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Topic: A plan?
Message: Posted by: landmark (Jul 21, 2012 09:18AM)
A proposal going around to help out homeowners in Califronia underwater:

[quote]

Desperate for a way out of a housing collapse that has crippled the region, officials in San Bernardino County are exploring a drastic option using eminent domain to buy up mortgages for homes that are underwater.

Then, the idea goes, the county could cut the mortgages to the current value of the homes and resell the mortgages to a private investment firm, which would allow homeowners to lower their monthly payments and hang onto their property.

[/quote]
http://www.rollingstone.com/politics/blogs/taibblog/from-an-unlikely-source-a-serious-challenge-to-wall-street-20120720

Is this feasible, or is this just another money-making scam? Lobo, I believe you have expertise in the realm of eminent domain. What do you think?
Message: Posted by: MobilityBundle (Jul 21, 2012 03:15PM)
One thing's for sure: that's a fantastically original plan.

But like any fantastically original plan, it stretches the boundaries a bit. And in this case, boundary stretching means litigation. There are two obvious fronts:

1. I'm not sure about the California Constitution, but typically eminent domain requires that the taken property be for "public use." Historically, that means stuff like improving infrastructure or even making government buildings. This plan is arguably a taking for public use ("We saved the neighborhood!"), but arguably not ("They just turned around and sold the mortgages to a private entity!").

2. "Fair compensation" must be paid for any taken property. For a home with a $300K purchase price, a $250K mortgage balance, and a $150K current assessed value, you can bet the banks will argue -- at least to start -- that the fair compensation is the face value of the mortgage, not the current assessed value of the home.

Curious to hear others' thoughts.
Message: Posted by: MagicSanta (Jul 21, 2012 03:25PM)
Never work. Lawyers would sue over every aspect.

I know oftwo cases in San Jose where eminent domain wat tried. In one case they gave up after years the other to build a highway near the airport took almost 15 years to settle before the highway was built.
Message: Posted by: Dannydoyle (Jul 21, 2012 08:24PM)
What about when they get I see water the next time?