U.S. District Judge Charles Breyer ruled today that the case had to be dismissed, rather than put on hold, because the claims depend on “future events that may never occur.”
Breyer said on Sept. 13 that bondholders’ request for an injunction blocking the city from continuing to pursue the plan was premature because city council members hadn’t voted on whether to go to state court to seize the loans.
Bank trustees for bondholders including Pacific Investment Management Co. and DoubleLine Capital LP sued last month alleging Richmond’s plan to seize more than 600 loans on which the amount owed is more than the value of the property through eminent domain and refinance them to give homeowners built-in equity was unconstitutional.
Richmond Mayor Gayle McLaughlin and lawyers for Mortgage Resolution Partners LLC, a firm that will provide financing, say the plan will prevent foreclosures and blight. Lawyers for the trustees allege that some of the targeted loans are still performing and the plan will harm investors and disrupt the U.S. housing market if it’s allowed to proceed and other communities follow suit.
The cases are Wells Fargo Bank v. City of Richmond, 13-03663, and Bank of
New YorkMellon v. City of Richmond, 13-03664, U.S. District Court, Northern District of California (San Francisco).