Kelo vs. New London, Connecticut.  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 Fort Trumbull 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.

The case of Kelo vs. New London 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 are people”).

Pfizer Abandons New London Headquarters 4 Years After Landmark Eminent Domain Case

In the end, the historic homes were razed, nothing was ever built and when the tax credits ran out, Pfizer pulled up and left New London.

So the City of Richmond 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 September 20, 2013 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 values.

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 Vallejo, Calif., to places like 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 people.

Don’t forget the banks created the mortgage mess when they packaged bad mortgages mixed with good mortgages into securities.  They then paid the bond rating agencies to rate these crap securities as AAA so that they could be unloaded on unsuspecting investors. 

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

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