San Francisco takes steps to acquire underwater mortgages

The next front in the eminent domain wars may have been opened in San Francisco this week.

The San Francisco Board of Supervisors took a vote this week that is bringing the city ad county closer to a program that could lead to forcible acquisition of underwater mortgages.

The board unanimously approved a resolution that will direct the city controller to study whether San Francisco should use eminent domain to help prevent residential foreclosures.

The city of Richmond has debated a similar policy. The idea has rankled the banking industry, which has been successful in stifling the Richmond plan, blocking a two-thirds vote on that city’s council.

The San Francisco Chronicle reports that “in an Oct. 6 memo, San Francisco’s controller warned that the eminent domain plan — in which cities could forcibly acquire mortgages at discounts, then help homeowners refinance into smaller, more affordable home loans — was risky and would benefit only a small number of homeowners. The resolution calls for the controller to complete the study within 75 days.”