A coalition of fair housing and civil right groups filed an amicus brief in federal court today defending Richmond, Calif.’s plan to grant principal reductions to underwater homeowners by purchasing their mortgages using the city’s powers of eminent domain.
The groups, including the National Housing Law Project, Housing and Economic Rights Advocates, Bay Area Legal Aid and the California Reinvestment Coalition, say actions that the mortgage securitization industry has threatened to take to block the program would amount to illegal redlining.
Richmond is 40 percent Hispanic and 25 percent African-American, the groups say, and if lenders shun Richmond — as the Securities Industries and Financial Markets Association’s (SIFMA) has warned they will if the “Richmond CARES” plan is not stopped — that would have a disparate impact on minority borrowers.
The groups filed a brief supporting the city of Richmond’s opposition to a motion for a preliminary injunction filed by trustees Wells Fargo Bank and Deutsche Bank, that seeks to block the city’s plan to restructure underwater mortgages. Source: calreinvest.org.