Federal Court Halts Lender Underwater Mortgages Lawsuit Against Richmond
Posted in Projects

Yesterday, the City of Richmond caught a small reprieve with respect to its plan to condemn underwater mortgages.  As reported by Reuters, the federal district court ruled that the lawsuit filed by lenders Wells Fargo, Deutsche Bank and The Bank of New York Mellon is unripe. The judge denied the lenders' request for an injunction to halt the City's plan to condemn underwater mortgages even though the lenders argued that the City's use of eminent domain in this context is unconstitutional.  Next Monday, the judge will decide whether to dismiss the action or leave it pending.

In reality, the City has not invoked its power of eminent domain and, as discussed on Wednesday, it would need to reconvene the city council and receive its super-majority approval of the plan before condemning anything.  Therefore, the lenders need to wait until the City takes an affirmative action to use its power of eminent domain before pursuing their lawsuit any further.  While the lenders may have lost (at least for now) on a procedural issue, I'm sure the message was still sent loud and clear to the City of Richmond, and other cities for that matter, to seriously rethink their plan of action.  Look for an update on Monday as this story continues to unfold.

  • Partner

    Bernadette Duran-Brown is a real estate litigation attorney primarily focusing on eminent domain, inverse condemnation, regulatory takings and valuation matters.  With more than a decade of experience, she has advised numerous ...

California Eminent Domain Report is a one-stop resource for everything new and noteworthy in eminent domain in California. We cover all aspects of eminent domain in California, including condemnation, inverse condemnation, and regulatory takings. We also keep track of current cases, project announcements, budget issues, legislative reform efforts, and report on all major California eminent domain conferences and seminars.

Stay Connected

RSS RSS Feed

Categories

Archives

View All Nossaman Blogs
Jump to Page

We use cookies on this website to improve functionality, enhance performance, analyze website traffic and to enable social media features.  To learn more, please see our Privacy Policy and our Terms & Conditions for additional detail.