Cities Mull Using Eminent Domain To Seize Mortgages

IBD ^ | 01/08/2014 | By ANDREA RIQUIER

[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.

[The Louiswu]

"If cities can use eminent domain to take underwater mortgages, couldn’t they use eminent domain to take unsustainable public employee pension rights?"

Coming soon, If you like your pension plan, you can keep it..."

[pmac]

Thank You brother, I knew I couldnt have been the only one seeing this connection