California Lt. Gov. Gavin Newsom has warned a leading financial services industry trade group to ‘cease making threats to the local officials of San Bernardino County’ over the controversial plan to seize underwater mortgages through the invocation of eminent domain law.
Reuters reports that Newsom has criticized the Securities Industry and Financial Markets Association (SIFMA), which is spearheading an industry-wide effort to challenge the strategy of using eminent domain laws to seize current mortgages that are underwater, refinance them and resell them to investors affiliated with Mortgage Resolution Partners, a San Francisco-based organization.
‘We cannot allow Wall Street, who exploited the housing market for financial gain, to kill an idea before it is given a fair hearing,’ says Newsom, noting that the California communities considering the eminent domain strategy ‘have no choice in these desperate times.’
Newsom, a former mayor of San Francisco, adds that he hopes to engage with SIFMA for a meeting in the near future to discuss the controversy. SIFMA has warned that the proposed use of the eminent domain laws would weaken the economic viability of the California housing market rather than strengthen it.