Foreclosures, Blight
The goal is to help communities by fending off foreclosures that cause blight and create other costs, according to supporters of the eminent domain plan. The 32 loan servicers and bond trustees that received letters seeking voluntary sales of the Richmond loans were told they must respond by Aug. 13, said Mortgage Resolution Partners Chief Strategy Officer John Vlahoplus.
The initiative has targeted mainly the loans of borrowers who are current on their payments, which make up 444 of the initial batch in Richmond, where the city council still hasn’t formally authorized the use of eminent domain. Mayor McLaughlin vowed to take the step on a July 30 call with reporters.
Richmond is a largely blue-collar city of 106,000 north of San Francisco with long ties to heavy industry where almost half of mortgages have higher values than the homes they finance.
Freddie Mac
The ultimate investors in the securities whose trustees sued yesterday “include state and local pension plans, 401(k) plans, college savings plans, insurance companies, mutual funds, university endowments, and government-sponsored enterprises” according to the complaint.
Pacific Investment Management Co., known as Pimco, manages the world’s largest bond fund, while BlackRock is the biggest asset management company.
Government-controlled Freddie Mac is also unhappy with the “threat” of eminent domain being invoked, William McDavid, its general counsel, said yesterday on conference call with reporters. While loans in mortgage bonds guaranteed by the company and rival Fannie Mae aren’t being targeted, the firms also own non-agency securities.
“We would consider taking legal action” if Freddie Mac’s regulator, the Federal Housing Finance Agency, wants to pursue it, McDavid said.
Andrew Wilson, a spokesman for Fannie Mae, confirmed that the company was among the investors authorizing Wells Fargo and Deutsche Bank to sue.