RICHMOND (AP) - Richmond may become the first city in the country to use eminent domain to condemn and seize hundreds of underwater mortgages to help troubled homeowners.
The San Francisco Chronicle reports that Richmond officials proposed in a letter Monday that the city would invoke eminent domain if investors rejected its offer to buy 626 underwater mortgages.
Richmond would help struggling homeowners refinance into new mortgages in line with the home's current worth. Zillow.com says forty-seven percent of mortgages in the working-class city are underwater.
However, a trade group representing banks and securities firms called the proposed move unconstitutional because it violates property rights.
San Bernardino County and two of its cities backed away from a similar scheme earlier this year after opposition from mortgage and investment industry groups.