If several California cities move ahead with a plan to seize underwater mortgages, they could end up paying more for the loans they expected, according to a legal expert retained by the Securities Industry and Financial Markets Association (SIFMA).

Walter Dellinger of O’Melveny & Myers LLP told reporters on Tuesday the use of eminent domain to seize mortgages out of private-label securities would diminish the value of the overall pool of securitized loans.

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