By The Associated Press
Richmond is moving ahead with its first-in-the-nation plan to use the government's constitutional power of eminent domain to seize hundreds of underwater mortgages.
The Richmond City Council voted 4-3 early this morning to set up a Joint Powers Authority to bring more cities into the plan. Mayor Gayle McLaughlin said the city of El Monte (Los Angeles County) has expressed interest, and she believes other cities will follow.
Under the plan, Richmond would use eminent domain to seize the underwater mortgage. It would then offer the bank fair market value for it and give the homeowner a new loan that would lower monthly payments and improve the owner's chances of staying.
Banks have filed lawsuits to stop Richmond from going ahead. Recently, city officials have expressed concern that Wall Street financial institutions have declined to participate in the city's recent attempts to refinance some of its bond debt.