In a nearly $13 billion settlement with the US Justice Department in November 2013, JPMorganChase admitted that it, along with every other large US bank, had engaged in mortgage fraud as a routine business practice, sowing the seeds of the mortgage meltdown. JPMorgan and other megabanks have now been caught in over a dozen major
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A town in California is making headlines on how it is tackling its foreclosure crisis. In Richmond, almost half of the city's residential mortgage holders are underwater. In a major development last week, Richmond became the first city in the country to offer to purchase mortgages of distressed homeowners from Wall Street banks and other lenders. Under a plan approved by the city council in April, the city can also use its eminent domain authority to purchase loans in order modify them and allow families to avoid foreclosure and stay in their homes. "The banks sold our community predatory loans, and now they have no solution they're presenting for this crisis," says Richmond Mayor Gayle McLaughlin. "We are stepping in by taking these troubled loans off the hands of the banks, and we're paying them fair market value for these loans. And then we're working with the homeowners to refinance and modify loans in line with current home values. We call on the banks to voluntarily sell us these loans, and if they don't cooperate, we will be considering eminent domain."