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Real Estate News Today 7-6-2012

06 Jul

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I posted an article in my Today’s News on June 14 about a California mortgage company that was lobbying for municipalities to use of the powers of “Eminent Domain” to grab mortgage notes from investors.  The idea is that then the muni can “write down” the principal to make sure the homeowner stays in the property and/or it doens’t become blighted.  The idea has gained some traction in California among a couple of cities, but not everyone is in favor of the concept (see first article below).

Upside? The city or town could have more control over the property, more control over how it is maintained by forcing the owner’s hand, and even could foreclose on the property when they deem it desirable for other purposes if the owner is behind on payments.

Downside? The city or town could have more control over the property, more control over how it is maintained by forcing the owner’s hand, and even could foreclose on the property when they deem it desirable for other purposes if the owner is behind on payments. 

What if it were your house? Feedback is always welcome at acarollo@stewart.com

Cities in California Consider Using Eminent Domain To Seize Mortgages
New York Observer | July 5, 2012
Officials in San Bernardino County cities Ontario and Fontana, citing blighted neighborhoods and communities, propose using the state’s eminent domain power—most commonly used to seize land from homeowners and re-allot it for public use—to acquire underwater mortgages (loans that exceed current property value) and decrease the loan principle to match the current property value. (See also “Seizing mortgages via eminent domain profits few” from HousingWire. ~Anthony)

New Agency Plans to Make Over Mortgage Market
The New York Times | July 5, 2012
The Consumer Financial Protection Bureau, seeking to improve fairness and clarity for borrowers, is moving to establish its legitimacy and quiet its critics.

U.S. Hiring Seen Stuck in Low Gear in June
Reuters | July 5, 2012
U.S. employers likely quickened the pace of hiring last month but not enough to allay worries that Europe’s debt crisis is shifting the economy into low gear.

Some U.S. Metros ‘in the Clear’ of Housing Crisis
MSNBC | July 3, 2012
Nearly 30 cities have been designated “in the clear” of the housing downtown, according to a report today by Trulia, although real estate experts in some of those markets reacted to the apparently good news with conservative-sounding forecasts for their areas – or with downright skepticism.

To Play the Game To Win You Need to Know the Rules-
Why the Economic Recovery Continues to Stumble
Ted C Jones Blog | July 6, 2012
Last week I spoke in Las Vegas and thought of the myriad of games that people can play and hopefully win in the casinos.  Each game has a set of rules that the player needs to have full working knowledge of to optimize their potential outcome.  Without this full understanding of the rules, most people simply avoid those games.  

States use mortgage settlement funds to fill budget gaps
HousingWire | July 5, 2012
It’s a controversy that has been brewing in several states: Some state leaders are using funds from the $25 billion mortgage servicing settlement to fill gaps in their budgets, Bloomberg reported. (This seems similar to the tobacco settlement a few years back where very little of the money recieved by states actually went to helping folks that were impacted or harmed by the tobacco industry. Similarly, some states are using the mortgage settlement money to get them over a budget hump rather than helping homeowners stay in homes or helping those who were actually harmed. ~Anthony)  

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Stewart Title of Spokane
606 W. 3rd Ave.
Spokane, WA 99201
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acarollo@stewart.com

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2 responses to “Real Estate News Today 7-6-2012

  1. Anthony Carollo

    July 9, 2012 at 10:33 am

    Regarding the “Eminent Domain” discussion, here are a few of the comments I received from readers:

    “Anthony
    This is wrong on so many levels.

    1. Government is already too large and intrusive in private enterprise.
    2. This act would reinforce the “victim” mentality of a large portion of our society. What ever happened to “ I made this debt. It is my responsibility to pay it”?
    3. How will these cities pay for this? The legal fees and other processing will not be cheap.
    4. What happens if the homeowner doesn’t agree? Instead of keeping them in their home, the cities would be forcing them out.
    5. Finally, this is NOT a role for government at any level. I am even opposed to Fannie and Freddie remaining as government entities.”

    “Hi Anthony:
    I watched a story about this California concept of dealing with foreclosures on TV recently and I thought, “good for them, they are thinking outside the box and trying to deal with a potential time bomb’ to limit the damage. I guess the proverbial ‘devil is in the details’ surely applies to this as well. Should be interesting.”

    “Anthony, this is a very slippery slope – why should the government be able to use this power to solve an economic problem. How does a lender underwrite this risk?

    The solution should be to clean up the blight:

    A. Purchase the property and put it into a public use – park – etc.; or
    B. Provide significant incentives for the private sector to rebuild and cure the blight (form of urban renewal – aka Kendall Yards)”

    “Anthony: My personal opinion is to be leery of broadening the scope of eminent domain. Unfortunately, “public good” is a very subjective rationale for seizing privately owned real property. Even if the intentions are good, the doctrine may be too easily misapplied. Interesting post- Thanks for sharing!”

    Thanks so much to all who responded!
    Anthony

     

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