Oct 05 2012
In a radical plan that is terrifying mortgage companies and bankers on Wall Street, cities across the country are trying to invoke the power of eminent domain to stop the tsunami of foreclosures still happening in many cities. With little relief from the Obama Administration which has only helped about a million of the ten million home owners still facing foreclosure, local governments are trying to step in where the federal government has not.
The use of eminent domain, which is a power granted to state or local governments to acquire control over certain properties for public purposes, has been promoted by a company called Mortgage Resolution Partners or MRP. MRP puts up the money for a County like San Bernardino, here in Southern California, to buy homes at a “fair market” price from underwater homeowners using eminent domain.
The underwater mortgages are then repackaged and refinanced in a way that allows people to buy back their home at a fair price with lower monthly payments. The eminent domain plan offers an option to homeowners who have otherwise been denied any help from a federal government that has been more actively bailing out Wall Street firms than helping individual home owners. San Bernardino County is one of the worst hit areas in the nation with over 150,000 home mortgages currently underwater.
However, Orange County Republican Representative John Campbell has now authored a new bill called the Defending American Taxpayers from Abusive Government Takings Act to stop local governments from using the power of eminent domain to acquire mortgages. The bill would prevent the country’s biggest mortgage lenders, Fannie Mae, Freddie Mac, the Federal Housing Administration and the Veteran’s Administration from offering or guaranteeing loans in counties which have invoked the power of eminent domain to aid underwater homeowners.
Financial analyst Matt Taibbi says, “In the Death Star of America’s financial oligarchy, the ability of local governments to use eminent domain to seize toxic debt might be the one structural flaw big enough for the rebel alliance to exploit.”
GUEST: Acquanetta Warren, mayor of Fontana, San Bernardino County