Richmond?
Which Richmond?
Ricmond, VA?
A city in CA has already floated this socialist claptrap of an idea.
Libs have no concept of the law of unintended consequences for the housing market.
Not to mention the grossly unconstitutional nature of it.
Oh, wait. Silly me, I was still operating under the mistaken assumption that the US was a Republic with a functioning Constitution. How stupid could I be?
If they do this good luck getting a loan to buy a home in that city. Banks may not say they aren’t making loans, but you can bet underwriting will go on forever.
Richmond, California is broke
anyway.
It narrowly avoided being pushed into federal bankruptcy court (through a major cutback in city services, etc.).
Where it thinks it can get the $$$$ all of a sudden to buy up 600 defaulted deadbeat non-paying loans in its mostly-slum neighborhoods
AND pay all the litigation costs (plus pay for its defense when taxpayer suits are filed)
?????????
This is 95% BS
Legalities aside, there are also huge tax consequences to consider.
A local attorney and real estate broker posting under the name “davecherr” commented on the problem of debt forgiveness.
There is a massive and thus-far unremarked upon problem with this ED scheme: it would result in a MASSIVE INCOME TAX BILL FOR THE HOMEOWNER. Under the tax code, discharge of indebtedness is counted as income. There is a safe harbor for people who lose their primary residence to foreclosure, but it would not apply to these Richmond residents, since they would keep their house with magically reduced debt.
Read more at http://globaleconomicanalysis.blogspot.com/2013/07/tax-nightmare-of-eminent-domain.html#ITujKY26TipCDmUZ.99
No government entity can use the power of Eminent Domain to buy property at “below the homes’ current value.”
The very definition of Eminent Domain requires that the owner be paid “just compensation”, which in turn is defined as:
Just Compensation n 1) in general a fair and reasonable amount of money to be paid for work performed or to make one “whole” after loss due to damages. 2) the full value to be paid for property taken by the government for public purposes guaranteed by Fifth Amendment to the U. S. Constitution, which states: “...nor shall private property be taken for public use without just compensation.” If the amount offered by the governmental agency taking the property is not considered sufficient, the property owner may demand a trial to determine just compensation. Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
http://legal-dictionary.thefreedictionary.com/Just+Compensation
The thing which gets to me is that I ended up in a near total financial catastrophe with a house I’d bought in 89 and had to sell in 94 when the housing and job market both crashed simultaneously, and nobody gave a rat’s ass. In fact prior to that time, nobody had ever lost a dime in real estate in Northern Virginia, so that people losing money at that time at least had an excuse, people under-water today don’t have that excuse yet it seems like the whole world wants to try to help them...
You can see it coming from a mile away, just as has been building with healthcare, the government is making their play to take over all housing, in the interest of “fairness.”
Isn't that special? The mayor wants to define the "fair market value" and compel banks to sell at his chosen price. I've met people who wanted to negotiate like that, but normally they carry guns or at least knives, they travel in packs, and they negotiate late at night in bad neighborhoods.
While the 5th amendment provides for taking property for public use with just compensation, doesn’t Section 10 of the constitution prohibit the states from interfering with contracts.
Section. 10: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
When a financial institution loans money to a person to purchase a home, the lender and borrower enter into a contract for repayment of a specific dollar amount. The amount subject to this contract is not affected by either the appreciation or depreciation in value of the property bought with the borrowed money. The property (house) value at any given time is irrelevant to the contractual obligation. The fact that the property may have been pledged as collateral for the loan does not have anything to do with the contract itself. It would seem that a contract could only be modified or taken at the federal level through a bankruptcy proceeding.