Judge Clears Way for Eminent Domain Seizures

Judge Clears Way for Eminent Domain Seizures

09/17/2013 BY: HUGH MOORE

A federal judge in San Francisco has dismissed a lawsuit brought by BlackRock Inc and other asset management companies that sought to block the city of Richmond, California, from seizing underwater homes under eminent domain laws. The city council of Richmond had voted by a narrow margin to work with lawyers from Mortgage Resolution Partners LLC (MRP) to seize more than 600 properties under eminent domain in an effort to prevent foreclosure and blight.

Justice Charles Breyer said that the suit had to be dismissed because it was based on future events that may never occur. Lawyers for the plaintiffs, which include

Fannie Mae and Freddie Mac, said that the seizure of the properties under eminent domain could harm the housing market as a whole if other cities were to follow suit.

“Today’s ruling addresses only the matter of timing before the courts,” said John Ertman, who represented the companies trying to stop the seizure. “This is not a victory for the program and only postpones the day that Richmond and MRP will have to defend this program in court. This is an unprecedented application of eminent domain powers that we believe is facially unconstitutional. If implemented by the City, this eminent domain program will cause harm to millions of savers and retirees throughout the United States. We stand ready to act at the appropriate time to prevent this unconstitutional investment scheme from unfolding in Richmond or elsewhere.”

The Alliance for Californians Community Empowerment (ACCE), which works to keep low-income homeowners in their homes, praised the development.

“Over the last few months the Wall Street lobby has tried hard to scare cities from moving forward, but to no avail,” said Amy Shur, a campaign director for ACCE. “With today’s victory in court we expect to now see other cities join with Richmond to advance this important foreclosure prevention program.”

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