The city of Pomona in California is deliberating how to solve its housing problems and is taking a closer look at use of eminent domain, the Mortgage Bankers Association said.
The Mortgage Bankers Association wrote the city emphasizing the possible implications of utilizing eminent domain to seize underwater mortgages.
“We believe that MRP’s proposal in particular raises very serious legal and constitutional issues, in addition to the threat it poses to the City’s housing market and economy,” the letter said.
“No jurisdiction has ever used eminent domain to acquire underwater mortgages from securitized pools. Such a novel use of the eminent domain powers is unprecedented and would, in our view, not survive the multiple legal challenges that would ensue,” the letter added.
While idea of using eminent domain has become quite common, most cities have backed off the strategy.