The City of Richmond, California rattled the universe of real estate lenders, trustees, owners, bankers, investors, and insurers (particularly those of residential mortgage backed securities (“RMBS”)), when it proposed to use its eminent domain power for debt relief for homeowners with “underwater” mortgages on residential real property.
Richmond’s proposal has prompted other government entities to consider the plan. They claim that using eminent domain power in this way would benefit the public by providing debt relief for homeowners and help for communities with depressed residential real estate prices. The plan, if adopted by cities and allowed by the courts, would have profound effects on the RMBS, real estate, title insurance, mortgage insurance, and securities markets.
Real estate lenders, trustees, owners, investors, insurers, and bankers are uniting in opposition to the plan, challenging it as an improper use of eminent domain and raising a number of constitutional barriers to it.
This 90-minute CLE program on using eminent domain to seize underwater mortgages will analyze Richmond’s plan, summarize the status of pending proceedings, and review the various objections to the plan.
Our panel of experts will:
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explain the structure and economics of the eminent domain plan
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analyze constitutional objections to the plan
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explore which governmental entities have considered and rejected this plan, and which are considering it now
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review the first litigation in federal court (the Wells Fargo Bank v. City of Richmond and parallel BNY Mellon cases)
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discuss potential legal liabilities of governmental entities that pursue this plan—including liability for higher taking prices than the plan proponents claim
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examine the unintended consequences of the plan, including potential destabilization of real estate markets, municipal property tax bases, and municipal bond markets
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