Tuesday, August 13, 2013
Southern's Chris Odinet passes along this news:
A group of plaintiffs representing some of the nation's largest bond investors (including Fannie Mae and Freddie Mac) have filed a lawsuit against the City of Richmond, CA and the investment firm Mortgage Resolution Partners (MRP), seeking to block the City’s proposal to seize mortgages using eminent domain. The complaint argues that the use of eminent domain being proposed by the City and MRP is unconstitutional because it benefits a small group of Richmond citizens at the expense of out-of-state investors, effectively violating the interstate commerce clause.
In conjunction, the Federal Housing Finance Agency also released a memo stating its view that the use of eminent domain in this capacity “presents a clear threat to the safe and sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks." These statements suggest that there may be some very real consequences for future access to consumer credit if the eminent domain plan is carried out. HUD has yet to weigh in on whether it will insure the loans that will refinance the seized mortgages.
The complaint is here.
The FHFA's general counsel memo is here.