Wall Street warns against using eminent domain to seize underwater mortgages

The Hill ^ | 8/19/12 | Peter Schroeder

[tbw2]

I can understand why corrupt, short sighted local pols would pick up this idea - get the assets for free or very cheap, receive monthly payments from homeowners, get to look like you are helping people, write down the debts of your friends at the expense of “Wall Street”.
That you no longer own your home, have to play with dirty pols to stay in your home, that new loans become almost impossible to get and that personal property rights become more tenuous are irrelevant to all involved.

[sten]

so I’ll be paying the gap on seized californian / new york property... that the owner gets to stay in... via federal taxes... while living in Florida

oh HELL NO

this is just theft

f*ck them

[Trod Upon]

Just Google “Bostonians paying the excise-man” and you’ll see about where this is all heading.

[Usagi_yo]

No, you have it totally wrong.

Capitalism works both ways. You live and you die by the market.

In a natural market, under normal situations banks *should* foreclose and repossess as long as they continue to to see profit. But there is an X% point of defaults where it not only becomes unprofitable to do so, it actually accelerates their loss and actually drags other markets down with it (I.E Insurance, Bank deposits, Savings deposits).

Call it a Nash equalibrium.

Now, past that equalibrium they use the catastrophic secondary collapse as leverage against taxpayer to force the taxpayer to foot the bill on their loss, rather than taking the loss by writing down and ceding equity to the mortagees themselves.

In other words, they have a “I’m going to shit in the sandbox if you don’t play along with me” attitude.

Which of itself, politicizes the issue.