City officials in Richmond, CA are taking aggressive steps to address the devastating effects of the mortgage crisis. Home values have declined precipitously since borrowers took out mortgages in the pre-2008 market and most of Richmond's homeowners are under water. The city has seen hundreds of foreclosures each year displacing families and destabilizing neighborhoods. So the city has decided to act by offering to buy these mortgages from the bank at a fair market value - somewhere around 80% of the value of the houses, but well below the loan principal. If the banks won't sell, the city is prepared to use its eminent domain power to take the bank's mortgage interest in the house, paying "just compensation" in the same amount as the purchase offer. The banks are irate. At least one Federal lawsuit has been dismissed as unripe. But now, the mayor of Irvington, NJ is announcing that his city is formally investigation employing the Richmond plan.
If, in the name of economic development, New London can take unblighted working class homes to give the land to a developer for a glitzy hotel , then it seems like Richmond should be able to take some bank assets in order to keep people in their homes. But unlike the working class,the bankers aren't used to getting their lunch money stolen. And they have the lawyers to fight the war of attrition.
From Democracy Now!: