The concept of using eminent domain to aid underwater homeowners may have gained traction in Richmond, Calif., but the pushback is coming, and it's not just mortgage bond investors who are at-risk from the changes.
As Bloomberg reports, eminent domain proposals threaten not just investors, but communities, and even hospitals when you finally delve into the books of institutional investors.
Jody Shenn and John Gittelsohn with Bloomberg explains:
Robert and Patricia Castillo, a California couple who have already had their monthly mortgage payments cut by almost 60 percent, want the city of Richmond to reduce their debt by using its powers of eminent domain. That could be bad for hospitals in Missouri.
Investment groups seem to be lining up to lead the charge.
Pacific Investment Management Co., which is known as Pimco and manages the world’s largest bond fund, is among mortgage-securities investors organizing a coalition to take legal action to oppose the push, according to three people with knowledge of the discussions.