JAN 24, 2013 4:14pm ET

San Bernardino Rejects Eminent Domain Plan

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A San Bernardino County official and the Homeownership Protection Program Joint Powers Authority the county formed with the California cities of Fontana and Ontario have rejected the possibility of using eminent domain to seize underwater mortgages, according to the American Securitization forum.

ASF executive director Tom Deutsch issued a statement in reaction to the development, saying members of the securitization group “hope it is a strong signal to other jurisdictions that the question of whether eminent domain to seize mortgage loans is a prudent and legal policy has been asked and answered.”

The ASF as well as other securitization advocates and industry groups had argued against the move, noting legal conflicts and potential concerns on the part of mortgage-backed securities investors.

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