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The American Civil Liberties Union and the Center for Popular Democracy filed a Freedom of Information Act lawsuit today against the Federal Housing Finance Agency for failing to respond to their request for information as the FHFA seeks to block eminent domain moves by municipalities.

The FHFA did not comment on the filing.

Cities like Richmond, Calif., and Irvington, N.J., have large numbers of homeowners in danger of foreclosure due to “underwater” mortgages. In response, those cities are trying to use their claimed right of eminent domain to buy affected mortgages and sell them back to the homeowners at the current value of their homes.

"For years, communities of color across the nation were targeted by banks peddling subprime toxic mortgages, greatly contributing to the current foreclosure crisis," said Udi Ofer, executive director of the ACLU of New Jersey. "Now communities are responding by considering novel approaches to help save their neighborhoods. Municipalities should be able to consider all of their options."

The FHFA has publicly voiced its opposition to this use of eminent domain, saying it could "negatively affect the extension of credit to borrowers seeking to become homeowners," and this week several senators jumped into the fray, urging the Obama administration to take a strong stand against the practice.

The senators asked Shaun Donovan, secretary of the Department of Housing and Urban Development, to use HUD’s existing authority to prevent the FHA from insuring mortgages on any properties affected by an eminent domain proposal.

The senators — Pat Toomey, R-Pa., John Boozman, R-Ark., Mark Begich, D-Alaska, and Heidi Heitkamp, D-N.D. — responded after the city of Richmond sent letters out offering to buy mortgages at a discount, while also threatening to use eminent domain if they were not willing to sell.

Now the lawsuit seeks to compel the FHFA to disclose the nature of its relationships and discussions with the financial industry regarding the eminent domain issue.

"The FHFA has taken an aggressive stance on this issue in a way that has harmed minority communities. The public deserves to know why," said Linda Lye, staff attorney with the ACLU of Northern California.

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