A controversial proposal to use eminent domain as a solution to the foreclosure crisis that has left many residential mortgages underwater has become a hot topic for consideration among local governments. Under many of the proposals, San Francisco-based Mortgage Resolution Partners (MRP) would loan to or assist in securing money for local governments to purchase performing underwater mortgages. Concurrently, the local government would use the power of eminent domain to acquire the mortgages, but not the properties, in exchange for receiving a fee from MRP. MRP has lobbied local governments across the country, and cities in Northern and Southern California, Illinois, New York and Florida are considering the proposal.
Opponents of this proposal, however, warn that MRP's proposal is unlawful and unconstitutional and could cause such loans to be excluded from securitizations. The industry also has expressed concern that lenders and investors might withdraw from the markets that permit seizure of performing mortgage loans through the use of eminent domain.
On August 23, 2012, please join guest speaker Chris Killian, Managing Director at SIFMA, and Mayer Brown partners Bronwyn Pollock and Mary Richardson-Lowry as they discuss the threat of eminent domain and the potential impact on investors, mortgage trusts and the marketplace.
Mayer Brown's Global Financial Markets Initiative helps clients deal with the legal and business challenges resulting from the ongoing turbulence in worldwide financial markets. By mobilizing the firm's global resources from multiple practices and offices, the Initiative provides clients with knowledgeable and timely counsel on a broad spectrum of their legal needs.