Posted on 09/11/2013 2:29:16 PM PDT by whitedog57
Richmond California is proceeding with plans that include eminent domains to help homeowners with “troubled loan.”
Richmond, California, took a step toward setting up a mortgage principal reduction program to help homeowners with troubled loans, while leaving the door open to using its eminent domain powers to acquire the debt.
The City Council refused to shelve a plan to seize mortgages that exceed the value of their properties, which has spurred lawsuits by U.S. banks including Wells Fargo & Co. The council agreed that any effort to acquire loans though eminent domain — the right of governments to take private property for the public good — would require their approval.
“Our residents have been badly harmed by this housing crisis,” Mayor Gayle McLaughlin said. “The banks have been unwilling or unable to fix this situation, so the city is stepping in to provide a fix.”
Richmond, a refinery town of about 106,000 east of San Francisco, is among U.S. cities considering the proposal advocated by Steven Gluckstern’s Mortgage Resolution Partners LLC to seize and refinance so-called underwater mortgages to avert foreclosures.
San Francisco-based Mortgage Resolution Partners would provide services and arrange for private investment funds that would profit by buying the loans for less than property values.
About 38 percent of Richmond homeowners with a mortgage, or more than 7,000, are underwater, according to RealtyTrac Inc., an Irvine, California-based data provider. Nationwide, 23 percent of those with home loans owed at least 25 percent more than their property is worth, RealtyTrac said Sept. 5.
Lest we forget, data shows 31% of the 624 Richmond, CA mortgages being targeted for eminent-domain seizures by Mortgage Resolution Partners aren’t even underwater, according to a declaration filed in court by Phillip R. Burnaman II, a managing director at GreensLedge Group.
• 63% were cash-out refinancings or “equity extraction” loans, with borrowers tapping $53 million above original home purchase prices • 53% of borrowers have received loan modifications • Richmond is seeking to buy loans at average 41% discounts to current property values • Losses from Richmond seizures to non-agency RMBS trusts in which Fannie Mae has invested would total $17M • Total would rise to $7.5b if extended to all of California, $24b for entire U.S. • At least 301 Richmond loans previously modified, and now have average monthly payments of $1499 and average rates of 3.05% • Refis into FHA loans at current rates would increase payments 19% to $1,784, making defaults more likely
So, Richmond claims it wants to help troubled borrowers and fix the underwater mortgage problem, but what they really want to do is bail out borrowers to the tune of $55 million and stick it to investors (Fannie Mae, PIMCO, taxpayers). These were borrowers that extracted equity from their homes, often to purchase consumer durables (such as pick-up trucks and big-screen TVs), take vacations, even pay for college tuition.
Sorry, I don’t see why PIMCO and Fannie Mae should have to pay for bad decisions by consumers. Why don’t they just seize all mortgages and wipe the debts and stick the bill to PIMCO and Fannie Mae? It is BAD ECONOMICS and is fraught with moral hazard problems.
Besides, East Bay house prices have coming roaring back.
oaklandhouseprices
And lenders are easing credit standards.
1005_lrmp_09_o+tower_of_power_music+back_to_oakland
Good luck convincing a bank to give you a loan to buy a home in Richmond in the future.
Corporate America deserves this. They do legal research to lobby and sue in court to have laws interpret in their favor as well as invent financial scams that skirt legal boundaries. That is call astute business practices. When workers use lobbies and lawsuits to do the same it is call Communism??!!! Corporate America started the misuse of eminent domain, now their nemesis anti capitalist Communist are using it in the same way. Meantime Main Street Americans get screwed by both, since both (corporate America and big gov leftist) are enemies of the middle class/Main Street America, let them both kill each other. That way corporate America will get hit in the wallet and leftist gov will embark on the road to unsustainable business models that lead them all to Detroit.
“Communism is coming”? That is such total BS.
Seriously, have you not seen the abuses of the banks? Their directors should have been put in jail. Instead they got bonuses.
No conservative could be in support of what the banks did in the run up to the crash. There was nothing conservative about that behavior and their practices.
And now we have the backlash. That’s what happens when conservative guidelines are not followed.
