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(Reuters)   Step 1) See lots of homeowners in your city with underwater mortgages. Step 2) Seize property by eminent domain Step 3) Refinance property back to homeowners at affordable rates. Step 4) Profit - handsomely   (reuters.com) divider line 242
    More: Hero, negative equity, North Las Vegas, public purpose, eminent domain, Federal Housing Finance Agency, private property, mortgages  
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15560 clicks; posted to Main » on 11 Sep 2013 at 8:53 AM (31 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-09-11 08:55:09 AM
Better than Nero!
 
2013-09-11 08:56:15 AM
Holy shiat, did anyone else see that flashing Home Depot ad on the sidebar?  Click, close.
 
2013-09-11 08:58:05 AM
www.redhotconservative.com

or something
 
2013-09-11 08:59:17 AM
The banks are already doing this.  I'd rather see the city/public sector see the "profits" than the greedy, amoral a$%holes in the banking industry who caused the problem in the first place.
 
2013-09-11 09:00:50 AM
Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?
 
2013-09-11 09:02:09 AM
I've got to say, this should be just as illegal as cities seizing land to build a Walmart. Eminent domain is being seriously abused in this country.
 
2013-09-11 09:02:49 AM
I hope the vote went well. Stick it to the banks, hard.
 
2013-09-11 09:03:10 AM

Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?


Because it's not stealing as long as you're a bank taking advantage of people with poor decision-making skills?
 
2013-09-11 09:04:11 AM
Well..who is going to make whole the investors that lent the funds in the first place?
 
2013-09-11 09:05:01 AM
I'd say it all depends on how responsible you consider the mortgage companies to be for the entire housing bubble and burst.

If you blame them mostly, then this is the city saying: fark you, you've all but destroyed our town by taking advantage of residents then kicking them out, leaving row after row of boarded up buildings. We're going to fix it and keep our town afloat.
From that angle, you might even say eminent domain isn't really being abused, since it's for the greater good of the public and the town.

If you look at the home owners as taking on more mortgage than they can chew, well then it looks like a completely awful plan.
 
2013-09-11 09:09:44 AM
From the sound of it, this is an unconstitutional taking by the government that should be thrown out in court.

If its legal to seize property from a bank for private resale then its now legal to seize any property for any reason.

/If you don't make the payments on your house then you deserve to lose it. You signed an agreement to pay. If the city wants rent housing to you, they shouldnt steal from your lender to do it.
 
2013-09-11 09:10:09 AM
It's a great idea, but it scares the poo out of Wall Street. Now who do you suppose has more money and lawyers, the City of Richmond or Wall Street?
 
2013-09-11 09:10:20 AM
Just as long as it's government doing it, A-okay!!

*GLORY TO THE STATE!!!*
 
2013-09-11 09:10:35 AM
Kelo v New London coming back to bite the big guys in the arse?
Good.
 
2013-09-11 09:10:58 AM

Tomahawk513: Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?

Because it's not stealing as long as you're a bank taking advantage of people with poor decision-making skills?


How many wrongs is it again that make a right? I can never remember. I know it's three lefts to make a right, other than that, I'm hazy.
 
2013-09-11 09:11:24 AM

twiztedjustin: [www.redhotconservative.com image 300x324]

or something


Basically yeah.

JohnCarter: Well..who is going to make whole the investors that lent the funds in the first place?


This is what's going on.  The government says, "Hey bank.  You own a $300,000 property that Joe is living in.  Joe owes you $425,000, but the property was a $500,000 property when he got it.  Well, we're taking your property from you, so have fun with that huge half a million dollar loss.  And Joe?  We'll refinance your lot.  We're not just making interest, we're making the whole cost of selling the house to you!  But we'll be nicer than that asshole who we stole the house from."
 
2013-09-11 09:11:29 AM

Tomahawk513: Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?

Because it's not stealing as long as you're a bank taking advantage of people with poor decision-making skills?


As soon as these people admit they are incompetent to take care of their own affairs, and relinquish their right to vote, they can have protection from "being taken advantage of".  Until then, they are adults who are responsible for their decisions.  Feel free to educate them on your own budget.  Do not feel free to use my tax money to bail them out (or bail banks out, for that matter - Lehman should have been followed by Merrill, Citigroup, Countrywide, and possibly Bank of America).
 
