A big portion of the country's home loans are underwater, meaning more is owed on the loan than the property is really worth. However, a California business has a novel repair in mind, which involves local governments using the power of eminent domain to force a refinance.
Seizing land
"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 generally. During this process, the land owner is compensated by the government. This is one power that federal, state and local governments have access too, and it is very questionable.
Lots of people think that eminent domain is an abuse of power and should not be allowed, although it is generally used to put in highway extensions and other things, according to New Jersey.com. There was one landowner who had 1-acre of land taken with eminent domain by the city of Hoboken. Even though the land was valued at $10 million, they only gave him $2.3 million, and the land was being used to put in a park.
Idea to use it well
California-based real estate company Mortgage Resolution Partners, according to Reuters, has a novel idea for using eminent domain. When eminent domain is used, the home is known as "condemned." However, MRP wants to use it to condemn the mortgage loans.
One concept that MRP brought up would be to get private investors with a lot of cash to purchase the loans from consumers, according to Reuters. Then, the property would be seized from banks meaning less would be paid for the house than it is really worth. Then, MRP would sell the loans to new investors and lower payments to help the mortgage borrower. This would be a good plan considering 22 percent of the mortgages in the country are underwater according to CoreLogic estimates and Zillow estimates that number to be higher at 31.4 percent, according to CNN. These customers might really appreciate the help.
Since investors would fund the entire action, no taxpayer cash would be spent; all any governments in California would be doing is turn in the paperwork for eminent domain actions.
Still in the suggestion stage
Even though the bill has been well-received in some areas, it has already been turned down by the Hesperia city council, according to the Hesperia Star. This is despite the belief that 50 percent of homeowners in the city have underwater home loans. Since California has been hurt a lot by the decreased home values, a number of people in California are really anxious about the plan. MRP has talked to a lot of local governments about it already. Remember, it is just a proposal at this time.
Homeowners are at higher risk for foreclosure when they owe more than a property is worth in a loan, which is called negative equity. The same Zillow survey from before found that 90 percent of underwater homeowners are current on their payments as of right now, which shows a lot of people are paying the payments diligently anyway, according to CNN.
Seizing land
"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 generally. During this process, the land owner is compensated by the government. This is one power that federal, state and local governments have access too, and it is very questionable.
Lots of people think that eminent domain is an abuse of power and should not be allowed, although it is generally used to put in highway extensions and other things, according to New Jersey.com. There was one landowner who had 1-acre of land taken with eminent domain by the city of Hoboken. Even though the land was valued at $10 million, they only gave him $2.3 million, and the land was being used to put in a park.
Idea to use it well
California-based real estate company Mortgage Resolution Partners, according to Reuters, has a novel idea for using eminent domain. When eminent domain is used, the home is known as "condemned." However, MRP wants to use it to condemn the mortgage loans.
One concept that MRP brought up would be to get private investors with a lot of cash to purchase the loans from consumers, according to Reuters. Then, the property would be seized from banks meaning less would be paid for the house than it is really worth. Then, MRP would sell the loans to new investors and lower payments to help the mortgage borrower. This would be a good plan considering 22 percent of the mortgages in the country are underwater according to CoreLogic estimates and Zillow estimates that number to be higher at 31.4 percent, according to CNN. These customers might really appreciate the help.
Since investors would fund the entire action, no taxpayer cash would be spent; all any governments in California would be doing is turn in the paperwork for eminent domain actions.
Still in the suggestion stage
Even though the bill has been well-received in some areas, it has already been turned down by the Hesperia city council, according to the Hesperia Star. This is despite the belief that 50 percent of homeowners in the city have underwater home loans. Since California has been hurt a lot by the decreased home values, a number of people in California are really anxious about the plan. MRP has talked to a lot of local governments about it already. Remember, it is just a proposal at this time.
Homeowners are at higher risk for foreclosure when they owe more than a property is worth in a loan, which is called negative equity. The same Zillow survey from before found that 90 percent of underwater homeowners are current on their payments as of right now, which shows a lot of people are paying the payments diligently anyway, according to CNN.
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