OK, I'll admit it. A year ago I thought this whole condemnation-of-underwater-mortgages thing would die off pretty quickly. I predicted we'd never see any large-scale condemnation effort. So far, I've missed badly on the first prediction -- but it remains to be seen whether I'm right on the second one.
To date (unless I've missed something), not a single condemnation action has been filed anywhere in the U.S. to condemn an underwater mortgage. But the concept certainly has not disappeared quietly into the night. Instead, some cities continue to pursue the idea.
One in particular ...
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.
Despite three major banks filing federal lawsuits against the City of Richmond last month related to its plan to condemn underwater mortgages, the City continues to press on. On Tuesday, the City voted 4-3 to continue its partnership with Mortgage Resolution Partners (MRP), the mastermind behind the scheme. (See articles from The Press Enterprise and Contra Costa Times.) The council and MRP will form a Joint Powers Authority to administer the plan and will attempt to attract more cities to join the effort.
While the City is still moving forward, there continues to be ...
We all knew this was coming (see my post from July 23). If you poke a sleeping giant, it's going to file a lawsuit against you in federal court. Yesterday, in response to the City of Richmond's preliminary actions to condemn underwater mortgages, three heavy-hitting banks fired back by filing lawsuits in California federal court to block the condemnations.
According to multiple news sources (here, here and here), Wells Fargo Bank, Deutsche Bank and Bank of New York Mellon Corp. have asked the court to find the City's plan unconstitutional and block its implementation. The banks argue ...
"Downzoning" describes a government agency's rezoning a parcel of land once previously zoned for a more intense use to a more restrictive use (e.g., changing the commercial zoning designation of an undeveloped parcel of land to agricultural or open space). Those who purchase an undeveloped property zoned for commercial, industrial, or residential uses, only to later have that property rezoned for agricultural or open space uses unquestionably suffer a loss. But when is it compensable?
There's an interesting news article on the Daily Zilla about an alleged downzoning case ...
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