The Next Imminent Bailout… EMINENT DOMAIN

July 7th, 2012

FAKE NEWS for the Zionist agenda

land-grab-eminent-domain-stealing

It seems that governmental efforts to save the underwater and
ineligible homeowner from his own fate are reaching fever pitch.

Not
only do we hear today of the up to $300 million in Agriculture Department Rural Housing Service loans that may have financed ineligible projects or borrowers with a high potential inability to repay the loans.

Yesterday’s WSJ reports on the growing call for ‘eminent-domain’ powers to be used by local government officials in California to stop the “housing bust’s public blight on their city”.

In yet another get-out-of-jail-free card, the officials (helped by a
friendly local hedge-fund / mortgage-provider) want to use the
government’s ability to forcibly acquire property to remove underwater
homes, restructure the mortgage (cut principal), and hand back the home
to the previously unable to pay dilemma-ridden homeowner.

Following last week’s bankruptcy in Stockton, it seems cities are
increasingly desperate as they reel from the effects of the housing
bust – willing instead to use government funds (provided by the working
and mortgage-paying taxpayer) to bailout the underwater (and likely not
paying anything at all) homeowner.

As PIMCO’s Scott Simon puts it: “I
don’t see how you could find it anything other than appalling”, as this
would crush property prices further and drive up borrowing costs.

As we noted earlier, until these mal-investments are marked to market,
there will be no useful growth in our credit-bound economy but
transferring wealth to the ‘mal’-investor seems like a terrible idea.

The percentage of underwater borrowers remains staggering…

Fraudulently ‘giving’ these homeowners money is not the way to go:-

Heritage: Ineligible Borrowers Got Hundreds Of Millions In Stimulus Home Loans

The Agriculture Department’s Rural Housing Service likely loaned
hundreds of millions of dollars to ineligible borrowers as part of
President Obama’s stimulus package, a report by federal watchdogs has
revealed.

The stimulus earmarked more than $1 billion for RHS home loans in
rural communities. According to the Ag Department’s Inspector General.

Up to $292.3 million of those loans may have financed ineligible
projects, or gone to borrowers that did not meet the loan program’s
requirements due to their potential inability to repay the loans.

…

Rural Development field-level personnel made these questionable
determinations because they were not sufficiently trained on how to

either conduct or adequately document proper determinations;

did not
have an effective second party review process in place to catch errors;

and did not have sufficient guidance on the characteristics and
requirements needed for a property to become eligible.

Rural
Development conducted a follow-up review of the questionable loans and
agreed that they were not fully processed in accordance with regulations
or handbook requirements.

And ‘giving’ them principal writedowns seems to just be rewarding the mal-investor once again…

Wall Street Journal: Cities Consider Seizing Mortgages

A handful of local officials in California who say the housing bust
is a public blight on their cities may invoke their eminent-domain
powers to restructure mortgages as a way to help some borrowers who owe
more than their homes are worth.

Investors holding the current mortgages predict the move will
backfire by driving up borrowing costs and further depress property
values.

“I don’t see how you could find it anything other than appalling,” said Scott Simon, a managing director at Pacific Investment Management Co., or Pimco, a unit of Allianz SE.

Eminent domain allows a government to forcibly acquire property that
is then reused in a way considered good for the public—new housing,
roads, shopping centers and the like. Owners of the properties are
entitled to compensation, which is usually determined by a court.

Instead of tearing down property…

The municipalities, about 45 minutes east of Los Angeles, would
acquire underwater mortgages from investors and cut the loan principal
to match the current property value. Then, they would resell the reduced
mortgages to new investors.

…

The seizure of home-mortgage liens, but not the underlying homes, hasn’t ever been conducted through eminent domain,
as far as the group’s principals can tell. And while they believe they
have a strong legal case, they expect loan owners to sue.

“California legal precedent and political posture favor the program and constitute an ideal proving ground,” Mortgage Resolution Partners said in a presentation to investors reviewed by The Wall Street Journal.

The document said it would begin with a $5 billion effort in
California that could grow to three million mortgages as part of a $500
billion multistate effort.

…

A letter sent last week to city leaders from 18 trade associations,
led by the Securities Industry and Financial Markets Association, warned
that such a move “could actually serve to further depress housing
values” by making banks less willing to lend. The plan’s backers are
unfazed.