'Eminent Domain for the People' Leaves Wall Street Furious

[xchrom]

http://www.commondreams.org/headline/2013/08/07-4


Underwater Homeowners Press Conference in front of Richmond City Hall (Photo: ACCE)


Using the authority of state government to actually help people has Wall Street bankers in a panic, spurring threats of aggressive legal retaliation against the town of Richmond, California simply for trying to help some of its struggling homeowners.

'Eminent domain' has long been a dirty term for housing justice advocates who have seen municipalities invoke public seizure laws to displace residents and communities to make way for highways, shopping malls, and other big dollar projects.

But in Richmond, city officials are using eminent domain to force big banks to stop foreclosing on people's homes in an innovative new strategy known as 'Principle Reduction' aimed at addressing California's burgeoning housing crisis.

Richmond became the first California city last week to move forward on a plan that has been floated by other California municipalities to ask big bank lenders to sell underwater mortgage loans at a discount to the city (if the owner consents), and seize those homes through eminent domain if the banks refuse. The city has committed to refinancing these homes for owners at their current value, not what is owed.

[Sherman A1]

1. K&R

[RKP5637]

2. K&R!!!!!! n/t

[Buns_of_Fire]

3. Good for Richmond. They made the banksters cry.

Now, if we could only "eminent domain" Wall Street. Maybe the EPA could help, seeing as it's become a prime example of toxic waste in this country.

[djean111]

4. This is great!

I sincerely hope a bill forbidding this is not speeding through Congress even as we celebrate.
I have learned to be cautiously happy........

If a property is seized, how does that affect the standing of the mortgage?

[Buns_of_Fire]

5. I believe they're required to pay fair market value to the owner --

which, in these cases, would be the mortgage holder. But I'm not a lawyer, so don't take that as gospel.

[eggplant]

9. No, the mortgage holder is not the owner.

The owner is the owner, who has a private loan with the mortgage holder. They have to pay the owner fair market value, who then has to pay the mortgage holder what they get. But the mortgage company doesn't get to be part of the process. Thus the implied threat to "be nice and refi these people, or we'll just take it and give you what we deem to be fair value, and you can go away."

The bank is always free to renegotiate the terms of the loan in order to avoid the threat. They're just not use to being on the wrong end of the threat, and they are kicking and screaming because it could really happen. If it does, they are screwed, not just in this one town, but everywhere. And they know it.

so, all that money that the people coughed up to bail them out? We'll be taking that back now, thank you very much.

[Buns_of_Fire]

12. I stand corrected. Thank you. nt

[Champion Jack]

6. K n R

[PoliticAverse]

7. Why would the localities seizing the properties by eminent domain (for which they must pay the owner

'just compensation') eliminate any debt owed to the bank by the homeowner for the mortgage ?

[PoliticAverse]

8. Pimco, BlackRock Seek to Bar California Mortgage Seizures

Pacific Investment Management Co. and BlackRock Inc. (BLK) are among bond investors seeking a court order blocking Richmond, California, and Mortgage Resolution Partners LLC from seizing mortgages through eminent domain, saying the initiative would hurt savers and retirees.

The city’s plan is unconstitutional, according to a complaint filed yesterday by mortgage-bond trustees in federal court in San Francisco. The trustees, Wells Fargo & Co. (WFC) and Deutsche Bank AG, were directed to take the action by investors in the debt that also include Jeffrey Gundlach’s DoubleLine Capital LP, said John Ertman, a partner at Ropes & Gray LLP.

Read the rest: http://www.bloomberg.com/news/2013-08-07/bondholders-sue-california-city-to-block-mortgage-seizures-1-.html

[JayhawkSD]

10. In our rush to sympathize with people who are "underwater" on their homes...

...that is people who owe more money on their home than the home is worth, we overlook four points:

1. Unjust enrichment of the seller. If that home is worth less than it was sold for, we do not set things right by merely making the excess money disappear. The seller is walking away with money that is not rightfully his. We should go get that money back from him.

