djamal-soft
الأحد، 1 يونيو 2014
A big portion of the country's home loans are underwater, which means more is owed on the loan than the house is really worth. However, a California company has a novel fix in mind, which requires local government authorities using the power of eminent domain to force a refinance.
Controversial power of government
Among the powers of the federal, state and local government authorities in the U.S., and certainly one of the single most debatable, is the power of "eminent domain." Eminent domain is the right of a government to seize land from its owner for the "public good," as not doing this would be considered detrimental to public welfare. Home or land proprietors whose property is thus seized must be compensated for the loss of their property.
There are a lot of difficulties associated with eminent domain seizures. Even though they are for the common good, such as for highway extensions, people are typically not given what the land is worth from the government. For example, one landowner in the city of Hoboken was given $2.3 million for an acre of land worth $10 million to make a park, according to New Jersey.com. Lots of people think this is the worst type of abuse of power.
Novel use
California-based real estate business Mortgage Resolution Partners, according to Reuters, has a novel idea for using eminent domain. When eminent domain is used, the home is recognized as "condemned." However, MRP wants to use it to condemn the mortgage loans.
Millions of homeowners are underwater. CoreLogic estimates 22 percent of the nation's mortgages are underwater; Zillow, according to CNN, estimates 31.4 percent of the nation's houses are in negative equity. MRP's concept, according to Reuters, is to get private investors to invest the funds needed to seize the loan and pay the bank that owns seized properties a fair industry price, which would be lower than the purchase price, for the deeds to said properties. The loans would then be restructured by MRP for a fee and sold to new investors, lowering payments for the mortgage borrower.
Government authorities in California would simply need to turn in the eminent domain paperwork. No taxpayer cash would be used for it since investors would fund it.
Still in the proposal stage
MRP has taken the proposal to a ton of local government authorities in California already, and some people liked the idea a lot since California could really use a pick-me-up. The Hesperia Star explained that even though 50 percent of homeowners in the city are underwater on their mortgages, the city council already turned the bill down.
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 many people are paying the payments diligently anyway, according to CNN.
Controversial power of government
Among the powers of the federal, state and local government authorities in the U.S., and certainly one of the single most debatable, is the power of "eminent domain." Eminent domain is the right of a government to seize land from its owner for the "public good," as not doing this would be considered detrimental to public welfare. Home or land proprietors whose property is thus seized must be compensated for the loss of their property.
There are a lot of difficulties associated with eminent domain seizures. Even though they are for the common good, such as for highway extensions, people are typically not given what the land is worth from the government. For example, one landowner in the city of Hoboken was given $2.3 million for an acre of land worth $10 million to make a park, according to New Jersey.com. Lots of people think this is the worst type of abuse of power.
Novel use
California-based real estate business Mortgage Resolution Partners, according to Reuters, has a novel idea for using eminent domain. When eminent domain is used, the home is recognized as "condemned." However, MRP wants to use it to condemn the mortgage loans.
Millions of homeowners are underwater. CoreLogic estimates 22 percent of the nation's mortgages are underwater; Zillow, according to CNN, estimates 31.4 percent of the nation's houses are in negative equity. MRP's concept, according to Reuters, is to get private investors to invest the funds needed to seize the loan and pay the bank that owns seized properties a fair industry price, which would be lower than the purchase price, for the deeds to said properties. The loans would then be restructured by MRP for a fee and sold to new investors, lowering payments for the mortgage borrower.
Government authorities in California would simply need to turn in the eminent domain paperwork. No taxpayer cash would be used for it since investors would fund it.
Still in the proposal stage
MRP has taken the proposal to a ton of local government authorities in California already, and some people liked the idea a lot since California could really use a pick-me-up. The Hesperia Star explained that even though 50 percent of homeowners in the city are underwater on their mortgages, the city council already turned the bill down.
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 many people are paying the payments diligently anyway, according to CNN.
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