'Eminent Domain for the People' Leaves Wall Street Furious

[Yo_Mama]

97. Yeah well, nobody IS going to be writing mortgages in Richmond CA

http://www.latimes.com/business/la-fi-eminent-domain-lawsuit-20130809,0,6390434.story

The federal housing agency, which regulates Fannie and Freddie, on Thursday made clear it doesn't intend to let this happen. The agency said it would instruct Fannie and Freddie to "limit, restrict or cease business activities" in any jurisdiction using eminent domain to seize mortgages.

The move would be a "huge blow" to the city of Richmond, said Guy Cecala, publisher of Inside Mortgage Finance.

"It is pretty much a death sentence these days in terms of mortgage financing," Cecala said. "It is sort of an atom bomb solution, and the real question is would they pull the trigger on it, or is it just a threat? But it is the kind of thing they could do fairly quickly."

As I pointed out in another reply, no one can afford to write a mortgage in a city that does this, and no one will. The end result will be a fall in property values and a disaster for the homeowners, plus urban blight.

This is truly one of the most insane proposals I have ever come across, and it doesn't do what people think it does - it removes the prospect of homeownership from all but the wealthy. If this is the way mortgages are to work, no one but an idiot will fund them. Instead, they will shift their investments to organizations like Black Rock, which will buy up properties on their own. The end result will be a nation of renters. And then we'll see how high rents will go.