In many cases the money was given to the person who owns the home, given in the form of a “cash out” refinance. The owner now wants that loan, which was money given to him and has been spent by him for other things, to be written off. That is “unjust enrichment” on a grand scale. No one ever seems to ask how the mortgage got so high, but no loan which was refinanced should ever be written down.

2. Unjust taking from the lender. Much uproar is made about the “improper paperwork” used in forclosures, but the fact remains that the mortgage owed, regardless of the actual value of the home, represents actual cash money that the lender handed to someone. Simply saying that the money is no longer owed is "unjust taking" from the lender, who lent it with the expectation that it would be repaid.

You may not like the banks and may want to punish them, but there are laws, and simply taking money away from a lender because the value of the property securing the loan decreased is not justice.

3. Quid pro quo. If the lender is going to have to bear the loss of falling values, why should he not reap the reward of rising values? No one ever suggests that. When those homes originally sold for low prices and the value skyrocketed, why didn't those homeowners have to pay the excess value to the mortgage holders?

4. As you sow, so shall you reap. No one held a gun to the heads of these homeowners and made them buy such expensive homes. No one made them take out mortgages they could not afford. Yes, they were lied to, and in some cases were victimized, but seeking advice from a person who stands to gain by offering you that advice is not a good decision. At some point people have to take responsibility for their own decisions before they make those decisions, rather than going to the point of sale and letting the seller make the decision for them. If we keep getting bailed out of making bad decisions, we never learn.

We are all in agreement that the government should not bail out businesses who "made bad decisions" because if we do then they will keep right on making bad decisions. Well, if the government keeps on bailing out individuals who make bad decisions, will not individuals keep on making bad decisions?

[apnu]

11. To your last point

No, no one held a gun to their head. What they did was sell these low-income buyers a bill of goods they knew outright was going to burn the buyer down. It was snake-oil salesmanship at its most refined and institutionalized. So no, they weren't threatened or otherwise obligated to buy the properties with ARMs, they were connived and lied to get into those homes. We have a phrase for it, "predatory lending"

Claiming the home buyer is too stupid to know, is blaming the victim. Its like saying a woman wearing a mini-skirt "was asking for it"

[xchrom]

15. Long winded blaming the victim. Nt

[Egalitarian Thug]

19. Feh, it's what they got.

Wanna bet this one is in the business?

[xchrom]

21. it's just weird that after all this time they still drag that ugly bit of business around.

it wasn't true in the immediate after math of the crash and it's still not true.

yet they still drag it around and demand everyone look at it.

[Egalitarian Thug]

22. I think lack of imagination is a prerequisite for this authoritarian mindset.

If egalitarians were defending this or some similar shenanigans, we could come up with and endless variation of justifications, but these people just don't have it in them. They get their script and they stick with it, and that goes for their lives as well.

Can you picture a mortgage broker or an investment banker saying, "I dream of things that never were; and I say ‘Why not?'"

[ohheckyeah]

17. What you overlook is

that during the housing bubble the whole industry was guilty of hyping houses at unsustainable prices. Realtors knew, appraisers knew, and mortgage lenders knew. Many buyers didn't know.

LOL at your number three. That's just ridiculous. The interest on homes is such that the mortgage lender already gets double the amount of the loan.

Your use of "we" is presumptuous. I doubt "we" would agree on much.

[socialist_n_TN]

23. Fuck the banks. They need to be expropriated and nationalized under worker's control....

All that money that bailed them out could be put back into the economy for actual people, not "corporate persons".

[librechik]

13. wait--is there a liberal ALEC? cuz if so, I would send it money.We need more thinking like this.

[PoliticAverse]

16. There's one called 'ALICE'...

http://www.alicelaw.org/about-alice

[librechik]

18. thanks for the link--recommend to everybody!

[Starry Messenger]

14. k&r