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Cities Aim to Take Predatory Loans By Eminent Domain, Wall St Fights Back

By Matthew R. Lee

MAIN STREET, January 16 -- In the aftermath of the predatory lending meltdown in the US there are families who despite paying their mortgages on time still owe more than their homes are now worth.

  In response to this problem, the city of Richmond in California has been moving toward using eminent domain to take over the "under water" mortgages and reform them, so that families don't lose homes and buildings don't stand vacant.

  Deutsche Bank, investors like Pimco and Bank of New York Mellon have sued Richmond's move. Stock market industry groups have inquired into - that is, tried to undermine - Richmond's other bond sales, in what one pro-industry observer off the record / not for attribution told Inner City Press would be a "capital strike."

  They say the time for Richmond's move is gone; they argue that it would hurt other working class people by reduced the return on the investments their pensions are in. (This despite union support for the use of eminent domain).

  Newark and Irvington, New Jersey have been considering similar moved. There was a break-out session on the tactic at a recent meeting of the National League of Cities. While a perhaps novel legal theory, to take intangible rather than tangible property like a building, it is an idea that is picking up steam.

  While it is a local matter, or tactic, what is the position of the Obama administration in Washington? So far, the FHA has resisted opining, despite pending requests for industry trade groups.

 Meanwhile from the Obama-created Consumer Financial Protection Bureau not only Raj Date but now also Mitch Hochberg have left to a for-profit company Fenway Summer LLC, aiming to make money selling non-conforming ("non QM") mortgages working with and around rules they helped draft while at the CFPB.

  There is money to be made dodging the fight back to the predatory lenders. But cities like Richmond and their residents continue to suffer. Their moves to fight back are met with the dirty tricks of the same predators who causes and profit from the crisis.

  This week, though Regions Bank belated announced it will stop offering payday loans known as deposit advance, these continue to be offered by Fifth Third and US Bank -- even as the latter proposes to acquire fully 94 branches for Royal Bank of Scotland's RBS Citizens unit Charter One.

  Fair Finance Watch as comment on this to the Office of the Comptroller of the Currency, and filed requests including under the Freedom of Information Act. Watch this site.


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