Next move? Banks stop lending anybody money in Richmond, CA. The Richmond city council decided to use eminent domain to help homeowners stuck with underwater mortgages after every single bank declined to offer any relief to the mortgagees. The city decided it was worth alienating the banks and helping the homeowners, and if their move survives the lawsuits it could start being emulated in other cities and municipalities. Which, btw, the banks wouldn't like very much since it would mean getting back 50 cents or 20 cents or 70 cents on the dollar for their mortgage loans. The city thinks that's a better deal than homeowners abandoning their homes entirely. Vladimir Putin is suggesting a cooling-off period and says he thinks the borrowers actually lent themselves the money so they should just start sending their mortgage checks to "Mortgageski Russe, 1 Russia Street, Moscow, Russia". He's being so helpful lately.
From NBC's news website:
A San Francisco Bay Area city is moving ahead with its first-in-the-nation plan to use the government's constitutional power of eminent domain to seize hundreds of underwater mortgages.
The Richmond City Council voted 4-3 early Wednesday to set up a Joint Powers Authority to bring more cities into the plan. Mayor Gayle McLaughlin says the city of El Monte in Southern California has expressed interest, and she believes other cities will follow.
Under the plan, Richmond would use eminent domain to seize the underwater mortgages. It would then offer the bank fair market value for it and give the homeowner a new loan that would lower monthly payments and improve the owner's chances of staying.
Banks have filed lawsuits to stop Richmond from going ahead.