2013-09-11 09:11:36 AM
Wow... governance for the people.  You don't see that a lot in the US.
 
2013-09-11 09:11:59 AM

Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?


Great comment coming from Taxcheat.   Amusing.

Underwater doesn't mean you made bad decisions.  I'm way underwater, but it's because 80% of my neighborhood was foreclosed on or short sold recently.  Values have come back up a bit though.   It would be nice to refinance at a lower rate to save a few bucks a month but I can afford my payments.

It makes sense to help people like me as any extra money I have in my pocket can go toward goods and services which drives the economy.

But you know the difference between underwater (value of mortgage exceeds current value of home) and someone who bought more house than they can afford right?
 
2013-09-11 09:12:14 AM
Actually, it sounds like Step 4 is to descend into ruin as nobody buys your municipal bonds anymore and nobody will finance mortgages in your town.
 
2013-09-11 09:12:42 AM

Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?


This doesn't really save people from poor decision-making.   The fools with the money are the ones that lose out with this scheme.   It may, however, cause bankers to make better decisions in the future.
 
2013-09-11 09:12:50 AM

Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?


It also seems like a bad idea to make use eminent domain easier in the future.

This is a plan that sounds clever but will bite us in the ass eventually. The first bite will be when no bank will finance any home in any city that uses this trick.
 
2013-09-11 09:13:32 AM

Tomahawk513: Because it's not stealing as long as you're a bank taking advantage of people with poor decision-making skills?


A voluntary transaction isn't theft. You are talking about the city using a police power to take money by force.  The bank didn't hold a gun to the Starbucks barista's head and say she better buy that 4,000 square ft. mcmansion or else.

Stealing from banks makes mortgages more expensive, so non-idiots end up paying more for their house. It also steals from old geezers whose pension income comes from financial sector investments. But go ahead and keep stealing from them to reward idiocy.
 
2013-09-11 09:14:04 AM

Tomahawk513: Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?

Because it's not stealing as long as you're a bank taking advantage of people with poor decision-making skills?


Here's the thing. It's not the bank's job to help you run your life. You're supposed to be an adult and/or seek advice from professionals.

If the banks refused to loan money based on "Hey, this guy seems like a dope, let's not give him a loan" you would be on here ranting about how bank discriminate.
 
2013-09-11 09:14:08 AM

Notabunny: It's a great idea, but it scares the poo out of Wall Street. Now who do you suppose has more money and lawyers, the City of Richmond or Wall Street?


If enough other cities do this, it won't matter how many lawyers Wall St. has.  At that point, it'll only matter how many congressmen Wall St. has...  dammit, I just found the flaw in my own plan.
 
2013-09-11 09:15:36 AM

piercedgeek: I'd say it all depends on how responsible you consider the mortgage companies to be for the entire housing bubble and burst.

If you blame them mostly, then this is the city saying: fark you, you've all but destroyed our town by taking advantage of residents then kicking them out, leaving row after row of boarded up buildings. We're going to fix it and keep our town afloat.
From that angle, you might even say eminent domain isn't really being abused, since it's for the greater good of the public and the town.

If you look at the home owners as taking on more mortgage than they can chew, well then it looks like a completely awful plan.


Its got nothing to do with that.

When you buy a house you sign a g.d. contract.

If you're too stupid to figure out if you can make the payments, or lied on your loan application, seek professional help before you buy the house.

The mortgage broker/lender isn't holding a gun to your head. Take resposibility for your future and don't make stupid decisions, and if you do something stupid, man up and face the consequences, instead of invoking V.I. Lenin to erase your troubles.
 
2013-09-11 09:15:43 AM
The banks will somehow put a stop to this.  It's tantamount to blackmail.

City: You don't want to renegotiate? Then we will just steal the homes from you under E.D.

Banks:  W.T.F.  thieves!

City:  How does it feel, biotches?


/love it
 
2013-09-11 09:16:05 AM
FTFA:  Critics say the plan threatens the market for private-label mortgage-backed securities.

prinsesamusang.files.wordpress.com
 
2013-09-11 09:16:33 AM

SpectroBoy: Tomahawk513: Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?

Because it's not stealing as long as you're a bank taking advantage of people with poor decision-making skills?

