WASHINGTON (12/9/13)--The American Civil Liberties Union and the Center for Popular Democracy last week filed suit against the Federal Housing Finance Agency, seeking information on that agency's financial industry ties and its alleged "efforts to block municipalities from using eminent domain to prevent foreclosures."
The suit, which was brought under the Freedom of Information Act, was filed in the U.S. District Court for the Northern District of California.
The city of Richmond, Calif., this summer sent notice to holders of more than 620 mortgages, asking them to sell their loans to the city for 80% of the homes' fair value. The city then would write them down, and help the homeowners refinance their loans. If the offers aren't accepted, the city said it would use eminent domain to seize the loans at a value determined by a court.
Following these notices, the FHFA and Freddie Mac said they were considering taking legal action against the city of Richmond. The FHFA has expressed concern that losses resulting from such programs would ultimately be paid for by taxpayers.
The Credit Union National Association supports a broad range of programs to assist struggling homeowners and their communities, but believes that "using the power of eminent domain in this manner would harm our nation's housing markets and the very communities it is intended to help."