The Pomona City Council in California entered into an agreement with Mortgage Resolution Partners, a firm that has long advocated the use of eminent domain to help troubled homeowners. A representative for the city said the firm was brought on just to explore options for homeowners, not to necessarily roll-out an eminent domain plan.

Mortgage News Daily reported on the deal this week.

The council's decision caught the attention of the mortgage industry since Mortgage Resolution Partners has long supported the notion of allowing governments to seize underwater loans to modify them for borrowers.

The plan spooked investors in the past, namely when Mortgage Resolutions Partners tried, but failed, to get a similar plan accepted in San Bernardino County.