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CA City To Use ‘Eminent Domain’ For Mortgages

From a cheering Associated Press:

Calif city looks to seize loans to ease mortgages

By PAUL ELIAS | August 25, 2013

SAN FRANCISCO (AP) — When the mayor of Richmond, Calif., and a gaggle of activists and homeowners showed up at the Wells Fargo Bank headquarters in downtown San Francisco this month, they were on a mission to speak with the bank’s chief executive.

They wanted the bank to drop a lawsuit aimed at stopping Richmond’s first-in-the-nation plan to use the government’s constitutional power of eminent domain to "seize" hundreds of mortgages from Wells Fargo and other financial institutions…

How dare these banks try to defend their money and personal property from ‘activists’?

The banks have filed two lawsuits alleging that the plan is an illegal abuse of eminent domain, which allows governments to seize private property for public use — like a house in the path of a new highway or a piece of land needed for a new park.

The banks argue the plan would "severely disrupt the United States mortgage industry" because many other cities would likely adopt the same program to help homeowners who owe more on their mortgages than their houses are worth.

So far, Richmond has sent out more than 600 offers, but has not yet begun any eminent domain proceedings. Newark, N.J., North Las Vegas, Nev., El Monte, Calif., and Seattle are considering similar plans, according to Wells Fargo’s lawsuit.

While the housing industry is recovering slowly, Richmond, a city of roughly 100,000 people, is in the middle of a housing crisis, as plummeting home values and rising crime has left many worried that an era of urban blight is upon them.

It sounds like Richmond is in desperate need of more illegal aliens. Who, we are told, are the cure for all economic ills.

[Richmond Mayor Gayle] McLaughlin said cities are considering the program because they are desperate. Nearly half the mortgages in Richmond, for example, are "underwater," the owner owes more than the house is worth.

The plan is the brainchild of Cornell University law school professor Robert Hockett and here’s how it works… Richmond, working with San Francisco-based Mortgage Resolution Partners, offers $150,000 to buy a $300,000 bank loan on a house that is now worth $200,000 and is in danger of foreclosure.

If the bank agrees, the city and the company then obtain the loan at $150,000. Richmond and the company then offer the homeowner a new loan of $190,000, which, if accepted, lowers the monthly payments and improves the owners’ chances of staying.

In such transactions, the company receives $4,500 for each completed sale and splits any additional profits with the city.

If the bank refuses to sell the loan to Richmond, then the city invokes its power of imminent domain and seizes the mortgage. It would then offer the bank a fair market value for the home…

What a sweet deal this is for everyone, except the banks who were forced into giving out these mortgages in the inner cities in the first place.

Tim Cameron, a Washington, D.C., lobbyist with the Securities Industry and Financial Markets Association, said there is more at play than a single person’s underwater loan.

Cameron said pension funds, banks and other groups that made loans in Richmond stand to lose millions if the city is allowed to use eminent domain to force lenders into accepting less than the original terms of the loan.

Well, it’s not like pensions are a problem in California or anywhere else.

He also predicted that cities using eminent domain will make lenders wary of doing business there. "There’s a domino effect in play here," he said.

You think?

This article was posted by Steve Gilbert on Tuesday, August 27th, 2013. Comments are currently closed.

5 Responses to “CA City To Use ‘Eminent Domain’ For Mortgages”

  1. Rusty Shackleford

    Once again, here we are. The government, or, more accurately, the socialists in our government, which is largely most to all of them, think they have the answer(s).

    Invariably, their answer always seems to be that they have to make it all “fair” and “just” and “level”. The myopic view they possess is always at odds with reality, even if they create a fiasco with hair on it out of their own “good intentions”.

    It seems to me that it’s borne of the indoctrination of the 60’s on up. I came of age in ’79 and discovered I was surrounded by socialists. Even in the military. The soft underpinnings of “fair” and “equal” had already taken hold though there was still a fair amount of “fend-for-yourself” in a lot of ways, which I preferred. However, as the years went on, I found that more and more “leaders” became pro-active in the activist sense, perhaps harkening back to their days when they, themselves were either bullied or didn’t get that thing they wanted because some good-looking jock or rich-kid kept it from them.

    I think it’s an underlying anger that has prevailed in our society where it’s preyed upon by the manipulator-types and fostered by our entertainment system, which includes the news-media, which is really now just a petri dish for reinforcing a smart-ass attitude towards conservativism. Shows like “Rules Of Engagement”, “How I Met Your Mother”, “Two Broke Girls”, etc etc, to say nothing of all of Seth McFarlane’s work and the ubiquitous “The Simpsons”.

