Banks and city officials in Richmond, Calif., continue battling over a local plan to use eminent domain to seize and refinance underwater mortgages. City officials want to use eminent domain to obtain 624 mortgages which the city (population 103,000) has deemed as in danger of foreclosure, which they argue would result in a slide in property values and neighborhood stability. 

Richmond City Council voted 4-3 on Tuesday to move forward with the plan, according to accounts in the local media, but conceded to state law which requires a super majority to support each eminent domain move. 

Thus, the Richmond plan remains in limbo. Other communities in California and Nevada have raised the possibility in the past of using eminent domain in this way, but backed off in the face of strong opposition from mortgage originators and Realtors. NAFCU and other trade groups also have spoken out against the idea.

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