San Bernardino: an underwater homeowner’s white knight?
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Do you think San Bernardino County’s loan cramdown-by-seizure plan for underwater homeowners will help the real estate market?
- No (72%, 118 Votes)
- Yes (28%, 46 Votes)
Total Voters: 164
A case for one county’s use of eminent domain to help underwater owners, despite anti-cramdown smokescreens launched by the opposition.
Repurposing an old sword
The San Bernardino County Board of Supervisors voted unanimously to approve a first-ever plan to seize underwater mortgages (yes, mortgages) through court ordered eminent domain. Congress could not instigate similar curative actions, and now San Bernardino County is stepping up to the plate in its own bold and unorthodox way. Cue the Homeownership Protection Program!
Related article:
San Bernardino County Board of Supervisors: Joint Exercise of Powers Agreement: Homeownership Protection Program
The county is desperate to keep residents in their homes and increase homeowners’ disposable income. If implemented, this proposal to stimulate the local economy by reducing the debt burden carried by its underwater residents is threefold:
- “condemn” home loans on negative equity properties;
- take “possession” of these loans; and
- renegotiate the loans with homeowners to principal amounts at or below the home’s fair market value (FMV).
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ft Editorial Staff
is the writing staff comprised of legal editor Fred Crane, In-House Broker Consultant Fernando Nunez and writer-editors Connor P. Wallmark, Giang Hoang-Burdette, Jeffery Marino, Carrie B. Reyes, Sarah Cantino, Matthew Taylor and Matthew Shade.
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Of course this is a great idea. The concept of impacting the contractual rights of mortgage lenders in great financial stress. See Home Building & Loan Assoc. v. Blaisdell et ux. 54 S.Ct. 231 (1934).
It would seem to me that if the County of San Bernardino declares a Financial Emergency, their powers will trump the contract protection clause. This is a financial emergency just as it was in 1934 during the great depression…
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I don’t care how they spin this process…it is a train wreck in progress.
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Tax payers foot the bill yet again. Ca will eventually foot the bill for SB Co. Which means all Californians will foot the bill for homes no one wants. G Sachs should be to buy all th bad mortgages back. Oh wait the feds saud it did no wrong doing. What a JOKE!!!!!
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Will there be a credit card balance cram-down protection plan; school loan human capitol eminent domain joint exercise of powers to free up disposable income?
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If the borrowers are not behind in payments why do they need to be rescued
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I’m sorry, using eminent domaine to bale out underwater mortgages is about as far away from the original intent of the law as you can get! Government actions got us into this mess along with the greed of people wanting a house without any down payment. Then as the value went up artificially with the speculative market, they further borrowed aginst the house to buy a boat and a new wide screen – come on, government is not the answer to all our ills!!!
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Question: How does San Bernardino define “private lender”? How many of the “targeted loans” are owned by “private lenders” versus “non-private lenders”?
Question: If a “private lender” owns a loan insured by FHA or a loan that is otherwise government guaranteed (such as GNMA, FNMA or FMAC), does the owner of the loan receive FMV or does he get reimbursed for his loss(the difference between his cost and FMV) from FHA or the government guarantor? If so, is this just a way to get the taxpayers to pay the cost of writing down these loans?
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Reality check: When these fools seize just the loan, they’ll find that the fair market value of a promissory for which the borrower is current in his payments, is still the face value of the note. That’s especially true if the note has nothing to do with the lowered value of the of the real estate, such as when the note is the only property seized. And it’s also especially true because under their scheme, the borrower in question will be someone who did keep current in his payments anyway, regardless of the lowered underlying value of the real estate!
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This is so far out in la-la-land, it is amazing that you keep pushing this idea over and over. What is your agenda?
This “eminent domain” law cannot stand up to any court in the US, maybe Cuba and Venezuela?
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John:
San Bernardino County’s plan to seize underwater mortgages through eminent domain exclusively targets “non-agency securities.” These are mortgages which are not backed by Fannie Mae or Freddie Mac, but held by private investors. This narrows the amount of potential program participants to approximately 10% of the county’s underwater homeowners, a number which will be further reduced after each applicant has been measured against other eligibility criteria.
Some of these criteria are yet to be determined as the county’s plan is still in the early stages of development.
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there is approximately 3.5 million underwater homeowners where mortgages are not backed by freddie or fannie. counties all over the the united states should aggressively follow suit with san bernardino. something needs to be done aggressively and it should be now. if we wait for the federal government to take action
nothing will be accomplished.
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Typical leftist-think…”how can something that feels so right [and humanitarian] be so wrong”. And, once again, the same end (feeling good and and a host of related irrational sentiments) always justifies the means. This is in large measure contributory to our current financial crisis. Sound economics and justice go hand in hand. This is neither. This is completely outside the boundaries of that for which governments, by we the people, were instituted, namely to protect our hard earned private interests. By the way, surely you’ve visited San Bernardino lately! This is a human, not an economic problem directly. How ’bout this innovative alternative to holding private interest, and the 47% of us who actually do pay taxes, accountable for these “investments” (i.e. code word for putting your capital and mine at great risk to which they are always immune) on our behalf. Would that we hold these “homeowners” accountable to the same standards of stewardship seemingly inherent in us, the “more fortunate and privileged class”. If ya can’t afford to pay your principal obligations in lieu of all the benefits in the multitude forms of government welfare and tax subsidies (particularly for declaring untold “dependents” on your 1040), then perhaps the new F-150, the Tundra, SUV, electronic toys, and some of those unreasonable home improvements outta go! Having lived in San Bernardino, knowing what it used to look like and why, and well acquainted with most of the demographics of San Diego county (given my current employment in the EMS field), I can speak first hand concerning the real tragedy of contributing this way to the creation of a dependent class. It is downright repulsive and does violence to genuine human rights and freedoms. This program is another example of lower-order thinking, the inability or reluctance to either conceive or consider the unintended consequences of violating the natural order of things.
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The result may or may not be good for the individual homeowner, or the county, but I don’t like the idea of them taking anything against the will of the owner. This a vast expansion of the power of eminent domain, and bad, bad, bad news. Is there nothing to government won’t take?
It’s a trap! Don’t go in there!
Governments seizing things, even from another government, sounds a lot like Tyranny, communism or some other ism that I don’t like.
If the investor agrees, that’s a different story…And if they want some of my 2nd TDs please contact me…
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“Much ado about nothing”. This ACTIVIST Court w/its CONservative majority will strike it down quicker than Mitt can FLIP his position or Ryan can start lyin’. Besides Ayan Rand is turning over in her grave at the very idea! Imagine what FOX news woulda done with the story if a Democrat had payed Homage to and claimed her, a RUSSIAN ATHEIST, as the INSPIRATION to his Philosophy of Life!?!
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