U.S. warns against eminent-domain mortgage seizures - latimes.com
"The nation's top housing finance regulator threatened to choke off mortgage lending in cities that use eminent domain to seize underwater loans from lenders. The salvo from the Federal Housing Finance Agency came Thursday, on the heels of a lawsuit directed by major Wall Street firms and U.S.-sponsored mortgage giants Fannie Mae and Freddie Mac against the Bay Area city of Richmond. Richmond is the first to push forward with the plan, also being debated in cities across the state and nation. Richmond wants to require lenders and investors to sell underwater mortgages at a deep discount. The city would then refinance borrowers into more-affordable mortgages."
In keeping with the Obama administration's predilection for continuing the bank-friendly policies of the Bush administration, FHFA is stepping in to prevent Richmond, CA, from using eminent domain to help out underwater homeowners. Obama's housing initiatives have done very little for homeowners--but, hey, the banks are doing great! The HAMP/HARP programs did very little for underwater homeowners. What it comes down to is this: homeowners can't get any meaningful relief from the feds, and now, when a city tries to do something the feds jump in to prevent it. In the meantime, the "too big to fail" banks borrow from the Fed using the "discount window" at virtually zero interest. This follows on the heels of Obama's recent supposedly major but really underwhelming speech announcing, among other things, that mortgage securitization is to become wholly a private undertaking, with Fannie and Freddie being phased out. I really don't see any concrete plan for how this is supposed to work, though. It seems like vaporware to me, but we shall see. There seems to be a consensus that the GSE's need to be done away with, but no agreement on how to make sure that private securitization of mortgages goes at a pace that will maintain liquidity for mortgage lenders. Thanks to Fred Pilot for the link.