San Bernadino found the solution to home owner bankruptcy – they are going to bankrupt mortgage investors or at least turn them off to investing.
The county is suffering from too many homes going into foreclosure or under water. Officials have come up with a novel way of dealing with the problem and plan to study it. They are serious.
By abusing Eminent Domain, they will condemn and seize mortgages of people who are making their payments on homes that are under water [valued at less than the mortgage]; these are the very people that lenders want to keep. The government officials will use Mortgage Resolution Partners to find private investors who will pay “fair market value” to the owners of the original mortgages. Fair market value will mean that the original investors will take the hit for the under water price. The Mortgage Resolution Partners will then negotiate lower payments for the home owners.
The officials think it’s fine for the lenders to take the hit because they are all predators. I guess the people who bought the home are so incompetent that they bear no responsibility for taking the loan out and the government officials bear no responsibility for the failed economy.
The lenders are very concerned about the loss of their investment. They gave out loans to conscious adults and they should get their money back.
The administration wonders why banks and investors are sitting on money. Why would anyone invest? This is another form of redistribution and it is not how America is used to doing business.
Read about it at California Crazy