Proposals for the eminent domain of mortgages spread to Chicago

Jul 292012

It’s barely been proposed in California and now other cities are looking into to his process. It’s interesting that the idea is spreading so fast considering it hasn’t even tried or tested in the courts.

Chicago considers eminent domain to seize underwater mortgages

By Jon Prior July 27, 2012 • 10:47am

The City of Chicago will hold a hearing over using eminent domain to seize underwater mortgages.

The idea first came under consideration in San Bernardino County, Calif. Venture capital firm Mortgage Resolution Partners is pitching the idea to several cities across the country. Using investor dollars, local governments would seize performing mortgages in negative equity, reduce the principal for the borrower and refinance it into a government-backed loan.

Chicago Alderman Edward Burke, chairman of the city finance committee, scheduled the hearing this week. According to a city council document, Burke sees a chance the idea could clear legal hurdles.

“Legal experts have opined that government entities may use eminent domain to acquire mortgages so long as certain legal standards are met,” according to the document.

More than 44% of the homes in surrounding Cook County back are worth less than the mortgage. According to the city, local homeowners lost more than $37 billion in equity since the housing market crashed.

The San Bernardino proposal would affect less than 1.5% of private-label security loans in the area as the mortgages are bought out of pools. Investors are concerned, the idea would spread, with some arguing that the iniative may acutally do more harm than good.

Mortgage bonds backed by jumbo loans – those presumed to be targeted by the program – could see losses rise more than 30% than already expected should a national eminent domain program be implemented, according to a recent report from Moody’s Investors Services.

On the other side of the idea, however, private investors looking into joining MRP expect returns as high as 30%, according to a recent article in The Wall Street Journal.

Fullerton Overview

Median home price is $365,000. Based on a rental parity value of $548,000, this market is under valued.

Monthly payment affordability has been improving over the last 4 month(s). Momentum suggests improving affordability.

Resale prices on a $/SF basis increased to $245/SF to $245/SF.

Resale prices have been weak for 12 month(s). Price momentum suggests weak prices over the next three months.

Median rental rates increased $107 last month from $$2,124 to $$2,231.

Rents have been slowly rising for 5 month(s). Price momentum suggests slowly rising rents over the next three months.

Market rating = 5

Proprietary OC Housing News home purchase analysis

219 MARIGOLD Ave Fullerton, CA 92831

$459,000 …….. Asking Price
$245,000 ………. Purchase Price
6/27/2000 ………. Purchase Date

$214,000 ………. Gross Gain (Loss)
($19,600) ………… Commissions and Costs at 8%
============================================
$194,400 ………. Net Gain (Loss)
============================================
87.3% ………. Gross Percent Change
79.3% ………. Net Percent Change
5.2% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$459,000 …….. Asking Price
$16,065 ………… 3.5% Down FHA Financing
3.70% …………. Mortgage Interest Rate
30 ……………… Number of Years
$442,935 …….. Mortgage
$116,620 ………. Income Requirement

$2,039 ………… Monthly Mortgage Payment
$398 ………… Property Tax at 1.04%
………… Mello Roos & Special Taxes
$115 ………… Homeowners Insurance at 0.3%
$461 ………… Private Mortgage Insurance
………… Homeowners Association Fees
============================================
$3,013 ………. Monthly Cash Outlays

($309) ………. Tax Savings
($673) ………. Equity Hidden in Payment
$20 ………….. Lost Income to Down Payment
$135 ………….. Maintenance and Replacement Reserves
============================================
$2,185 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$6,090 ………… Furnishing and Move In at 1% + $1,500
$6,090 ………… Closing Costs at 1% + $1,500
$4,429 ………… Interest Points
$16,065 ………… Down Payment
============================================
$32,674 ………. Total Cash Costs
$33,500 ………. Emergency Cash Reserves
============================================
$66,174 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

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	$494,900 218 South MARIGOLD Ave		0.03 miles 4 bd / 1.75 ba 1,578 Sq. Ft.
	$445,000 1400 CENTRAL Ave		0.42 miles 3 bd / 1.75 ba 1,370 Sq. Ft.
	$490,000 1103 East SANTA FE Ave		0.49 miles 4 bd / 2 ba 1,626 Sq. Ft.
	$525,000 1013 OAKDALE Ave		0.78 miles 3 bd / 1.75 ba 1,921 Sq. Ft.
	$369,900 2466 CLARKE Ave		0.8 miles 3 bd / 2 ba 1,752 Sq. Ft.
	$459,000 1125 RIEDEL Ave		0.87 miles 3 bd / 2 ba 1,390 Sq. Ft.
	$295,000 500 PATTERSON Way		0.88 miles 3 bd / 2 ba 1,280 Sq. Ft.
	$511,000 1206 DOROTHY Ln		0.91 miles 4 bd / 2.75 ba 1,900 Sq. Ft.
	$369,900 1309 North ASH Pl		1.18 miles 4 bd / 2 ba 1,516 Sq. Ft.
	$339,000 1406 East KENWOOD Ave		1.2 miles 3 bd / 1.5 ba 1,303 Sq. Ft