RICHMOND (KPIX 5) – Despite rising home prices in much of the Bay Area, many home buyers are struggling to wade out from their underwater mortgage – prompting some Richmond city leaders to attempt a unique tactic to provide mortgage relief.
More than 100 people, concerned about the status of their mortgages, filled the Nevin Center in Richmond Saturday to discuss using options, including eminent domain as a way to restructure loans.
“The recovery that is being talked about in the paper is not hitting Richmond…over 50% of homeowners with mortgages are stuck underwater,” said Amy Schur with the Alliance of Californians for Community Empowerment. “What’s going on here today is that there is a local solution.”
The plan is relatively simple; The City of Richmond, with the help of investors, would buy the underwater loans from the banks to help the people stay afloat. But if the bank refuses, the city is considering using eminent domain to gain control of the properties.
Eminent domain is usually exercised to allow governments to obtain property from private citizens. But in this case, the city would seize the property from the banks in an effort to restructure the loans and make them more affordable.
The mayor insists negotiations will work and the banks will give the city a discount.
“This, is in my view, has some uphill battle in terms of having to fight,” said Richmond Mayor Gayle McLaughlin, who is working with Mortgage Resolution Partners to secure funding for the properties. “This Thursday the city manager and myself will be meeting of MRP…talking about implementation and expecting implementation to be moving forward very quickly.”
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