Richmond, California is seriously considering a more radical municipal approach to foreclosures:
The city has offered to buy more than 600 underwater mortgages at below the homes’ current value.
“If they are unwilling to negotiate a sale of the loans, which we want them to do, then we will consider using eminent domain as another option to purchase these loans at fair market value,” said Richmond Mayor Gayle McLaughlin…
Richmond is the first city in the country to take the controversial step of threatening to use eminent domain, the power to take private property for public use. But other cities have also explored the idea…
Banks, the real estate industry and Wall Street are vehemently opposed to the idea, calling it “unconstitutional” and a violation or property rights, and something that will likely cause a flurry of lawsuits.
It will be interesting to see how this plays out. I suspect a number of communities would argue they have few other options in order to force the hands of mortgage providers.
Legally Sociable 
By not judicially Foreclosing on the property the Bank has lost the lien!
The people of California have been defrauded in the largest way imaginable, in California there is only ONE form of foreclosure on real property. It has to be in a court of law. Code of Civil Procedure section 726, pertinent part reproduced below, states the fact. Furthermore, any deed of trust that contains a waiver of this right is void and unenforceable see Civil Code section 2953. 2953, or C.C.P. 726 can be raised at any time.
Source: Find California Code (online)
§ 726. Form of action; procedure unenforceable
Form of action; judgment.
There can be but one form of action for the recovery of any debt, or
the enforcement of any right secured by mortgage upon real property,
which action must be in accordance with the provisions of this
chapter. In such action the court may, by its judgment, direct the
sale of the encumbered property (or so much thereof as may be
necessary), and the application of the proceeds of the sale to the
payment of the costs of court,
The banks circumvent this requirement by using a different definition of mortgage, found in Civil Code section 2924, adopted in 1872, the so called non-judicial foreclosure. What has the Supreme Court of California stated about section 2924? The code section pertains to a mortgage of personal property.
[No. 19385. In Bank.—January 5, 1895.]
JOHN D. WORKS ET AL., RESPONDENTS, v. GEORGE
A. MERRITT, APPELLANT.
105 CAL. 467
ID.—MORTGAGE OF PERSONAL PROPERTY—CONSTRUCTION OF CODE.—
Under section 2924 of •the Civil Code a mortgage may be made by a transfer of an interest in any personal property, other than in trust, made only as security for the performance of another act, and the power to mortgage personal property, without a transfer of pos¬session, is not confined or limited to the articles enumerated in sec-. 2955 of the Civil Code.
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