Forum details city’s eminent domain plan
ASU forum analyzes seizing private property from local residents
Published: Saturday, October 26, 2013
Updated: Saturday, October 26, 2013 13:10
The mayor of Richmond addressed students and local citizens in the Eminent Domain Forum on Oct. 16 in LA-100, explaining how the city would like to use “eminent domain” to prevent further foreclosures in Richmond.
Steven Gluckstern of the Mortgage Resolution Partners firm joined Mayor Gayle McLaughlin in the co-address.
“Eminent domain and its processes are just the tail end of the dog. The real story is how to fix the situation middle class families are in,” Gluckstern said.
He said mortgages in America make up a $10 trillion business. In the last six years of the country’s mortgage crisis, more than 10 million families have been badly affected. As much as 40 percent of American household wealth has been lost, according to similar reports. The proportional loss is even greater for Latinos and African-Americans who were “targeted with bad loans,” Gluckstern said.
Richmond, a “majority minority” city where Latinos, African Americans, Asians and other minorities comprise over 75 percent of the population, has just over 106,000 residents. Gluckstern’s figure on household wealth loss in Richmond is $264 million.
Many of the foreclosure horror stories and minority-targeted loans come at the hands of Fannie Mae and Freddie Mac mortgage corporations, he said.
With the non-guaranteed loans of the past, Gluckstern said homeowners could not even discuss their loan with the loan owners if they were “non-guaranteed” and not backed by a huge corporation like Bank of America. Sometimes the loan owners were hundreds of separate entities without a single responsible party.
The loss of homes is now, and has been for years, an American crisis. So where does this eminent domain business come into play?
Mayor McLaughlin and Gluckstern would like for the city to legally obtain underwater mortgages in Richmond and reduce the principal on properties that simply do not hold the value they once did. To Gluckstern, this is the only way to solve this issue.
Mayor McLaughlin’s plan is for the city to make offers to the banks to purchase homes at lowered, more pragmatic, values. If the banks refuse, McLaughlin will, with the aid of Gluckstern’s Mortgage Resolution Partners firm and other allies like the Alliance of Californians for Community Empowerment, take the banks to court.
Eminent domain, the power to take private property for public use, would be what McLaughlin’s group uses to purchase the properties.
The definition of eminent domain is: “The power to take private property for public use by a state. It can be legislatively delegated by the state to municipalities, government subdivisions, or even private persons or corporations when authorized to exercise functions of public character.”
The key is that the state must be taking private property for a public use.
“The public purpose is to invigorate and stimulate neighborhoods with a legal and just solution,” McLaughlin said. “This is not for a private gain, it is for a city purpose.”
McLaughlin reiterated that when citizens lose their homes, nobody wins. The actual process of using eminent domain to support families facing foreclosure gets cloudy. If the city could obtain the loans, they plan to work with the homeowner to adjust the loan into something “fair,” McLaughlin said.
How will they do it? She said the city would enlist the help of its many departments in some capacity.
As far as the more precise details of how city workers would be giving citizens qualified loan advice, McLaughlin said, “We have not gotten that far yet.”
The city does not know if it will be taking banks to court.
Eminent domain has not been used to obtain private citizens’ homes and provide the people with more manageable mortgages anywhere in the country, McLaughlin said. Any court ruling citing eminent domain as the tool would be precedent-setting. City officials from cities across the nation have shown interest in this use of eminent domain.
McLaughlin and Gluckstern said they were not certain they would win in a court battle. But if it came to that, McLaughlin said they are “very confident.”
Gluckstern also cited the legal advice from Cornell University law professor Bob Hockett, who advised this would be seen as a proper use of eminent domain.