The Structure Finance Industry Group Inc. has filed an amicus brief in support of Wells Fargo NA’s motion for a preliminary injunction against the eminent domain plans of Richmond, Calif. and Mortgage Resolution Partners LLC. The case is currently in the U.S. District Court for the Northern District of California. Wells Fargo filed the suit as trustee for mortgage-backed securities investors.
SFIG argues using eminent domain is unconstitutional, that it undermines the market for private label securities if municipalities can cherry-pick performing loans, that it will hurt the market value of the trusts by an amount greater than the face value of the loans seized and it will hurt all kinds of pension and retirement plans investors and ultimately “ordinary Americans who are the beneficiaries of such accounts.”
It also is claiming the use of eminent domain will impede the return of private capital to the residential mortgage market.
SFIG says it represents 150 companies from all sectors of the securitization market.