The Joint Powers Authority, an entity founded last year by San Bernardino County and the cities of Fontana and Ontario, unanimously rejected the eminent domain strategy, in which the localities would evoke eminent domain to take over underwater residential home loans, restructure them to lower the amount owed, and then resell them to investors. The strategy was created by Mortgage Resolution Partners, a San Francisco-based organization run by Steve Gluckstern, a former executive for Warren Buffett's Berkshire Hathaway Insurance Group and a major donor to President Obama's re-election campaign.
‘It's wrong to impose that risk on the community without support from the community, and that level of support has not materialized,’ says Greg Devereaux, board chairman of the Joint Powers Authority. ‘We don't want to do more harm than good in what we choose to do.’
However, the mayor of Fontana told the Los Angeles Times that the city would still continue to explore the eminent domain idea, even though the authority rejected the plan.
‘It would be irresponsible for the city of Fontana to not examine all options available to strengthen our community by helping our underwater homeowners,’ says Fontana Mayor Acquanetta Warren. ‘It is our intention to go forth aggressively to help find local solutions to Fontana's mortgage and foreclosure crisis.’
Gluckstern also told the Los Angeles Times that he would continue to push for his strategy in California and other markets.
‘It is a bump in the road, but this is a marathon and we have had lots of conversations,’ Gluckstern says.