By Clea Benson - Sep 20, 2012 4:10 AM PT
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U.S. regulators and lawmakers are seeking ways to keep local governments from using the power of eminent domain to seize mortgages and cut borrowers’ debt, citing concern about the potential cost to taxpayers.
The issue, which will be the subject of a Mortgage Bankers Association symposium today, has gained attention in Washington after the city of Chicago and California’s San Bernardino County said they would consider confiscating home loans. No community has taken the step so far.
Enlarge image Cities Weighing Mortgage Seizures Draw Attention in Washington
Legislation introduced last week by Representative John Campbell , a California Republican, would bar Fannie Mae, Freddie Mac, the Veterans Administration and the FHA from guaranteeing or buying loans in communities that seize mortgages. Photographer: Andrew Harrer/Bloomberg
The federal government is positioned to wield broad power in the debate because it owns or guarantees 90 percent of U.S. mortgages through government-sponsored enterprises and the Federal Housing Administration. Legislation introduced last week by Representative John Campbell, a California Republican who will attend the symposium, would bar Fannie Mae, Freddie Mac (FMCC), the Veterans Administration and the FHA from guaranteeing or buying loans in communities that seize mortgages.
Campbell’s bill “sends a clear message to municipalities considering eminent domain, Mortgage Bankers Association President David Stevens said in a statement. “If you do this, there will be consequences for your constituents, consequences that will severely impact not only potential home buyers and home owners, but the value of every home in your area.”
Local governments, whose tax bases are being eroded by foreclosures in the wake of the mortgage crisis, say they are being forced to act because lenders and federal officials have failed to find solutions for troubled borrowers. The city of
http://www.bloomberg.com/news/2012-09-20/cities-weighing-mortgage-seizures-draw-attention-in-washington.html
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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