Comments on: Why using eminent domain for liens is a bad idea http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: MrRFox http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40608 Sun, 24 Jun 2012 16:07:34 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40608 @Beebe – Just because it’s “out-of-the-box” doesn’t mean it’s not a mistake. IMO that MRP thing is. The intention may be good and the need acute, but half-thought-out ideas don’t solve IRL problems. And about the intention –

IMO getting mixed-up in anything that includes Phil Angelides as a sponsor is dumber than lending $200k for a music school romp. Both got “fatal outcome” written all over them.

Needs more thought.

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By: Beebe http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40606 Sun, 24 Jun 2012 15:28:53 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40606 Finally a mortgage resolution! It is great to read that some of our fellow citizens have embarked to think outside of the box and our comfort zone. The mention of eminent domain makes everyone squirm, but think it through. Is anyone really in their comfort zone after the banks received trillions of dollars of bailout money with the purpose of lending and reinvigorating our economy in 2008, but never giving back to the taxpayers who bailed them out, to only pay themselves nice bonuses? That is definitely not in my comfort zone. I condemn the banks for their greedy actions at the expense of this nation’s poor and middle class.
The middle and lower class citizens of this country who were economically kicked back 20 years by the 2008 mortgage crisis are the people, parents and their children who deserve consideration now. Not one of them was responsible for the economic crisis, but have paid the price sorely. We are the banking and “investment” industry’s “collateral damage”.
Now a few forward thinking and civilly minded people have thought out of the box and our comfort zone to bring a real solution to the mortgage and economic crisis facing this country. The banks have already taken their losses on real estate (a requirement under GAAP), but they have resisted all attempts to correct their bad bets in the housing market. If this nation is a community, then the politicians in our local communities need to get involved to provide the solution to their neighbors, families and friends. Communities thrive where families have homes. Families maintain them and the entire community benefits. Who wants to see a family put out on the street and the home sitting vacant and dead? Foreclosed homes negatively impact the value of everyone’s home.
Washington is incapable of navigating the housing crisis given the conflicts that bank lobbyists present and the special interests that buy their votes. I don’t like the words “eminent domain and condemnation” but I really dread the words “foreclosure, eviction and homeless”. Mortgage Resolution Partners has thankfully thought outside our comfort zone in order to give comfort to families and the communities in which they live, work, send their children to school to learn and where they attend houses of worship to pray. If we don’t solve the mortgage crisis, our economy will never recover.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40578 Sat, 23 Jun 2012 12:58:33 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40578 I bet you could do it too, MrRFox, but most underwater homeowners don’t have cash for a new 20% downpayment. As usual, the system favors the wealthy and those with liquidity.

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By: MrRFox http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40569 Sat, 23 Jun 2012 03:21:12 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40569 @GregH, @TFF – we’re talking non-recourse states only here, so – yes, it is that easy; don’t even have to make the trek to the bank – just stop paying. The old, underwater house is never going to put money in your pocket, so ‘selling’ it shouldn’t be a material precondition to anything.

May have to be a little clever/creative/cunning to out-maneuver the banks on the purchase of the new property. Bet I could do it if I had to. If you can’t manage that – rent.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40564 Sat, 23 Jun 2012 01:13:57 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40564 Banks have grown leery of this possibility. If they suspect it is in play, they don’t give you the new mortgage. This can be a real problem for people who hope to keep the old property as a rental and buy a new one.

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By: GregHao http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40557 Fri, 22 Jun 2012 21:15:36 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40557 @MrRFox – is it really that simple, to just hand the keys in? Also, unless you’re making a ton of money, how will you get approved for mortgage on the house across the street even before you hand in the keys?

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By: MrRFox http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40550 Fri, 22 Jun 2012 18:17:26 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40550 @TFF – Good observation. Here’s the solution – I buy the new house before I pay a visit to my old bank, with the keys.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40545 Fri, 22 Jun 2012 17:14:01 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40545 @MrRFox, if you default on your current mortgage, you’ll have trouble getting financing on a new purchase. Might take 7-10 years to restore your credit after that?

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By: realist50 http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40542 Fri, 22 Jun 2012 16:14:52 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40542 @Felix – thank you for clarifying. That explanation makes perfect sense. Regarding your 2nd point about home value, it sounds like a classic case where transaction costs (here foreclosure costs) are more or less the same whether the underlying asset (here a home) is worth $10,000 or several hundred thousand dollars, so at a low value the transaction costs almost equal the cost of the asset.

I think that the $150k case – albeit with hefty tax liens in some cases – is closer to what San Bernadino will face if it tries to buy up a large number of mortgage liens in the county. $10k homes, at least in any significant numbers, sounds more like rough parts of Detroit.

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By: MrRFox http://blogs.reuters.com/felix-salmon/2012/06/21/why-using-eminent-domain-for-liens-is-a-bad-idea/comment-page-1/#comment-40541 Fri, 22 Jun 2012 16:12:07 +0000 http://blogs.reuters.com/felix-salmon/?p=15340#comment-40541 @Traian – It’s a shared appreciation deal on the underwater portion of debt, as you describe it. The pooling feature is new, but it doesn’t change the concept from what was touched-on in earlier threads on this. If the appreciation never happens, who eats the loss? What if the owner wants to sell and move – can he? How does the bank carry the item on its books – do they book the loss immediately (would have to under GAAP)?

If I’m the owner, why don’t I just hand the keys to the bank, walk across the street, buy the identical house in foreclosure at FMV (and with attractive financing) and keep 100% of any future appreciation for myself?

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