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 concern among council members over the potential cost of the condemnations to the City. A major concern is the ability of MRP to cover the legal costs associated with challenges to the plan, especially since MRP has yet to secure insurance for the City to protect it against legal liability and related damages. On the other hand, residents of Richmond seem to support the proposal and hope it can bring relief to those who need it most. (However, our fellow blogger Gideon Kanner would completely disagree with the plan's characterization as helping those in need.)
Though the City voted to proceed on Tuesday, the council must reconvene before filing condemnation actions because a super-majority is required to invoke the power of eminent domain under state law, meaning the proponents need 5 council votes in favor of the plan. Two of the seven members are adamantly opposed to the plan and three are very much in favor of the plan and hope to sway the last two council members to join their camp. While other cities have resoundingly rejected the plan (such as North Las Vegas, voting 5-0 against it), Richmond forges ahead. Stay tuned for more updates on this fast moving issue.