    Growing up in the TV generation, I loved a lot of shows but could distinguish between the fantasy world created in the box to reality. Yet today, it seems those in authority are trying very, very hard to make everything into a half-hour sitcom with a desirable outcome by the show’s end. Such cannot be done and to try to do so is a fool’s errand.

    Maybe this is why obama is finding that reality is harder to manipulate than a TV script and the “success” he enjoyed in the small-scale of community organizing led him to believe it could be done on the whole-world scale. Not so fast, Kimosabe. Real life not like TV.

    But, so often I have heard supervisors, managers and others take up the pablum of equality-of-outcome, level playing-fields, and of course, fairness. These same people also seem to fail to recognize that said managers and supervisors have few to no standards yet are charged with enforcing them.
    ———————————-
    *Side note: The interior functionings of corporations also seem to parallel more closely the socialist model than the free, American one by prohibiting free-speech, free-access and other rights. Additionally, discussing disciplinary action with fellow employees is punishable, along with their being able to make accusations stick while ignoring the right to face one’s accuser, such as in matters of alleged discrimination, etc. where the company simply sticks a letter in an employee’s file and does not allow the employee to submit a counter-statement to it.
    ———————————-

    But we live in a society here in the US where the imaginary seems to be more of a factor than trying to get people to think rationally, practically, correctly and to reason and see logic. I’ll use the middle east as an example; Obama & Co. went about their activities completely bereft of what has happened in the past and seemed to move forward as if history started the moment he was elected.

    Aside from lacking that type of gravitas in his personal demeanor, the muslims just look at him as a little girl anyhow. ( As do I and about 50 million other Americans or more.)

    But they actually seem to think that this whole philosophy of “equal” and “fair” is going to bear fruit. Yet they can’t seem to understand why it’s not. Right now, the argument is “It’s all the republicans’ fault.” How can this be so? No republican policy, rule, law or procedure has been used since 2008. Not only have they not created any legislation but they can’t stand in the way of any democrat (national socialist) proceedings either.

    See, that’s where TV thinking comes in. It’ll all work out…the show will have a happy ending, everyone will smile and laugh and so on.

    NOT.

    So I wonder, did all these democrats just watch too many episodes of “Happy Days” and “The Mary Tyler Moore Show”? Or is it just the wet-dream of how they think socialism is the best thing, EVER and they believe they can do it better than North Korea, Cuba and all the rest.

    Or, are we just living a microcosm of “Gilligan’s Island” where the professors and the skippers have all the answers and the rich people are essentially useless and Gilligan, the hapless twit is really the idiot-savant and/or just a republican and occasionally gets things right but knows to keep his mouth shut and just carry the water?

    Seems a shame that so many people in the nation want a fantasy to become real because, as they told me in the military, “Wish in one hand and sh*t in the other….See which one fills up first.”.

  2. mr_bill

    Is Richmond also willing to allow banks to increase the amount due on loans when property values increase or is this a one-way street? (rhetorical question, of course)

  3. Petronius

    The protection and enforcement of contracts by courts of law is crucial to the functioning of peaceful society. Without this protection trade and civilization cease to exist. Without this the rule of law is replaced by the rule of criminals.

    In his speech in Phoenix on 7 Aug, Nerobama applauded the (alleged) rise in home prices, saying “As home prices rise, we can’t just re-inflate another housing bubble.”

    He called for the injection of more private capital into the mortgage market.

    So which is it going to be? Are housing prices rising or falling? Do they want more private money in the mortgage market or do they want to confiscate it?

    When capital investment is no longer welcomed, it will flee.

  4. Reality Bytes

    Cue the torches & pitchforks. Good luck storming the castle!

  5. yadayada

    so who owns the company that the city is in bed with? you can just see the $$$ flashing in the eyes of the politicians to whom this was proposed. any surprise it was devised by some commie college prof?
    in the example, mortgage resolution partners gets $22,500 because the gubmint walks up and takes the property at gun point. oh they resolved that one alright.
    if they really want to be “fair” (snicker) why not lower the mortgage to 160k and split a 10k profit?
    even if the home”owners” are reliable, the property is still owned by the gubmint. what’s to stop them from foreclosing if they don’t agree with the resident’s lifestyle choices? any guesses which “groups” will reap the most bennys?
    is there any room left to talk about potential for corruption?


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