Dan Peterson, Executive Director info@proprights.com 407-481-2289

Copyright © 2012 Coalition for Property Rights

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The Coming Eminent Domain “Heist”

The Constitution of the United States gives government the “Power” to take private property “for public use” provided there is “due process of law” and “just compensation.” The most notorious misuse of this power to date is the U.S. Supreme Court decision in Kelo v. City of New London.  But now, certain US cities are promoting a new use of eminent domain that will spell disaster for the housing and financial industries. San Bernardino County and the City of Stockton, California have already crossed over the line of bankruptcy and are in desperate need of revenue. Here’s their plan:

Use eminent-domain powers to buy mortgages where homes are underwater.

Impose losses on lenders.

Write down the principal amounts owed by the borrower.

The results are great for the borrower who gets his loan modified.

The results are great for the financial/investment management company to be selected to operate this scheme because of the fees to be received for each loan modified and their share of the profits realized on behalf of their investors.

The results are great for the municipalities which get a financial piece of the deal.

But, what about the lender of the original loan?

Consider the following scenario as laid out by Jann Swanson in an article entitled, “SIFMA Slams Eminent Domain “Scheme” in Letter to FHFA”: More