MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
Eminent domain has been in the news the past few years because of how corporations and wealthy individuals are getting government agencies to use the power of public seizure of property for private gain.
That's how, in large part, George W. Bush made a fortune with the Texas Rangers ballpark and surrounding land without having to risk a whole lot of money. That is how the Keystone XL Pipeline is being moved across its southern leg whenever landowners put up resistance.
But now Richmond California, an impoverished city in the Bay Area where home prices have gone down not up, is strongly considering asserting eminent domain to seize homes from secondary lenders and re-sell them to their owners at current market value.
According to the New York Times, this has enraged banks and the secondary lenders who they sell underwater mortgages to. In Richmond "roughly half of all homeowners with mortgages are underwater, meaning they owe more than their home is currently worth."
Two-term Richmond Mayor Gayle McLaughlin is adamant about proceeding:
Scarcely touched by the nation’s housing recovery and tired of waiting for federal help, Richmond is about to become the first city in the nation to try eminent domain as a way to stop foreclosures.
The results will be closely watched by both Wall Street banks, which have vigorously opposed the use of eminent domain to buy mortgages and reduce homeowner debt, and a host of cities across the country that are considering emulating Richmond.
The banks have warned that such a move will bring down a hail of lawsuits and all but halt mortgage lending in any city with the temerity to try it
McLaughlin remains unintimidated:
“We’re not willing to back down on this,” said ... McLaughlin, the former schoolteacher who is serving her second term as Richmond’s mayor. “They can put forward as much pressure as they would like but I’m very committed to this program and I’m very committed to the well-being of our neighborhoods.”
Banks such as Bank of America frequently offload financially unstable mortgages to secondary lenders who then foreclose on the houses and then often re-sell them at significant profit.
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Richmond, in the near future, will be hopefully taking a stand and using eminent domain for the public good, the citizens of the city who were, for the most part, the victims of predatory sub-prime mortgages.
(Photo: Steve Rhodes)