Freddie Mac may sue California city on eminent domain loan seizures

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Freddie Mac may sue California city on eminent domain loan seizures

Freddie Mac may sue California city on eminent domain loan seizures

Reuters-

Freddie Mac (FMCC.OB), the government-owned mortgage finance company, on Wednesday said it is considering legal action against Richmond, California, if the city uses eminent domain to seize mortgages of local residents who owe more than their properties are worth in a bid to keep them in their homes.

The northern California city recently sent notice to the holders of more than 620 so-called underwater home mortgages in the city, asking them to sell the loans to the city. It would buy the mortgages for 80 percent of the fair value of the homes, write them down and help the homeowners refinance their loans.

“Our sense is that those so-called voluntarily loan sales would not be very voluntary,” said Freddie Mac’s general counsel William McDavid in a conference call with reporters to discuss the company’s second-quarter financial results. “They’re loan sales under pressure – in fact, under a threat of seizure by eminent domain. We would consider taking legal action.”

[REUTERS]

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