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Multiple Outlets Report on O’Melveny’s Memo Questioning Legality of Efforts to Seize Securitized Residential Mortgages Using Eminent DomainJuly 19, 2012
O’Melveny & Myers LLP authored a legal memorandum for public dissemination on behalf of the Securities Industry and Financial Markets Association (SIFMA) analyzing the legality of San Bernardino County and other California cities using eminent domain to acquire performing underwater mortgaged loans with funds provided by a San Francisco venture capital firm. Once acquired, the loans would later be modified to reduce the borrowers’ principle and then re-securitized.
SIFMA asked O’Melveny to analyze the legality of the plan. A bi-coastal team of lawyers led by Washington, DC partner Walter Dellinger identified multiple legal and procedural defects, including defects arising under the US Constitution, the California Constitution, and state and local laws governing eminent domain.
SIFMA publicly released the O’Melveny memorandum on July 17, 2012. Details of the memo were reported in numerous media outlets including CNBC’s Closing Bell, HousingWire.com, The Republic, Structured Credit Investor, The American Banker, The Monterey County Weekly, The Press Enterprise, SmartBrief.com, and ForeclosureGate Gazette.