Two Tales of Mortgages

Discussion in 'Politics, Religion, Social Issues' started by Sydde, Jul 7, 2012.

  1. Sydde macrumors 68020


    Aug 17, 2009
    Interesting stories on the "home"-front.

    In the SoCal desert, San Bernadino county is pursuing the use of eminent domain to rescue its cities. The idea is for the county or city to sieze a home that is under water, pay the bank market rate (more or less, probably less) and refinance for the current resident. This to avoid many sections of foreclosed, empty homes turning the area into a ghost-county.

    Eminent Domain article

    Is this abuse of government power, or even theft? Surely it will adversely impact lienholders, but will the architects of the housing crash fiasco be duly punished or at all affected?

    Meanwhile, the unsavoriness of the Iceland situation has led the nation to institute nationwide mortgage forgiveness for everyone while bankers and politicians are to be "tried" for corruption.

    Story in Iceland

    Is all this progress or peril?
  2. Ugg macrumors 68000


    Apr 7, 2003
    The US has always been the quickest to recover from economic downturns in part because everyone shares the burden. This time around, the burden has fallen entirely on the 99% and the 1% has gotten off scot free. Personal bankruptcy isn't an option for most people but many are tied to their homes like the prisoner's ball and chain.

    I think this could be effective if its scope was clearly defined by either a percentage of all homes or a fixed number something has to happen to kick start the economy and I don't believe the burden should solely be on the backs of working class America.
  3. Gelfin macrumors 68020


    Sep 18, 2001
    Denver, CO
    I am not sure I understand how this strategy works. The city seizes the property and pays less than the outstanding lien value to the lien holder. This ought to reduce the amount owed against that lien, but there seems nothing about it to compel the lien holder to forgive the balance of the debt when this happens. So the resident borrower would end up paying roughly what he does now.

    Or am I wrong?
  4. MorphingDragon macrumors 603


    Mar 27, 2009
    The World Inbetween
    That's what I gathered from the article. It's not the most lucid.
  5. Peterkro macrumors 68020


    Aug 17, 2004
    Communard de Londres
    The Iceland story which came from Telesur is bollocks by the way.
  6. Sydde thread starter macrumors 68020


    Aug 17, 2009
    SF Gate version

    I think the general idea is that the city is allowed to seize property at the market rate for public use. SCOTUS ruled in the New London CT case that the city could use eminent domain to transfer property from residents to a business, so the precedent exists. A lot of the property in the country is tied up one way or the other in financing, so cities have to untangle those issues in order to take. The underwater condition has not really been an issue in the past because property had always appreciated.

    The way I see it, a city can condemn property for cause. In this case, the cause would be hazard to the community: high vacancy in a city can erode away the city's vitality and turn it into a ghost town. At that point, the city loses but the lienholders lose as well, being stuck with all-but-worthless deeds. This way, the lender gets something back and the city gets a shot at survival.

    The sfgate article does note, however, that the scope of this initiative is pretty narrow: less than 10% of homes qualify.

    Not bollocks per se, just poorly worded. Not mortgage forgiveness but national refinancing of all notes.
  7. VulchR macrumors 68020


    Jun 8, 2009
    Honestly I'd rather this type of solution be pursued than the bailing out of the corrupt pathological gamblers who are in charge of the banks.
  8. Zombie Acorn macrumors 65816

    Zombie Acorn

    Feb 2, 2009
    Toronto, Ontario
    What they do is just too complicated for you to understand is all..

    At least thats what they said before the bricks came tumbling down. :rolleyes:
  9. iJohnHenry macrumors P6


    Mar 22, 2008
    On tenterhooks

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