Jason Bernabei, TriCastle Realty & Mortgage,
The Realty Insiders
“Eminent
Domain & Solving the Foreclosure Problem”
DEL MAR:
January 14, 2013 – Goooooodd Monday morning San Diego!!! So much
happening in the world of mortgages and real estate right now in reaction to
the end of the once dreaded Fiscal Cliff! I would like to share with you this
intriguing article on the prospects of Eminent Domain as a fix to the
foreclosure epidemic. Its author is Jann Swanson, and it was originally
published today on www.mortgagenewsdaily.com. Enjoy. J
~~~
Another City Looks at Eminent Domain as
Solution to Foreclosures
Another city hard hit by the housing crisis has proposed
exercising its power of eminent domain on behalf of its underwater
homeowners. The City Council of Brockton, Massachusetts voted this week
to commission a study into the feasibility of such a move, joining several
municipalities in California and the City of Chicago which have already taken a
look at such an undertaking.
Brockton, an old industrial city located south of Boston, has
seen the median price of its housing drop from $260,000 to around $120,000
since the first quarter of 2007 and home sales during the same period drop by
about a third. The proposed plan is designed to stabilize the
housing market, curtail blight, and return homeowners to a positive equity
situation. If adopted, the City would use eminent domain to take foreclosed
properties (REO) from lenders and sell them to city residents and
non-profit organizations. Under the plan the City could also seize underwater
mortgages from the investors who hold them, restructuring them to reflect
the value of the underlying collateral then reselling them to other investors
at that new value.
In the middle of this plan is a new firm established for the
sole purpose of facilitating the mortgage purchases. Mortgage
Resolution Partners was founded last summer by Phil Angelides, formerly the
chairman of the Financial Crisis Inquiry Commission which investigated and
issued a lengthy report on the causes of the U.S. housing market collapse and a
former California state treasurer. According to Reuters, Angelides is
seeking financial backers for his company, telling potential investors his
plans to buy mortgages at a deep discount could generate a 20 percent annual
return.
Reuters offered this quote from a letter the company sent to
prospective investors. "We just might do a good thing for America,
and along the way get a great return on investment. If our hopes do not
pan out, the amount wagered should be a deductible loss."
Representative John Campbell (R-CA) introduced a bill titled The Defending American
Taxpayers from Abusive Government Takings Act which would prohibit the four
major government sponsored mortgage providers from buying loans in any
community and the Federal Housing Finance Agency (FHFA) as conservator for GSEs
also joined in and conducted a period of public comment on the subject.
All
of these opponents argue that the idea of using eminent domain, especially to
seize loans, would constitute an unconstitutional seizure and an unwarranted
abridgement of investors' property rights and that lenders would effectively
boycott any community that adopted such a plan.”
I’m curious the thoughts of my industry constituents and
competitors. What say you SD: good ideas, or not so good?
Jay’s Outlook:
Interesting…
Jason Bernabei, TriCastle Realty & Mortgage,
The Realty Insiders
