It’s been a while since we focused on the whole condemnation of underwater mortgages scheme but that doesn’t mean the idea has died off. To the contrary, apparently at least four California cities have now signed advisory agreements with Mortgage Resolution Partners. According to the Las Vegas Sun and various other news outlets (see here and here), the cities of Richmond, San Joaquin, Orange Cove, El Monte, and perhaps a few others, have entered into an agreement with Mortgage Resolution Partners and are looking to pursue the condemnation of underwater mortgages.
The first step in the process is for the municipality to offer to purchase underwater mortgages from lenders. If they refuse, the municipality will proceed with eminent domain actions with MRP to guide and advise them. However, the plan still faces significant opposition from lenders, financial associations and the U.S. House of Representatives (see here, here, and here). Just last week, John Campbell, a representative from Orange County, CA, reintroduced legislation to block the use of eminent domain to acquire underwater mortgages.
I can’t wait for the next chapter in this saga, namely, what the various municipalities will do when the lenders inevitably refuse their offers… Stay tuned!