Here's the thing. It's not the bank's job to help you run your life. You're supposed to be an adult and/or seek advice from professionals.

If the banks refused to loan money based on "Hey, this guy seems like a dope, let's not give him a loan" you would be on here ranting about how bank discriminate.


what about when those professionals deliberately mislead you? nobody can know everything about everything (although to read fark you'd think they could) therefore there are times when you have to let someone else tell you what to do. if that person is unscrupulous, then you're not stupid or careless, you're unlucky
 
2013-09-11 09:16:39 AM

Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?


So let me get this straight... someone buys a house in 2000 for $200K, the economy tanks because the banking system collapses under the weight of derivatives that the farking Wall St bankers don't understand, economic downturn results in house now being worth only $140K, and you're blaming that on the "poor decision-making skills "  of homeowners?

Which defunct Wall St bank did you work for?
 
2013-09-11 09:17:08 AM

DoBeDoBeDo: Underwater doesn't mean you made bad decisions.


Er, that's quite debatable, as you can't be underwater on your mortgage without first getting a mortgage.

DoBeDoBeDo: It makes sense to help people like me as any extra money I have in my pocket can go toward goods and services which drives the economy.


It makes sense for you because you get to spend that money. It doesn't make sense for me, because I'll no longer have that money to put towards goods and services myself. I'm not in debt - why should I subsidize your debt?
 
2013-09-11 09:17:22 AM

SpectroBoy: The first bite will be when no bank will finance any home in any city that uses this trick.


I would think that the pro-bank people in the thread would also be fans of the whole "free market" thing.  And anyhow, worst case, the city could partner with the community and form a credit union that would finance home sales.  It'd probably end up making a fark-ton of revenue for the community since the money would essentially be staying there.
 
2013-09-11 09:18:10 AM

Animatronik: From the sound of it, this is an unconstitutional taking by the government that should be thrown out in court.

If its legal to seize property from a bank for private resale then its now legal to seize any property for any reason.


It is legal to seize any property for any reason.  See Kelo v. New London.  This sounds like a much better plan for the seized property than that case turned out to be.

If you need a better justification, you could have someone give the local police an anonymous tip that each of the foreclosed houses is being used to deal drugs, and they can be seized under asset forfeiture with no proof or criminal charges being filed.
 
2013-09-11 09:18:46 AM
If all of Fark were in a plane crash in the mountains, these threads will tell you which of the dicks will have the snack cart stashed under a snowdrift for themselves because FARK other people!
 
2013-09-11 09:19:11 AM

Mercutio74: Notabunny: It's a great idea, but it scares the poo out of Wall Street. Now who do you suppose has more money and lawyers, the City of Richmond or Wall Street?

If enough other cities do this, it won't matter how many lawyers Wall St. has.  At that point, it'll only matter how many congressmen Wall St. has...  dammit, I just found the flaw in my own plan.


Long before we hit that point the machine (wall street bankers, politicians, lawyer) will make an example of the first cities that try this.

Once other cities witness the power of this fully operational banking system they will fall in line.
 
2013-09-11 09:19:32 AM

SpectroBoy: Taxcheat: Because it's not stealing as long as you're robbing a bank to save people with poor decision-making skills?

It also seems like a bad idea to make use eminent domain easier in the future.

This is a plan that sounds clever but will bite us in the ass eventually. The first bite will be when no bank will finance any home in any city that uses this trick.


fark em, they don't want to help the economy.

As I said I'm way underwater, but I called my bank to see about a refi because they already own the mortgage.

"We can't help you because the value of your home is too low, it's too risky for us!!!!!"

Umm you BOUGHT my mortgage when the value of the home was less than the value of the mortgage.  Just say "we aren't helping because you're stuck at a higher rate and that means we make more money off of you", instead of trying to play the "it's too risky" card.

But like I said not allowing me to refi just hurts them as I'll have to go longer between new cars (they won't get the loan origination fees and both cars are in the more money goes to principle than interest phase), I can't buy other banking products that they make money on, etc.

