Skip to comments.Cities Mull Using Eminent Domain To Seize Mortgages
Posted on 01/08/2014 7:15:01 AM PST by SeekAndFind
As a real estate agent in the struggling San Francisco Bay city of Richmond, Zina Hall is well acquainted with all ways of helping troubled homeowners. Hall spent months this autumn working with an elderly widow with a medical condition who was struggling to make payments. Her best option, Hall believed, was a short sale, and they began that laborious process.
But after several weeks, the homeowner disappeared, then called Hall to say she wanted to pull out and use a new program by the city.
"They have eminent domain and it's going to help me," Hall recalled her saying.
Governments typically use eminent domain to seize land for public or private projects. But Richmond is mulling using its powers to seize the loans themselves from mortgage-backed securities. The holder of the securities would receive cash, roughly equal to what the home is currently worth. The homeowner would see his or her principal reduced to near fair-market value.
The idea has met with howls of outrage from investors in mortgage-backed securities, pushback from lenders, and some disapproval from federal regulators. It would apply only to mortgages in "private label securities" those not guaranteed by the government or held by banks about 10% of the market.
(Excerpt) Read more at news.investors.com ...
We really do get the government we deserve, don’t we? People are so freaking retarded that they don’t understand what half of these legal tenets mean, but they SOUND good!
I don't know what the mortgagees are howling about. They should not be losing a dime. If the city wants to seize a mortgage to avoid forceclosure, then they should pay every dime with interst that is owed. But I suspect they are not.
Even if they are, the city (government) has no right to do this. The article mention lawsuits, which is the correct response to this "Eminent Domain". I hope this idea fails.
Everyone has blood on their hands when it comes to the housing markets, mortgages, and prices.
The first thing to realize is that we do not have a free market argument to fall back on here. Government, banks, etc., have all so regulated, coerced, cronied, and winked at everything from fake interest rates, to fake money, to fake appraisals, to fake loans that housing being a free market is like saying North Korea is a free country.
That is the intent. Destroy the 'private securities' market, so that only banks and 'approved' lenders can invest in mortgages...........
Ayn Rand had it right. :
"Needless to say, under either system [socialism or fascism], the inequalities of income and standard of living are greater than anything possible under a free economy -- and a mans position is determined, not by his productive ability and achievement, but by political pull and force. Under both systems, sacrifice is invoked as a magic, omnipotent solution in any crisis -- and the public good is the altar on which victims are immolated."
Cities who are contemplating this should heed the cautionary tale of the Genesee Towers in Flint, Mich.
The tallest building in Flint, it was left mostly vacant when NBD, successor to Genesee Bank, again merged and pulled out of it’s former headquarters. Some Indian fellow from Oakland County bought the 19 story building for $500K. He did not keep up on the maintenance, and within a few years large chunks of concrete began falling to the pavement below.
Faced with a public safety hazard, the city of Flint took the building via eminent domain and paid the guy $500K. “But wait a minute,” he said, “you have me assessed at $5 million!” The case wound it’s way all the way up to the Michigan Supreme Court, which agreed with him and ordered the City of Flint to pay him $5 million, which the city did not have.
Everybody got a supplemental tax bill to pay off the “Genesee Towers Assessment”. The building was beyond repair and was brought down via controlled demolition just before Christmas.
Localities out there could easily end up in a similar situation with these mortgage holders.
“It is only when the people become ignorant and corrupt, when they degenerate into a populace, that they are incapable of exercising their sovereignty.”
I have a housing market crash as proof.
All property (and money, of course) rightfully belongs to the government.
How is this legal? Loans are paper--seizing the mortgages and then claiming ownership of the property, and then giving away the seized property is rather indirect. And, redistribution of physical property to bankrupts is not a compelling common interest. The mortgagors never really owned the property--they were renting it from the lienholders (banks).
Russia’s kleptocracy is a piker-version of ours.
The Founders had such wisdom and few hear their warnings.
If cities can use eminent domain to take underwater mortgages, couldn’t they use eminent domain to take unsustainable public employee pension rights?
First it was to build sidewalks, or to widen the streets. Then to build schools and roads. Then as a favor to private developers (who rewarded the politicians).
Now its for whatever the government wants to do. No private property is safe.
Communist manifesto: all private property must be seized by the government. (not the exact words)
Such actions would freeze the private money lenders and those who cannot get money at the normal banks, etc, would be losing their homes—10% of the market, according to this article.
Meanwhile, a local ‘real estate’ TV show had information that Hedge Funds are buying up properties that are being short-saled. One such hedge fund bought 30 properties in the last 2 months in Sacramento alone.
I am assuming such homes will be cleaned up & RENTED for income until the market gets some sort of recovery and then the house will be sold for another profit.
For totally broke municipalities to be taking over homes that are underwater isn’t the answer. Maybe the cities should form their own hedge funds to do this action.
That set of pics must have been taken around 1959.