Posted on 07/22/2012 10:52:50 AM PDT by Lorianne
.... there’s something brewing that looks like it might be a blueprint to effectively take on the financial services industry: a plan to allow local governments to take on the problem of neighborhoods blighted by toxic home loans and foreclosures through the use of eminent domain.
The plan is being put forward by a company called Mortgage Resolution Partners, run by a venture capitalist named Steven Gluckstern. MRP absolutely has a profit motive in the plan, and much is likely to be made of that in the press as this story develops. But I doubt this ends up being entirely about money.
Here’s how it works: MRP helps raise the capital a town or a county would need to essentially “buy” seized home loans from the banks and the bondholders (remember, to use eminent domain to seize property, governments must give the owners “reasonable compensation,” often interpreted as fair current market value).
Once the town or county seizes the loan, it would then be owned by a legal entity set up by the local government – San Bernardino, for instance, has set up a JPA, or Joint Powers Authority, to manage the loans.
(Excerpt) Read more at rollingstone.com ...
However, I hope someplace like San Bernadino county tries this scheme.
If you can't serve as a good example, you can at least serve as a horrible warning to others.
I would submit that heroin is less of threat to someone’s well-being than Rolling Stone is.
This is all about yet another way to stick this mess on to the tax payers and to enrich a few well connected people. Zerohdge has a pretty good write up on this scam:
http://www.zerohedge.com/news/guest-post-eminent-domain-mortgage-heist
The one thing that I’m not sure of is how these cities think that anyone will lend them money for this since they seem to be going bankrupt at an increasing rate. You would have to be stupid beyond belief to invest in municipal bonds in California right now, especially for some harebrained real estate scam.
Steven Gluckstern is a BIG bundler for Zer0
This is still a rob Peter to pay Paul kind of deal.
You end up with a sore peter and you cant get **** done with a sore peter.
If the intent is to deal with all of these underwater mortgages and deteriorating neighborhoods, they'd be better off leaving everything as-is and just taking possession of the homes through a tax lien.
Again -- I may be overlooking something completely on this ... so feel free to flame away!
The thing that really bothers me about all this is that the instruments that created this fiasco are still in place.
Fannie and Freddie need to go.
Frank and Dodd are gone but their treachery lingers on.
At least Kelo didn’t steal the lenders money - it paid any unpaid loans, then a fair market value - this does not even come close to doing that
I don’t think they seize the high mortgage - they chuck it.
They, in effect, steal the house from the bank holding the high mortgage and “sell” it back to the homeowner for the lower price, but now they (BOs cronies) own the mortgage.
I am frankly SO sick of BO.
Hold the election tomorrow. We can argue about Palin and all the rest after the election, but BO needs to go.
Now.
Interesting. Do you have a link or something.
I agree.
But I am still curious to see someplace try this and see the repercussions from this. It’s bound to be a train wreck in ways that we can’t even imagine right now.
For example, the aftermath of the Kelo decision for that particular property is a very good object lesson ... should be brought up more often.
For that reason alone I hope San Bernadino Co. or someother lame-brained entity should go for this.
I agree.
But I am still curious to see someplace try this and see the repercussions from this. It’s bound to be a train wreck in ways that we can’t even imagine right now.
For example, the aftermath of the Kelo decision for that particular property is a very good object lesson ... should be brought up more often.
For that reason alone I hope San Bernadino Co. or someother lame-brained entity should go for this.
What this article suggests as solution to the federal government forcing banks to make bad loans under fiscal penalty from the federal government is to have local government Rip the banks off, while the Federal Gov holds a gun to their head.
All this is done of course in the name of the little guy who was duped into taking the loan he couldn’t pay for.
It’s a load of socialist clap trap.
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Once again, they only focus on ‘underwater’ mortgage holders. I don’t like this plan because of that alone, not to mention the perils of eminent domain. I can’t see a good outcome from this.
I see they also want to ‘cherry-pick’ homeowners who are current in their payments. They don’t want to take a risk with those who don’t/won’t pay.
What happens to the legitimate financial interests of the banks who held the notes that led to foreclosure?
The banks will simply be robbed, not with guns, but by pandering politicians who will vote for the confiscation?
Now, the fallout: Banks, as ongoing businesses will be hurt, but the real theft will come from the myriad of stockholders and bondholders who own interests in the banks, many of them just average people who thought a bank stock or bond was a good investment for their retirement.
A further fallout will be a marked decline in mortgages approved. No bank will loan money on a home mortgage unless the collateral and credit rating of the borrower is sufficient to make sure that the bank cannot lose during a foreclosure in the future.
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