Using Eminent Domain to Condemn Underwater Mortgages
Not the property itself — just the mortgage. Allow an underwater homeowner to keep his/her home by seizing the mortgage. YES. Eureka! (Or “Viola!” as Kellie Bundy used to say.)
Everybody wins — the homeowners themselves and jillions of neighborhoods that have been blighted with foreclosed/derelict buildings. And this doesn’t involve any tax dollars or government agencies. This idea is being pushed by a mortgage firm and a number of investors.
Mortgage Resolution Partners says condemning underwater mortgages and taking them out of the hands of private banks is “the only practical way to modify mortgages on a large enough scale to solve the housing crisis.”
We’ve tried everything else. Let’s give it a whirl.
Mortgage Resolution Partners is working with local governments to find investors who are willing to come up with the money to finance the condemnation process on a large scale. After taking possession of a mortgage, Mortgage Resolution Partners would restructure the loan, thereby reducing the monthly payments and allowing the homeowner to keep his/her home.
The chief executive of San Bernardino County (CA) said:
“We are intrigued. Our economy in this county can't be turned around until a large proportion of the mortgage crisis has been addressed.”
The chairman of Mortgage Resolution Partners said:
“The private sector provides all the financing and all the risk with this program. We have watched state and national government try to fix this and it hasn't worked.”
This sounds like the most hopeful approach yet.
Labels: condemn underwater mortgages, eminent domain underwater mortgages, Mortgage Resolution Partners
posted by Tom Harper @ 4:11 PM
7 Comments:
A very intriguing concept. I don't see why it shouldn't be tried.
Some people wish to live beneath the waves, we should help them out.
Call me ignorant but who eats the loss in all of this? And who pays these investors back with interest? Sounds to me like they are trading a secured debt for an unsecured debt and we know what interest rates that commands.
No I am of the mind that the banks should just anti up and eat the losses they created in the first place.
Hmm, they would restructure the loans, isn't that what got us into trouble in the first place by loans being all restructured and bought out by investors. I hope I am just misunderstanding this and not being all cynical, that some MBA in an ivory tower has come up with a new and inventive way to screw us, without benefit of lubricant or a nice meal and reach around first. We need to do what Iceland did and nationalize the damn banks and actually get to regulating them the way we are supposed to so this does not happen again. color me a little more than cynical at this point, but hey I can be surprised if it works.
JR: Definitely intriguing.
Randal: Sorry, the octopus' garden has been condemned.
Demeur: I'm not very financial-minded, but the linked article says: "The restructured loans could then be sold to hedge funds, pension funds and other institutional investors with the proceeds paying back the outside financiers."
I guess we'll see if this works, or even gets tried. I too would rather see the banks forced to eat the losses and clean up their own shit, but that's not gonna happen.
Jess: Who knows, maybe they'll throw in some lubricant this time, since the public has gotten so sore.
Speaking of Kellie Bundy, what a perfect follow on V.P. candidate, after Sarah Palin! The only problem is that Christina Applegate, the actress who played Kellie, is a very bright, talented, poised and decent person. I don't know her politics, but I doubt she would want to get mixed up in GOP presidential politics.
Seriously, if this idea doesn't work out, let's just break up the 10 or 12 biggest banks and investment houses responsible for the mess we're all in, sell off their assets and use the proceeds to pay not less than half the outstanding balance on the bad mortgages those banks, brokerages and AIG foisted on dupes, and left the public holding the bag for — while the banksters and their ilk got bailed out on the public dime and started racking up obscene profits again almost overnight, while the country's paycheck workers and out-of-workers are being told it will be 2014 or beyond before the rest of us get back to where we were in early 2007. Also, use the proceeds to pay reparations to families whose homes have already been foreclosed.
SW: I remember when Christina Applegate was the guest host on Saturday Night Live. She was a lot more versatile than her Kellie Bundy role.
I'm certainly in favor of breaking up the 10 or 12 largest banks and selling off their assets to pay for the damage they did. Unfortunately, since they own the government, that's not very likely.
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