RICHMOND (CBS SF) — The Richmond City Council Tuesday evening will consider scrapping the city’s controversial plan to buy struggling homeowners’ underwater mortgages.
Richmond city officials have proposed teaming up with San Francisco investment firm Mortgage Resolution Partners to buy more than 600 city residents’ mortgages that were underwater, meaning that the residents owed more money than the home was worth.
The city has said it could use its municipal power of eminent domain to force the sale of the mortgages if lenders did not accept the offer.
But an agenda item submitted by Vice Mayor Corky Booze and Councilman Nathaniel Bates for Tuesday’s 5 p.m. City Council meeting proposes withdrawing the offers to buy the mortgages.
“While most of us are sympathetic to the many citizens who are undergoing financial risk of losing their homes through circumstances related to the mortgage crisis, as responsible elected officials, we must not compromise the integrity and financial ability of this city to operate efficiently,” the council members said in the agenda item.
Wells Fargo and Deutsche Bank have filed a lawsuit over the plan, saying the proposed use of eminent domain, which is typically used to purchase private land for public use, is unconstitutional.
The banks say the plan would also harm Richmond in the long run by making it harder for city residents to get approved for mortgage financing.
Two groups on opposing sides of the plan were holding rallies in advance of this evening’s meeting.
Proponents of the mortgage plan, including Mayor Gayle McLaughlin, are holding a 4:30 p.m. news conference and rally at City Hall. The Black American Political Action Committee, which wants the city to scrap the proposal, is holding a separate event nearby at 5 p.m.
Although the meeting begins at 5 p.m., a vote will not take place before 6:30 p.m.
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