So whatever
 
2013-09-11 09:19:40 AM
The power of 'eminent domain' allows governments to seize private property for a public purpose. Critics say the plan threatens the market for private-label mortgage-backed securities

From this i got, the wall street people who made a shiat-ton of money from screwing the housing market are mad that the city wants to take a load of debt off of the people who live in their city and keep them there paying taxes and whatnot.

regardless of who you blame (banks or buyers), it was the stock market people who piled all of this stuff into securities and sold and shuffled it all around that actually caused the crash. 
these are the same idiots i blame for high gas prices. right or not, i still blame them :p

The banks are responsible for offering crappy, confusing loan conditions (3 year ARMS with ridiculous interest rates) and the buyers are just as responsible for being too stupid to realize a bad deal.

I hope it works out for the city and the home owners regardless of how 'legal' it might be. screw wall street, they don't get to win on everything.
 
2013-09-11 09:20:24 AM

Mercutio74: Notabunny: It's a great idea, but it scares the poo out of Wall Street. Now who do you suppose has more money and lawyers, the City of Richmond or Wall Street?

If enough other cities do this, it won't matter how many lawyers Wall St. has.  At that point, it'll only matter how many congressmen Wall St. has...  dammit, I just found the flaw in my own plan.


The flaw is that this appears to be an illegal taking of property that most Americans like me, who have no connection to Wall Street or the real estate business, will not tolerate.

/allowing private firms to initiate foreclosure based on a small tax lien is also wrong.
 
2013-09-11 09:20:25 AM

Mentalpatient87: If all of Fark were in a plane crash in the mountains, these threads will tell you which of the dicks will have the snack cart stashed under a snowdrift for themselves because FARK other people!


And why would you need to know that? So you can steal from them because FARK other people!
 
2013-09-11 09:20:29 AM

LandOfChocolate: Holy shiat, did anyone else see that flashing Home Depot ad on the sidebar?  Click, close.


I see you haven't heard of Firefox, adblock, flashkiller, etc., etc., yet.
 
2013-09-11 09:20:31 AM

piercedgeek: I'd say it all depends on how responsible you consider the mortgage companies to be for the entire housing bubble and burst.


It's about priorities.  Sure the bank may have a piece of paper saying they own the property, but if they aren't making any good-faith effort to work with the city or the homebuyers then public good transcends legal claim, every time.  I think the banks forget that the very notion of private property only exists because it's backed by a government that protects those assets -- which means it's also able to take them away.  Back in the day you'd have to hire your own private army just for the honor of saying "mine".

The banks are so used to getting their way that they equate the paper with entitlement -- not responsibility.  They'd happily sit on money-losing properties until they're condemned as long as it doesn't involve any concessions on their part.  The city has to deal with these empty houses one way or another, and homeowners have been eating losses all this time.  The banks are only in a good position because they outsmarted people in a game they play on a daily basis and expect the "losers" to eat 100% of the losses.  That's OK to a certain extent, but when it starts killing communities then the society part wins out.

Basically when it comes to the social contract, banks (and businesses in general) want to have it both ways, and think the paper means everything.  But we are a SOCIETY, which means your mere existence is a burden on others that is only justified by fulfilling your obligations to society -- the papers only mean so much.  This is EXACTLY what eminent domain was created for.  If the banks just sit on property with no regard to what it costs society, the government is fully within its power to seize those properties for the good of society.  Land is a limited resource.  It's no different if someone who bought all the water in the area and hoarded it during a drought; the result mob won't give a shiat about your papers saying you own it.
 
2013-09-11 09:20:45 AM

bluefoxicy: This is what's going on.  The government says, "Hey bank.  You own a $300,000 property that Joe is living in.  Joe owes you $425,000, but the property was a $500,000 property when he got it.  Well, we're taking your property from you, so have fun with that huge half a million dollar loss.  And Joe?  We'll refinance your lot.  We're not just making interest, we're making the whole cost of selling the house to you!  But we'll be nicer than that asshole who we stole the house from."


I don't think you understand how it works. The city will be paying the bank market value for the house. In your example the bank gets $300,000 and loses $125,000. The same as if they seized the home, kicked out the owners and sold it.
 
2013-09-11 09:21:12 AM
I'm kind of torn on this one. While I don't have a problem with watching banks that made irresponsible loans take a loss, it does seem to be, at the very least, a dubious use of eminent domain. It seems like a handout by the city to homeowners who made bad decisions at the expense of the bank. While my sympathies for banks these days is running pretty damn low, I don't think it's the government's place to just steal from them.

