SAN FRANCISCO (AP) — The Northern California city of Richmond has a novel plan to help struggling homeowners.
It wants to use its authority to seize private property for public use to take mortgages from banks where the owners owe more than their house is worth. The idea is to reduce the amount of the mortgage, lowering the homeowners payments and keeping residents from fleeing the city and turning neighborhoods into blighted ghost towns.
But the banks holding the mortgages say they and their investors stand to lose millions of dollars if Richmond's first-in-the-nation plan is allowed to go forward.
Wells Fargo Bank and three other financial institutions have filed lawsuits seeking to stop the city's program. No decision has been made yet.
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