In an effort to ease the foreclosure crisis that plagues Richmond, city leaders are taking matters into their own hands. Fed up with the banks’ failure to offer a working solution, the Council has decided that in order to help the residents of Richmond they are willing to go as far as using eminent domain to seize underwater mortgages. The city would then assist homeowners in their efforts to refinance at a rate that more accurately reflects the current value of their home.
The city hopes to avoid outright seizure of the properties in question, and has begun the process of working with over 30 banks in negotiating the purchase over 600 homes whose mortgages are underwater. If such efforts fail, they are positioning themselves to employ eminent domain.
Stakeholders on Wall Street are wary of the idea, warning that it could lead to an onslaught of legal headaches for the city down the road. Moreover, banks caution that future mortgages will likely come at a premium to pay for the City’s current efforts.
Recent upswings in the housing market have done little to quell the rate of foreclosure in Richmond as over 47% of homes within the city limits have mortgages that are underwater. The city is the first in the U.S. to have committed to such a bold approach to keep its residents in their homes.
Read more at the San Francisco Chronicle.