Posted on 07/05/2012 10:57:24 AM PDT by listenhillary
A handful of local officials in California who say the housing bust is a public blight on their cities may invoke their eminent-domain powers to restructure mortgages as a way to help some borrowers who owe more than their homes are worth.
Investors holding the current mortgages predict the move will backfire by driving up borrowing costs and further depress property values. "I don't see how you could find it anything other than appalling," said Scott Simon, a managing director at Pacific Investment Management Co., or Pimco, a unit of Allianz SE.
Eminent domain allows a government to forcibly acquire property that is then reused in a way considered good for the public-new housing, roads, shopping centers and the like. Owners of the properties are entitled to compensation, which is usually determined by a court.
Read more: http://www.foxnews.com/politics/2012/07/05/california-cities-consider-seizing-mortgages/#ixzz1zlvtvCqT
(Excerpt) Read more at foxnews.com ...
Soooooo...we should just let people live in properties for free?
I thought they had a big push last year to force the banks to properly maintain the properties in their portfolios.
Eminent domain allows a government to forcibly acquire property.
Wonder if Roberts voted for that one to?.
The municipalities, about 45 minutes east of Los Angeles, would acquire underwater mortgages from investors and cut the loan principal to match the current property value. Then, they would resell the reduced mortgages to new investors.
This is more of governments making up laws out of thin air in order to apply “social justice” to suit their desires and needs. What is
This is a recipe for financial chaos that can never be straightened out.
What is eminent domain? Depends on the day of the week and what California city we are in.
Read that top paragraph again. It is saying that the cities will use taxpayer monies (which they don’t have) to pay the difference between the market value of a home and the mortgage amount, and then getting new investors to hold the now theoretically accurately valued mortgages.
This is no different than the city coming in and writing your mortgage holder a check buying down your principle to current market value. What could possibly be wrong with that?
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They (California democrats) have already driven the price of gas (environmental regulation) and rent (rent control) to higher levels than anywhere else in the country. Why not add the cost of home ownership and financing to the list?
Possibly a bank with the brains not to lend more for a house than the house figures to ever sell for five years down the road...
If this comes to pass, contracts and contract law mean nothing. The contracts mean what the current rulers of the state of California say they mean.
FMCDH(BITS)
Sort of.
It seems there are no good guys in this situation except the homeowners who bought to live in a home and pay the mortgage.
They got stung by government interference that falsely inflated home prices and seduced them into a loan they couldn't afford.
Economic ignorance that filppers and speculators cannot plead.
The banks not at fault, got out of the residential mortgage business because the Feds legislated it unsound economically, but the cities and over compensated public unions went along for the rise in property tax revenue and government jobs, on the false rise in value.
Now, everybody who went in for big profits, wants their money back first, and is unwilling to invest anything more of their own. Any manipulation of the law, records and perception is ok, as long as it favors the protected looter of the day over economic and social order.
They got what they asked for.
Yep, note my tagline.
Yep, note my tagline.
It may make sense to keep the homes occupied from the cities' point of view, but please don't call the people in the mortgage homes "owners." They are renters, renting from the bank.
I think eminent domain is a bad way to go about this, even if it is legally convenient. When eminent domain is used, the owner of the property is supposed to be justly compensated. Who is getting compensated here--the bank, by getting a "fair" reduced value for the mortgage? Who's the owner the city will be dealing with, and how will the fair value be set?
Note also, that if this becomes widespread, it introduces a different problem--mortgages will be forcibly marked to market rather than marked to fantasy, and many mortgage owners will find themselves underwater.
For 12 years you have been asking “Who is John Galt?”.
Just what good do you think is happening now with homes foreclosed, allowed to decay, be vandalized, stripped of appliances, stripped of wiring, stripped of liveability?
It's becoming a death spiral in places. What solution do you have? Add to the homeless population, let the neighbors decay, let local economies circle the bowl?
The appropriate action is for the neighborhoods and cities to sue the banks and demand they keep the properties in “Showable” condition.
Many cities have done so.
I’m siding with the cities here because the banks are not taking care of their properties and the cities, which are already broke, get stuck with the bills for mowing lawns and treating mosquito infested pools.
If the banks would turn around and sell the homes instead of keeping them vacant for years this would not be an issue.
To me all I see here is the banks trying to pass on their expenses to local governments. If this action spurs the banks to sell these homes instead of keeping them vacant then the laws will have done the right thing.
And if no one can get a mortgage in California then that’s not a bad thing, either. Prices will have to drop to where people can pay cash for the homes instead of paying ridiculously inflated prices that can only be sustained by an utterly artifical credit market.
You assume the bankrupt ready cities will maintain the houses using funds they don’t have to place appearance above solvency.
When they all sit down to negotiate the sales price to the cities, we will learn what is what. To take the properties they have to pay for the property. Absent tax liens, that is a lot of bucks.
You say that like it's a bad thing.
For county governments THERE IS NO DOWN SIDE.
They trade taxes on a small percentage of assessed value for those taxes AND the mortgage payment.
County tax and mortgage receipts go up by roughly 1,000% per parcel.
The control over ownership is improved, not only can they tax auction off your house, they now have the ability to foreclose as well.
There's no downside for the home owners, the new mortgage bill is much lower than the old bank mortgage.
As to the pensioners? They were going to be cheated or taxed out of their retirements anyway...
Well, not one of the cities and the county listed are in decent financial shape. Even if they had a redevelopment agency with funds, the crooked governor, Jerry Brown, seized all redevelopment funds last year. Now, even the “well off” cities are scrounging for funds due to Brown’s theft.
So, just where would these governments come up with the money to purchase any homes under eminent domain? Is George Soros going to give them the millions of dollars?
At least one city, Fontana, is a dung heap anyway. I doubt anyone could tell the difference between foreclosed properties and un-foreclosed properties.
Now, who would buy the mortgage after such a scam, I don't know.
“You assume the bankrupt ready cities will maintain the houses using funds they don’t have to place appearance above solvency.”
Not at all. I assume that the people living in the homes will take care of them. In any case, they’ll do a sight better than the banks are doing.
Again, if all this does is to spur the banks to stop holding on to foreclosed homes then it’s a good idea. Why they’re doing this in the first place mystifies me.
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