As we've seen elsewhere, servicers are often very, very slow to foreclose & sell empty delinquent properties, which can be extensively vandalized, blighting communities. Value can deteriorate to zero before communities are forced to demolish what have become nuisances. That's because servicers can line their pockets with fees in the process, double-fucking investors.
Locked interest rates and property value depreciation, that's how.
Weren't there a lot of people throwing a fit a few years back because the mortgage companies didn't take enough time to cross all the T's and dot all the I's? Something about robosigning?
And now you are complaining they are taking too long?
Richmond is North Oakland. Not too much difference in the two cities...and they're only separated by a few miles at the most...BOTH cities suffer from the same infestation of hood rats...gangs, drugs, hooliganism, high crime, etc.
The best solution for both cities is to turn the bulldozers loose and flatten them...then rebuild.
This is slightly misleading if I'm reading the article correctly. They are planning on seizing the mortgages themselves from the MBS holders and cutting the price for the homes' current owners. It's a way to get some equity in the homes for the homeowners while forcing the losses upon the investors. Right or wrong, that looks to be what they are trying to do. A better idea might just be to help those homeowners strategically default so they can begin to start over.
That's how I read it too. I'm not aware that eminent domain can be used to seize financial instruments. I question if this is even possible.
Fern
For the record, these people in "Kalifornia" are only following the ideas of the Federal Reserve Bank of New York(Big Daddy Fed had a report on this issue not to long ago) and an ambitious mortgage company Mortgage Resolution Partners.
The idea is simple and kind of novel. The govt uses its eminent domain power and pays fair market value for the underwater mortgages, to lower the amount owed. The problem comes when the mortgages are all going to be refinanced by Mortgage Resolution Partners. Its basically taking from X investors to give to Y investors, while tax payers foot the bill for fair market value. Has nothing to do with the underwater home owners other than they might get some benefit(how much is TBD).
There are 5 cities already planning on doing this(including Richmond). North Las Vegas could be the sixth(and first outside of CA) later this month. The first attempt of actually using eminent domain(instead of merely talking/planning) is going to happen in ~2 months in El Monte, CA.
My bet is it all gets bogged down by litigation and all the cities that signed on just stop trying.
Around 80% of all mortgages are held by some kind of Government Entity, this plan will NOT work for these as they cannot use Eminent Domain against, the county, state, or federal government.
Actually the biggest problem is 80% of all Mortgages is held by the Government, which means they can't actually use this for those mortgages.
Actually the biggest problem is 80% of all Mortgages is held by the Government, which means they can't actually use this for those mortgages.
Saying the same thing twice doesn't make it true.
You have links, right?
This is being applied to private mortgages. There are still trillions in non-agency RMBS out there.
As far as this idea, I have a few problems with it.
1. How far can this be applied? What about an underwater car, boat, plane, building? Should the government be seizing private assets to do what they want?
2. The investors get no upside while the homeowner takes it all.
This is being applied to private mortgages. There are still trillions in non-agency RMBS out there.
As far as this idea, I have a few problems with it.
1. How far can this be applied? What about an underwater car, boat, plane, building? Should the government be seizing private assets to do what they want?
2. The investors get no upside while the homeowner takes it all.
I think you are referring to the insurance that Fannie Mae and Freddie Mac provide to most mortgages. And they don't even insure that many. The government most definitely does NOT hold 80% of mortgages.Around 80% of all mortgages are held by some kind of Government Entity, this plan will NOT work for these as they cannot use Eminent Domain against, the county, state, or federal government.
I think you are referring to the insurance that Fannie Mae and Freddie Mac provide to most mortgages. And they don't even insure that many. The government most definitely does NOT hold 80% of mortgages.
This is being applied to private mortgages. There are still trillions in non-agency RMBS out there.
As far as this idea, I have a few problems with it.
1. How far can this be applied? What about an underwater car, boat, plane, building? Should the government be seizing private assets to do what they want?
2. The investors get no upside while the homeowner takes it all.
After Kelo v. New London, it's pretty apparent that government cannot be limited and can take whatever it wants as long as it benefits. Government DOES have to pay "fair market value" - but then, government also gets to set fair market value.This is being applied to private mortgages. There are still trillions in non-agency RMBS out there.
As far as this idea, I have a few problems with it.
1. How far can this be applied? What about an underwater car, boat, plane, building? Should the government be seizing private assets to do what they want?
2. The investors get no upside while the homeowner takes it all.
Richmond, CA -
http://blog.sfgate.com/ontheblock/2013/06/16/6285/
City is seizing legally owned private property to redistribute it to someone else.
This is exactly what happened during the communist revolution in Russia.
What a joke.
Welcome to the People's Republic of Kalifornia.
Richmond, CA -
http://blog.sfgate.com/ontheblock/2013/06/16/6285/
City is seizing legally owned private property to redistribute it to someone else.
This is exactly what happened during the communist revolution in Russia.
What a joke.
Welcome to the People's Republic of Kalifornia.
Steven M. Gluckstern
In addition to serving as Mortgage Resolution Partner's Chairman, Gluckstern currently serves as Chairman of Ivivi Health Sciences LLC, a privately financed San Francisco based medical technology firm.
Previously, Gluckstern was a general partner of Azimuth Trust Company LLC, an alternative asset management firm that Gluckstern co-founded in 2002 and served as its CEO until 2005.
From 1993 to 1998 and from 2001 to 2002, Gluckstern held a range of executive and financial positions within the Swiss-based Zurich Financial Services Group. In 1998, he co-founded Capital Z Partners. This alternative asset/private equity management firm managed over $4 billion in two global funds. In 1988, Gluckstern also co-founded Centre Reinsurance, the first specialty financial reinsurer, with $250 million of venture capital, making it one of the largest start-ups of its kind.
Prior to Centre Reinsurance, Gluckstern worked for investor Warren Buffett and served as General Manager of reinsurance operations of the Berkshire Hathaway Insurance Group, President of Columbia Insurance Company, and Senior Vice President of National Indemnity Company. Earlier he was Chief Financial Officer of Healthco Inc., the then largest distributor of dental products in the world. He started working in the business world as an investment banker at Lehman Brothers.
Prior to his time in business, Gluckstern spent seven years as a teacher and school administrator.
Gluckstern holds a BA in Psychology and Natural Sciences from Amherst College, an Ed.D in Administration and Organizational Change from The University of Massachusetts at Amherst, and an MBA from Stanford University Graduate School of Business where he was an Arjay Miller Scholar.
Hey hey hey! there's quite a few towns in between those two!
http://theweek.com/article/index/204563/fannie-and-freddie-by-the-numbers
This is just for FNMA and FHLMC which together hold 53% of mortgages, it doesn't include GNMA which it self is another 20 to 30%.
The amount in mortgages either owned or guaranteed by Fannie and Freddie equivalent to 53 percent of the entire U.S. mortgage market
Has nothing to do with the interest rate, has everything to do with buying into a bloated housing market.
People were buying homes as if they were a commodity, rather than buying a home to raise a family.
Just because someone tells you something is worth a certain amount of money does not make it so. So what if the people are underwater, deal with it. They were stupid enough to fall for the scam, too bad for them. Those of us who bought something we can afford should not be punished due to stupid people.
As for the OP, it is the government, oh well. That is why california is going broke.