Pacific Investment Management Co., BlackRock Inc. (BLK) and Bank of New York Mellon Corp. are seeking a court order blocking Richmond, California, and Mortgage Resolution Partners LLC from seizing mortgages through eminent domain, saying the initiative would hurt savers and retirees.<\/p>\n
The city\u2019s plan is unconstitutional, according to complaints filed yesterday by mortgage-bond trustees in federal court in San Francisco. The trustees, Wells Fargo & Co. (WFC) and Deutsche Bank AG, were directed to take the action by investors in the debt that also include Jeffrey Gundlach\u2019s DoubleLine Capital LP, said John Ertman, a partner at Ropes & Gray LLP. Bank of New York said in a separate complaint the beneficiaries of trusts it oversees include pension funds and mutual funds.
\nEnlarge image Pimco, Bank of New York Seek to Block Richmond Mortgage Plan<\/p>\n
Members of the California chapter of the Alliance of Californians for Community Empowerment (ACCE) during a bus tour of foreclosed and blighted properties in Richmond, California. Photographer: Justin Sullivan\/Getty Images
\nEnlarge image Pimco, BlackRock Try to Stop Mortgage Seizure Plan in California<\/p>\n
\u201cMortgage Resolution Partners is threatening to seriously harm average Americans, including public pension members, other retirees and individual savers through a brazen scheme to abuse government powers for its own profit,\u201d Ertman said in an e-mailed statement on behalf of investors.<\/p>\n
The plan advanced last month with Richmond backing offers to buy 624 loans, making it the first city to push the idea so far forward. Those offers would need to be refused before the city could follow through with its mayor\u2019s vow to invoke its potential powers to force sales of the mostly non-delinquent loans, so that homeowners could get their debt balances cut to less than the current values of their properties. <\/p>\n