So, you've got a city abusing its powers, irresponsible banks, and homeowners who bought more house than they can afford. I'm finding it difficult to root for anybody involved.
 
2013-09-11 09:22:02 AM

wineguy: So let me get this straight... someone buys a house in 2000 for $200K, the economy tanks because the banking system collapses under the weight of derivatives that the farking Wall St bankers don't understand, economic downturn results in house now being worth only $140K, and you're blaming that on the "poor decision-making skills "  of homeowners?

Which defunct Wall St bank did you work for?


Let me get THIS straight. You take out a mortgage and you can afford the payments. Then your house goes down in value. How does this impact your ability to make your payments?

Also, it is common knowledge that house prices fluctuate. If you took a loan out on the ragged edge of what you could afford you were gambling and you lost. Own your decision and stop playing the victim card.

Lastly, two wrongs don't make a right. Stealing from a bank is still stealing.
 
2013-09-11 09:22:02 AM

bluefoxicy: twiztedjustin: [www.redhotconservative.com image 300x324]

or something

Basically yeah.

JohnCarter: Well..who is going to make whole the investors that lent the funds in the first place?

This is what's going on.  The government says, "Hey bank.  You own a $300,000 property that Joe is living in.  Joe owes you $425,000, but the property was a $500,000 property when he got it.  Well, we're taking your property from you, so have fun with that huge half a million dollar loss.  And Joe?  We'll refinance your lot.  We're not just making interest, we're making the whole cost of selling the house to you!  But we'll be nicer than that asshole who we stole the house from."


Here is where the plan fails (or at least I am missing something)

This is how eminent domain works:
Bank Lends Joe 500k for house
Property has a highest use value of 400k
Property has a homeowner value of 300k

Eminent domain rules would require the city to pay the bank 400k for the house, but a refinance would only be reasonable at 300k. Yes the bank is screwed (not really since they have an unsecured debt and will probably lose money anyway), but if the city is making money off of this they are doing it at a very low interest rate (negative NPV) or are going to be sued by the bank.
 
2013-09-11 09:22:57 AM

untaken_name: Er, that's quite debatable, as you can't be underwater on your mortgage without first getting a mortgage.


You don't know what underwater means when it come to mortgages, do you?  Hell, there was a professional association of real estate agents that did a strategic default on their own HQ after the house of cards collapsed when THEY were underwater on their financing.  If a bunch of real estate agents ended up underwater, you don't think a lay person could do the same without fault?
 
2013-09-11 09:23:05 AM

Mercutio74: SpectroBoy: The first bite will be when no bank will finance any home in any city that uses this trick.

I would think that the pro-bank people in the thread would also be fans of the whole "free market" thing.  And anyhow, worst case, the city could partner with the community and form a credit union that would finance home sales.  It'd probably end up making a fark-ton of revenue for the community since the money would essentially be staying there.


(California Lieutenant Governor) "Newsom sent a letter on Monday to U.S. Attorney General Eric Holder asking federal prosecutors to investigate any attempts by Wall Street investors and government agencies to "boycott" California communities that are considering such moves."
 
2013-09-11 09:23:13 AM

Animatronik: From the sound of it, this is an unconstitutional taking by the government that should be thrown out in court.

If its legal to seize property from a bank for private resale then its now legal to seize any property for any reason.

/If you don't make the payments on your house then you deserve to lose it. You signed an agreement to pay. If the city wants rent housing to you, they shouldnt steal from your lender to do it.


Its been legal to sieze prizate property for resale for a long time dude.
 
2013-09-11 09:23:20 AM
I sure wish my town had come in when I built my house and cut my mortgage in half. How nice for fools that bought what they couldn't afford.
 
2013-09-11 09:24:56 AM
untaken_name:
It makes sense for you because you get to spend that money. It doesn't make sense for me, because I'll no longer have that money to put towards goods and services myself. I'm not in debt - why should I subsidize your debt?

How are you losing money OR subsidizing my debt?  The town (and by proxy the taxpayers) are MAKING money off the scheme.  If anything you could argue that the interest paid to the town would help lower taxes for everyone else.  The people that are refinancing are actually subsidizing the rest of the town.

The town will just issue a low interest rate bond to buy the homes and refi at a rate higher than that.  They end up with cash in pocket.
 
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