Eminent domain is the right of a government or its agent to expropriate private property for public use, with payment of compensation. It is justified when used for the common good. This doesn’t seem to pass the litmus test, as being for the common good but more for those just those affected by circumstances of the housing market crash.
I just don’t see the courts allowing Richmond to proceed with this action. A poor city will be wasting resources on a bad idea.
From DS News
Despite widespread opposition from the finance industry and the Federal Housing Finance Agency (FHFA), Richmond California, plans to move forward with a plan to use the government's eminent domain privilege to seize homes with underwater mortgages on behalf of homeowners. The city will work with a private company to purchase 620 delinquent underwater mortgages from banks at a discount. If the banks refuse to sell, the city will use its right to eminent domain to forcibly take the properties. » Read More
- Sunil Sethi
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