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CA County May Seize Mortgages Via Eminent Domain

From a cheering Associated Press:

Calif. cities eye plan to seize mortgages


FONTANA, Calif. (AP) — In the foreclosure-battered inland stretches of California, local government officials desperate for change are weighing a controversial but inventive way to fix troubled mortgages: Condemn them.

Officials from San Bernardino County and two of its cities have formed a local agency to consider the plan…

The idea was broached by a group of West Coast financiers who suggest using the power of eminent domain, which lets the government seize private property for public purpose.

In this case, they would condemn troubled mortgages so they could seize them. Then the borrowers would be helped into mortgages with significantly lower monthly payments

Typically, eminent domain has been used to clear property for infrastructure projects like highways, schools and sewage plants. In this case, supporters say, the public purpose is served because communities battered by foreclosures have seen tax rolls decimated and services gutted and have suffered economic blight

Who is going to pay for this?

The major city in San Bernardino County is San Bernardino, which just declared bankruptcy last week. So they don’t have any money to be buying houses at any price.

Rick Rayl, an eminent domain lawyer in Irvine, Calif., who is not connected to the company, said the plan could have unintended consequences, like discouraging banks and other lenders from making new mortgage loans in an area.

"The lenders are going to be livid," he said

Who cares about them? How many of them vote?

Timothy Cameron, managing director of the Securities Industry and Financial Markets Association’s asset managers group, told the authority that residents of the region would find it harder to get loans and investors — including pensioners — would suffer losses. He also said such a move would invite costly litigation

You mean these banks would dare to fight having their properties taken away from them by the government? Who do they think they are? What the government wants, the government takes.

But it sure sounds good on paper, doesn’t it? And it might even buy the local politicians a few more votes from the deeply stupid.

Which means we will probably hear Obama float a similar plan as we get closer to election day.

This article was posted by Steve on Tuesday, July 17th, 2012. Comments are currently closed.

2 Responses to “CA County May Seize Mortgages Via Eminent Domain”

  1. Petronius says:

    Eventually eminent domain may be the weapon used to confiscate all of our property.

    Eminent domain is the power of the state in its capacity as sovereign to seize property on account of public exigency and for the public good. Originally this meant a seizure of private land as a matter of necessity, for example to occupy land and erect military defenses on it during time of war for the common safety, or to build roads to open up trade routes.

    Over the years the courts have liberalized the scope of eminent domain to allow any seizure whenever the public interest requires it. And the public interest is determined by the legislature with limited scope for judicial review, such that today the public interest allows our homes to be seized for economic development by private third parties. Kelo v City of New London (2005).

    Still under the 5th Amendment property may not be taken without just compensation. It is a compulsory sale, but a sale nonetheless, and so the price must be reasonable.

    But what’s the Constitution among friends? Following the abdication of responsibility by Chief Justice John “I-can-be-reached” Roberts, there are only three reliable votes among the No-Good Nine. And those three can’t live forever.

  2. AcornsRNutz says:

    This is no surprise. Following the suits being brought against Bank Of America for neglecting forclosed homes and making “slums” in this same state, which will set the stage for even more confiscation of property. Eminent domain is actually one of the most frightening aspects of government, since there are reams of cases demonstrating that it doesn’t protect a property owner from having his land taken in time of need and not being compensated, but that it in fact is designed to allow the government to force you to sell your land at a price they deem fair value.

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