The banks got bailed out and the did it by lobbying. Now the ordinary citizens that paid the cost of the bailout are doing some lobbying to get relief also.
Are you saying the rules only apply to one side and not the other? If you said no bailout, no favors for anyone then I might be able to side with you.
The greatest criminals are ones who not only take money and property from their victims, but leave their targets feeling good about themselves. How sneaky and conniving must one be to in the process of stealing tangible goods to also take the victims dignity?
There’s something to be admired in such a swindler. But the admiration is directly proportional to the utter contempt one must have for the “victim”, whom even after being told of the scam continues to praise the crook who did it.
How stupid must one be? It reminds one of that girl in High School who strutted around with her nose in the air because she was allowed to hang out with the football team. Naturally the team was only using her for a couple of things, but that never bugged her.
This incident is annoying in High School, but it’s dangerous in the world of politics.
Enter Richmond and it’s radical socialist government. Faced with a number of house owners “underwater” it has sent an offer to mortgage companies to buy off said houses. If the banks refuse, the city said it may have to use eminent domain to seize the properties in question.
Although the Americans call it “eminent domain”, the Venezuelans would call it “nationalization” and the European republics of the 30’s would call it “Fascism”.
It also begs the question of true ownership. When a pipe busts in the house, who do you call: The bank or a plumber? When a wire shorts out in the house, who do you call: The bank or an electrician? When the roof caves in the house, who do you call: the bank or a roofer?
The strong arm of the government shows up and seizes a home, who are they taking it from: the bank or you?
The only upshot is that the bank can no longer repossess anything, because you no longer own it.
The downshot is that homeowners now cheering this idea on are in for a very rude awaking as slowly discover that they no longer own their domiciles. Instead they’re just caretakers of government property. Their beloved homes now subject to the mercurial winds of politics. The man from the government office might not like the remodeling plans for the kitchen or the type of paint for the bedroom, what the temperature it should be or how much water should be used. Maybe the environmentalists will get together and decide that the place needs solar panels. Maybe the Civil Rights groups will demand that some of the homes in the neighborhood be “diversified”. Or maybe the relative of a large campaign donor will simply need a place to live.
There’s no guarantee the powers that be will offer them a chance to get their property back either. Or give the people living in these places any type of a “fair” deal. When one couples this other things going on such as the government using its authority to punish groups opposed to gay marriage, the frightening possibilities become endless.
This is how things work in a socialist republic. It’s not a new idea. The seizing of private property was advocated by Karl Marx in “The Communist Manifesto” who’s goal was the destruction of the middle class. One of the greatest ways to harm the middle class is to ban one of its most iconic symbols: home ownership.
“A man’s house is his castle”? Not anymore I’m afraid.
I’m sure Marx would be tickled if he could come to 2013 and see the bourgeoisie that he hated so much the most zealous for his cause. The very victims of this scam are its biggest supporters. Makes you wonder where the smug sense of intellectual superior that radiates from such people comes from.
It would be one thing if these idiots wanted to sell themselves into this kind of slavery. What burns is that as long as 51% of voters are composed of these people, we’re all in raw deal.
You “conservatives” who think this type of crap is a good idea can kiss my ass!
He who robs Peter to pay Paul can count on the continuing support of Paul
Fine with me if that is what the people of Richmond, CA vote to do in their own town. They can tax themselves to pay for the scheme. Local control and decision making is fine with me ... even if it is stupid.
They had better not come asking for a Federal bailout of any kind whatsoever.
The bailouts were wrong ... a travesty to be exact.
But that has nothing to do with Richmond. This is a local matter and their decision to make. Conservatives should applaud local decision making and local control of local issues ... even if they are stupid ... rather than top down control, regulations, subsidies, bailouts, etc.
Nah this is called throwing food to the gators who are coming to eat you. Richmond is more of a dump than Detroit or Chicago ever thought of being. All those under water houses are on the west side of highway 80. They are in parts of town that are nearly uninhabitable due to gang violence and general disrespect for human life.
The city council hope this will keep the rioting masses from crossing the highway and burning down the part of town that actually contributes to the tax base
It’ll never pass constitutional muster. Not all mortgages will be covered and that [possibly] would be violation of 14th Amendment Equal Protection rights.
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