A large portion of the nation's mortgages are underwater, which means more is owed on the loan than the home is worth. However, a California company has a novel repair in mind, which involves local government authorities using the power of eminent domain to force a refinance.
Super debatable concept
"Eminent domain" is a government power allowing the government to seize land for any reason as long as it is for "public good." It would be considered detrimental to public welfare to do otherwise usually. During this process, the land owner is compensated by the government. This is one power that federal, state and local government authorities have access too, and it is very questionable.
Eminent domain seizures are generally for things like highway extensions and so forth. For instance, according to New Jersey.com, the city of Hoboken recently used eminent domain to appropriate a 1-acre parcel of land from a landowner for use as a park, offering the owner $2.3 million despite the land being valued at $10 million. It is highly questionable, as many civil libertarians consider it among the worst abuses of government power.
Try it like this
California-based real estate business Mortgage Resolution Partners, according to Reuters, has a novel idea for using eminent domain. When eminent domain is used, the home is considered "condemned." However, MRP wants to use it to condemn the mortgage loans.
Millions of homeowners are underwater. CoreLogic estimates 22 percent of the country's mortgages are underwater; Zillow, according to CNN, estimates 31.4 percent of the nation's homes are in negative equity. MRP's idea, according to Reuters, is to get private investors to invest the funds needed to seize the loan and pay the bank that owns seized properties a fair market price, which would be lower than the purchase price, for the deeds to said properties. The loans would then be restructured by MRP for a fee and sold to new investors, lowering payments for the mortgage borrower.
The action would be funded by investors, which means the only government involvement in California would be to turn in the eminent domain paperwork. There would be no taxpayer dollars used.
Not the law yet
It is only a proposal at the moment; MRP is pitching the idea to various local governments in California. It has been well received in some circles, as California is one of the worst-affected states by drastically lowered real estate values. However, according to the Hesperia Star, the city council of Hesperia, Calif., has already turned it down, despite 50 percent of Hesperia homeowners being underwater on their mortgages.
Despite the truth that a lot of people are underwater, a ton of them are still paying on their payments, according to CNN. The Zillow survey showed that 90 percent of underwater home owners are still making payments regularly. It is extremely dangerous for a homeowner to own more than the house is worth because they could end up in foreclosure.
Super debatable concept
"Eminent domain" is a government power allowing the government to seize land for any reason as long as it is for "public good." It would be considered detrimental to public welfare to do otherwise usually. During this process, the land owner is compensated by the government. This is one power that federal, state and local government authorities have access too, and it is very questionable.
Eminent domain seizures are generally for things like highway extensions and so forth. For instance, according to New Jersey.com, the city of Hoboken recently used eminent domain to appropriate a 1-acre parcel of land from a landowner for use as a park, offering the owner $2.3 million despite the land being valued at $10 million. It is highly questionable, as many civil libertarians consider it among the worst abuses of government power.
Try it like this
California-based real estate business Mortgage Resolution Partners, according to Reuters, has a novel idea for using eminent domain. When eminent domain is used, the home is considered "condemned." However, MRP wants to use it to condemn the mortgage loans.
Millions of homeowners are underwater. CoreLogic estimates 22 percent of the country's mortgages are underwater; Zillow, according to CNN, estimates 31.4 percent of the nation's homes are in negative equity. MRP's idea, according to Reuters, is to get private investors to invest the funds needed to seize the loan and pay the bank that owns seized properties a fair market price, which would be lower than the purchase price, for the deeds to said properties. The loans would then be restructured by MRP for a fee and sold to new investors, lowering payments for the mortgage borrower.
The action would be funded by investors, which means the only government involvement in California would be to turn in the eminent domain paperwork. There would be no taxpayer dollars used.
Not the law yet
It is only a proposal at the moment; MRP is pitching the idea to various local governments in California. It has been well received in some circles, as California is one of the worst-affected states by drastically lowered real estate values. However, according to the Hesperia Star, the city council of Hesperia, Calif., has already turned it down, despite 50 percent of Hesperia homeowners being underwater on their mortgages.
Despite the truth that a lot of people are underwater, a ton of them are still paying on their payments, according to CNN. The Zillow survey showed that 90 percent of underwater home owners are still making payments regularly. It is extremely dangerous for a homeowner to own more than the house is worth because they could end up in foreclosure.
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