This is fast becoming a Democrat/Republican issue. However, I doubt the Fed will let this happen.
By Clea Benson | Bloomberg – Thu, Sep 20, 2012 11:54 AM EDT
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.
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 San Bernardino, in San Bernardino County, declared bankruptcy last month.
San Bernardino County and two of its cities, Fontana and Hesperia, are weighing a plan advocated by San Francisco-based Mortgage Resolution Partners LLC, which may profit from managing aspects of it. Chicago’s city council held hearings on the issue last month.
Under the Mortgage Resolution Partners plan, lenders would be forced to sell mortgages of borrowers who owe more than their properties are worth so the debt could be reduced and refinanced. The plan targets mortgages in so-called non-agency securities, those without guarantees from U.S.-owned Fannie Mae, Freddie Mac or Ginnie Mae.
A firm such as Mortgage Resolution Partners, whose website describes it as a “Community Advisory firm working to stabilize local housing markets and economies,” could buy the loans at a discount to the homes’ value and modify them.
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Proprietary OC Housing News home purchase analysis
$360,000 …….. Asking Price
$360,000 ………. Purchase Price
9/21/2012 ………. Purchase Date
$0 ………. Gross Gain (Loss)
($28,800) ………… Commissions and Costs at 8%
($28,800) ………. Net Gain (Loss)
0.0% ………. Gross Percent Change
-8.0% ………. Net Percent Change
-0.0% ………… Annual Appreciation
Cost of Home Ownership
$360,000 …….. Asking Price
$12,600 ………… 3.5% Down FHA Financing
3.60% …………. Mortgage Interest Rate
30 ……………… Number of Years
$347,400 …….. Mortgage
$90,709 ………. Income Requirement
$1,579 ………… Monthly Mortgage Payment
$312 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$90 ………… Homeowners Insurance at 0.3%
$362 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
$2,343 ………. Monthly Cash Outlays
($237) ………. Tax Savings
($537) ………. Equity Hidden in Payment
$15 ………….. Lost Income to Down Payment
$110 ………….. Maintenance and Replacement Reserves
$1,694 ………. Monthly Cost of Ownership
Cash Acquisition Demands
$5,100 ………… Furnishing and Move In at 1% + $1,500
$5,100 ………… Closing Costs at 1% + $1,500
$3,474 ………… Interest Points
$12,600 ………… Down Payment
$26,274 ………. Total Cash Costs
$25,900 ………. Emergency Cash Reserves
$52,174 ………. Total Savings Needed
The property above is available for sale on the MLS.Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
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