Ten members of Congress called on leaders of the Department of Housing and Urban Development and the Federal Housing Finance Agency urging them to allow communities to pursue local principal reduction strategies, including eminent domain, free of legal and other threats.
“We urge FHFA to ensure that the current GSE investments will not discriminate against low-income borrowers, including Latinos and African Americans, who seek short refinances of toxic underwater loans that American cities acquire through their powers of eminent domain,” the members of Congress wrote in a letter to Acting Director DeMarco. “Refusal by the Federal Housing Finance Agency to insure loans that were changed by eminent domain would violate existing rules that prohibit discrimination to qualified borrowers and do further harm to the economy.”
The members expressed concern for the 4 million families who have suffered through foreclosure as a result of the 2008 financial crisis and asked the FHFA not to stand in the way of communities as they begin to use or study the use of eminent domain. In July, the city of Richmond, Calif., became the first in the country to vote in favor of an eminent domain program. Interest in the approach is now spreading rapidly, as more and more local elected leaders are considering the use of eminent domain to help homeowners.
“Refusal by the U.S. Department of Housing and Urban Development and the Federal Housing Agency to insure loans that were changed by eminent domain would violate existing rules that prohibit discrimination,” the members of Congress stated in a separate letter to Secretary Donovan. “HUD and FHA must continue to comply with fair lending and fair housing laws which forbid denying credit to qualified borrowers and ban discrimination based on factors like race and national origin.”
Representatives Keith Ellison, Raul Grijalva, John Conyers, Jerrold Nadler, Alan Grayson, Barbara Lee, Betty McCollum, Charles Rangel, Hakeem Jeffries, and Yvette Clarke signed the letters to Acting Director DeMarco and Secretary Donovan.
Click here to see copies of the letters (PDFs):