Seeking Alpha

California's San Bernardino County and two of its biggest cities, Ontario and Fontana, want to...

California's San Bernardino County and two of its biggest cities, Ontario and Fontana, want to use the concept of eminent domain to forcibly buy underwater mortgages from investors, lower the loan principal to match the value of the property, and then resell the reduced mortgages. Proponents believe they have a strong legal case, but mortgage investors are unsurprisingly opposed. (See Shiller)
Comments (5)
  • Just what we'd expect from the PRC (People's Republic of California).

     

    The net-net of such an enterprise would be a huge gift of taxpayer dollars to borrowers who made poor decisions, either borrowing too much for home purchases and/or taking out excessive cash-out refi's. Why should such borrowers be rewarded for their irresponsible behavior at the expense of more prudent taxpayers? All the people who own homes not saddled with excess debt also have suffered the exact same declines in market value and equity loss. I don't see any politicians standing in line to give them handouts for being so responsible.

     

    It's no wonder that the imprudent laugh at the rest of us. Not only does crime often pay, but, apparently, stupidity does, too.
    5 Jul 2012, 06:14 AM Reply Like
  • Tack,

     

    Could you imagine JFK suggesting something like this?

     

    The idea that property rights as a Natural Law would not be respected in this country just shows how far we have strayed from the original vision - a vision which created the most prosperous, free, and successful country in the history of the world.
    5 Jul 2012, 10:52 AM Reply Like
  • I'm surprised the tax payers in California aren't screaming. Are there any left?
    5 Jul 2012, 07:15 AM Reply Like
  • They're all on medical marijuana.
    5 Jul 2012, 08:45 AM Reply Like
  • Given how lenders are treated worldwide I am not sure why anyone would loan money. If the rule of law/contract can't be relied on then no loan is safe. The terms can't be high enough to cover that kind of bottomless risk (Other than full collateral coverage where the lender takes possession immediately).
    13 Jul 2012, 09:48 AM Reply Like
DJIA (DIA) S&P 500 (SPY)