The Federal Housing Finance Agency came out with a strongly worded statement about eminent domain proposals – particularly the one that has gained traction in Richmond, Calif.

The language in the agency’s statement suggests the FHFA will pursue all legal avenues to keep eminent domain proposals from actually taking effect.

Analysts with Compass Point Research & Trading are not treating the FHFA’s statement the same as a press release from an industry group. With the FHFA now involved, it could be a real game changer, the research firm suggests. 

Eminent domain proposals aim to restructure underwater loans by allowing municipal governments to use eminent domain powers to seize underwater mortgages for restructuring purposes.

Compass Point writes: “The FHFA is an 800-pound gorilla in mortgage finance which means that everything it does matters. In this instance, the FHFA’s reaffirmation of its opposition to the use of eminent domain must be viewed in the broader context. We do not believe that the FHFA’s statement will be enough to cause Richmond, California to reconsider its position. Instead, our view is that the FHFA’s restatement of opposition is likely sufficient to prevent the other two dozen municipalities reportedly considering the use of eminent domain from joining Richmond in the near-term.”