General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWOW! TURNING THE TABLES: California Town Using EMINENT DOMAIN To Save Homeowners From Banks
A City Invokes Seizure Laws to Save Homes
Banks = Waaa,waaaa, waaaa, waaaa..............
All of the loans in question are tied up in what are called private label securities, meaning they were bundled and sold to private investors. Such loans are generally the most unfavorable to borrowers and the most likely to default, Mr. Gluckstern said. But they are also the most difficult to modify because they are controlled by loan servicers and trustees for the investors, not the investors themselves. If Richmonds purchase offer is declined, the city intends to use eminent domain to condemn and buy the loans.
The banks and the real estate industry have argued that such a move would be unprecedented and unconstitutional. But Mr. Hockett says that all types of property, not just land and buildings, are subject to eminent domain if the government can show it is needed to promote the public good, in this case fighting blight and keeping communities intact. Railroad stocks, private bus companies, sports teams and even some mortgages have been subject to eminent domain. Opponents, including the Securities Industry and Financial Markets Association, the American Bankers Association, the National Association of Realtors and some big investors have mounted a concerted opposition campaign on multiple levels, including flying lobbyists to California city halls and pressuring Fannie Mae, Freddie Mac and the Federal Housing Administration to use their control of the mortgage industry to ban the practice.
Tim Cameron, the head of Sifmas Asset Management Group, said any city using eminent domain would make borrowing more expensive for everyone in the community and divert profits from the investors who now own the loan to M.R.P. and the investors financing the new program. Eminent domain is used for roads and schools and bridges that benefit an entire community, not something that cherry-picks who the winners are and who the losers are, he said. Representative John Campbell, Republican of California, has introduced a bill that would prohibit Fannie, Freddie and the F.H.A. from making, guaranteeing or insuring a mortgage in any community that has used eminent domain in this way. Eminent domain supporters say such limits would constitute a throwback to the illegal practice called redlining, when banks refused to lend in minority communities.
Opponents have also employed hardball tactics. In North Las Vegas, a mass mailer paid for by real estate brokers warned that M.R.P. had hatched a plan to make millions of dollars by foreclosing on homeowners who are current on their payments. In a letter to the Justice Department, Lt. Gov. Gavin Newsom of California complained that the opposition was violating antitrust laws and that one unnamed hedge fund had threatened an investor in the project. But not all mortgage investors oppose the plan. Some have long argued that writing down homeowner debt makes sense in many cases. This is not the first choice, but its rapidly becoming the only choice on how to fix this mess, said William Frey, an investor advocate.
cont'
http://www.nytimes.com/2013/07/30/business/in-a-shift-eminent-domain-saves-homes.html?pagewanted=2#h[]
Nuclear Unicorn
(19,497 posts)However, I am curious how the USSC will treat this in light of the heinous Kelo v New London decision.
elleng
(130,895 posts)as Kelo found, 'In a 54 decision, the Court held that the general benefits a community enjoyed from economic growth qualified private redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment,' I don't see a problem. NO DOUBT here about the general benefits the community will enjoy from saving homes.
Nuclear Unicorn
(19,497 posts)we'll see a bastardized version of Kelo saying giving the homes to the bank would be the better "benefits a community enjoyed from economic growth qualified private redevelopment."
1) this would unleash corporatism to run amok
2) it turns the USSC into a body that awards rulings based on which litigant in a given case derives greater value as opposed to establishing a body of case law that will guide the future.
If I'm just being paranoid without any basis in recent history please feel free to talk me down.
elleng
(130,895 posts)your #2, but rather deciding whether the city's approach is acceptable. Again, haven't thoroughly analyzed Kelo today (!) May do so later.
roody
(10,849 posts)candidate.
Largest city in the U.S. with a Green mayor.
elleng
(130,895 posts)'all types of property, not just land and buildings, are subject to eminent domain if the government can show it is needed to promote the public good, in this case fighting blight and keeping communities intact. Railroad stocks, private bus companies, sports teams and even some mortgages have been subject to eminent domain.'
Eminent domain is the right of a government or its agent to expropriate private property for public use, with payment of compensation.
I LOVE this argument!
sabrina 1
(62,325 posts)of the people.
I remember reading something like this being proposed to stop foreclosures, since the Government refused to put a moratorium on them. Not sure if this is the same plan, but it's brilliant.
Hopefully it will spread to other cities.
truebluegreen
(9,033 posts)too bad it is only the local govt...but maybe it will start a trend.
Segami
(14,923 posts)Duer 157099
(17,742 posts)If so, then one could argue that it is in the public's interest to seize some percent of the wealth of the nation's ultra-billionaires
badtoworse
(5,957 posts)Under Eminent Domain, you don't get to just take it. You have to compensate the owner of the property you are taking. Thge fair value of money seems like it should be pretty easy to calculate.
Duer 157099
(17,742 posts)Like that million-dollar coin or something.
Fair compensation. Let's see, some people get "compensated" for their labor at $7 an hour, some at $700 an hour, some even at $7,000 an hour. I'm sure it could be worked out.
badtoworse
(5,957 posts)Say you seized 20% of a billionaires wealth, i.e. $200 million.. What would fair compensation be? IOW, what is the fair market value of $200 million?
Duer 157099
(17,742 posts)Perhaps an acre of land on Mars?
Heywood J
(2,515 posts)NYC Liberal
(20,136 posts)If that's what you want to do then create a special tax and appropriate all revenue from that specific tax to whatever.
HiPointDem
(20,729 posts)let the properties sit & rot.
what's the point in taxing something when those taxed can get away with not paying?
arthritisR_US
(7,288 posts)badtoworse
(5,957 posts)ceonupe
(597 posts)is that the city in this test run is buying them for full loan value.
they know they cant get away with buying to for less than loaned value.
they tried earlier to go with a plan that forced compensation at only fair market value
this article is bullcrap.
basically the city is paying 425k for a property worth 125k now.
a better way might be a voluntary program in which the bank does an orderly transfer it lower price over to the city/government/nonprofit. From there the city/gov/nonprofit can finance a loan to the current owners based on the reduced price.
UtahLib
(3,179 posts)WillyT
(72,631 posts)Spitfire of ATJ
(32,723 posts)HiPointDem
(20,729 posts)Mnemosyne
(21,363 posts)Scurrilous
(38,687 posts)dipsydoodle
(42,239 posts)annm4peace
(6,119 posts)Maybe our Dems and DFL mayors could learn something from her.
Uncle Joe
(58,360 posts)Thanks for the thread, Segami.
malthaussen
(17,194 posts)... they'll really shake things up.
-- Mal