By E. Scott Reckard | Los Angeles Times
In a new legal challenge, financial industry opponents of the city of Richmond’s plan to seize underwater home loans call the gambit a disguised attempt to profit at the expense of everyday investors.
Richmond is threatening to use eminent domain to remove troubled loans from mortgage bonds in order to write down the principal for homeowners. The novel plan, promoted by San Francisco investment firm Mortgage Resolution Partners, seeks to stop another wave of foreclosures in the working-class Northern California city.
The plan has drawn fierce opposition from the financial industry, which has banded together in a lawsuit challenging the city’s authority. In a new filing late Thursday, the plaintiffs accused the city and Mortgage Resolution Partners of cherry-picking the most valuable loans and forcing their sale at less than market value — so the firm can make a profit.
