Judge says too soon to rule on Richmond's mortgage seizure plan

Banks that sued to stop a plan by Richmond, Calif., to use the city’s power of eminent domain to seize underwater mortgages to help homeowners avoid foreclosure did so prematurely, a federal judge has ruled.

In a 4-3 vote last week, the Richmond City Council voted to continue to study the plan. State law requires that a “supermajority” approve any use of the city’s power of eminent domain, the Contra Costa Times reports.

So until there are five votes, there’s no final version of the plan for the court to consider, U.S. District Court Senior Judge Charles Breyer ruled in dismissing a lawsuit seeking an injunction filed by Wells Fargo, Deutsche Bank AG and The Bank of New York Mellon.

An attorney for the banks said the ruling “only postpones the day that Richmond and (investment firm Mortgage Resolution Partners) will have to defend this program in court.” Source: contracostatimes.com