Stabilize Home Mortgage Borrowers with Eminent Domain

[SD Realtor]

EconProf I see absolutely no merit in this plan with respect to selling the home back to the original homeowners.

I agree with the first part of the plan which would be to take the home away from the homeowners using emminent domain.

However in no way whatsoever should the home be “given” back to the homeowner on any terms. The home should be sold on the open market. If the current homeowners want to buy it then they can compete with anyone else.

The rate of recidivism with regard to rampant consumerism is quite high. I work with so many people who are SO qualified with respect to gainful employment, strong downpayment money, who have simply elected to be prudent over the past few years. These people would form a much strong base to the homeownership pyrmaid rather then current overburdened base owner.

I am very disturbed by this “family upheaval” that everyone keeps writing about. Renting a home is not an upheaval. I don’t like it but it is not the end of the world and to sensationalize it is crazy. Pity the poor homeowner who HELOCd himself to foreclosure so now he has to suffer through the upheaval of foreclosure so he has nowhere to park his boat.

So yes, I like the first part of the idea but a much stronger implementation of what to do after the home is taken should be considered. If the home is taken through emminent domain then the deal with the original owner would be they get to walk with no ding to the credit and if the home sells for more then they owe then they get the profit.

The better lesson for them will be that they learn to live within thier means. What a treat.

[EconProf]

If we all agree on a few preliminary assumptions:
That our goal should be to minimize the government’s costs, to hit the bottom of the market sooner rather than later, and to punish the irresponsible lenders, and…
That the government’s actions so far, and into the future, promise to be wasteful, reward the wrong people and lenders (such as by buying underwater mortgages at face value), and take too long, and…
That the possibility exists for the RE decline to feed upon itself, forcing the bottom to be below trend line or “fair value” historically and putting underwater many people who now have 10% to 30% equity in their homes, thus doubling or tripling the taxpayer’s costs, then
this approach merits a closer look.
It gets ahead of the curve (assuming it could be implemented quickly, which I think is its biggest problem), and at a lot lower costs. It only keeps the borrower in the house if they have the liklihood of paying the new, lower mortgage. Yeah, I’d also like to not reward those who can stay with a lower principal, but the current and future programs are going to shower the undeserving FBs with a lot more than this program would at much greater cost to us.
As to the “social costs”, I’m not including solely the disruption to the family that is forced to move, but the external costs imposed on the neighborhood, the erosion of the property tax base and resulting hikes in other taxes, the overshooting of the price decline, and the inherent waste of perfectly good houses boarded up for many months or years.

[EconProf]

If we all agree on a few preliminary assumptions:
That our goal should be to minimize the government’s costs, to hit the bottom of the market sooner rather than later, and to punish the irresponsible lenders, and…
That the government’s actions so far, and into the future, promise to be wasteful, reward the wrong people and lenders (such as by buying underwater mortgages at face value), and take too long, and…
That the possibility exists for the RE decline to feed upon itself, forcing the bottom to be below trend line or “fair value” historically and putting underwater many people who now have 10% to 30% equity in their homes, thus doubling or tripling the taxpayer’s costs, then
this approach merits a closer look.
It gets ahead of the curve (assuming it could be implemented quickly, which I think is its biggest problem), and at a lot lower costs. It only keeps the borrower in the house if they have the liklihood of paying the new, lower mortgage. Yeah, I’d also like to not reward those who can stay with a lower principal, but the current and future programs are going to shower the undeserving FBs with a lot more than this program would at much greater cost to us.
As to the “social costs”, I’m not including solely the disruption to the family that is forced to move, but the external costs imposed on the neighborhood, the erosion of the property tax base and resulting hikes in other taxes, the overshooting of the price decline, and the inherent waste of perfectly good houses boarded up for many months or years.

[EconProf]

If we all agree on a few preliminary assumptions:
That our goal should be to minimize the government’s costs, to hit the bottom of the market sooner rather than later, and to punish the irresponsible lenders, and…
That the government’s actions so far, and into the future, promise to be wasteful, reward the wrong people and lenders (such as by buying underwater mortgages at face value), and take too long, and…
That the possibility exists for the RE decline to feed upon itself, forcing the bottom to be below trend line or “fair value” historically and putting underwater many people who now have 10% to 30% equity in their homes, thus doubling or tripling the taxpayer’s costs, then
this approach merits a closer look.
It gets ahead of the curve (assuming it could be implemented quickly, which I think is its biggest problem), and at a lot lower costs. It only keeps the borrower in the house if they have the liklihood of paying the new, lower mortgage. Yeah, I’d also like to not reward those who can stay with a lower principal, but the current and future programs are going to shower the undeserving FBs with a lot more than this program would at much greater cost to us.
As to the “social costs”, I’m not including solely the disruption to the family that is forced to move, but the external costs imposed on the neighborhood, the erosion of the property tax base and resulting hikes in other taxes, the overshooting of the price decline, and the inherent waste of perfectly good houses boarded up for many months or years.

[EconProf]

If we all agree on a few preliminary assumptions:
That our goal should be to minimize the government’s costs, to hit the bottom of the market sooner rather than later, and to punish the irresponsible lenders, and…
That the government’s actions so far, and into the future, promise to be wasteful, reward the wrong people and lenders (such as by buying underwater mortgages at face value), and take too long, and…
That the possibility exists for the RE decline to feed upon itself, forcing the bottom to be below trend line or “fair value” historically and putting underwater many people who now have 10% to 30% equity in their homes, thus doubling or tripling the taxpayer’s costs, then
this approach merits a closer look.
It gets ahead of the curve (assuming it could be implemented quickly, which I think is its biggest problem), and at a lot lower costs. It only keeps the borrower in the house if they have the liklihood of paying the new, lower mortgage. Yeah, I’d also like to not reward those who can stay with a lower principal, but the current and future programs are going to shower the undeserving FBs with a lot more than this program would at much greater cost to us.
As to the “social costs”, I’m not including solely the disruption to the family that is forced to move, but the external costs imposed on the neighborhood, the erosion of the property tax base and resulting hikes in other taxes, the overshooting of the price decline, and the inherent waste of perfectly good houses boarded up for many months or years.

[EconProf]

If we all agree on a few preliminary assumptions:
That our goal should be to minimize the government’s costs, to hit the bottom of the market sooner rather than later, and to punish the irresponsible lenders, and…
That the government’s actions so far, and into the future, promise to be wasteful, reward the wrong people and lenders (such as by buying underwater mortgages at face value), and take too long, and…
That the possibility exists for the RE decline to feed upon itself, forcing the bottom to be below trend line or “fair value” historically and putting underwater many people who now have 10% to 30% equity in their homes, thus doubling or tripling the taxpayer’s costs, then
this approach merits a closer look.
It gets ahead of the curve (assuming it could be implemented quickly, which I think is its biggest problem), and at a lot lower costs. It only keeps the borrower in the house if they have the liklihood of paying the new, lower mortgage. Yeah, I’d also like to not reward those who can stay with a lower principal, but the current and future programs are going to shower the undeserving FBs with a lot more than this program would at much greater cost to us.
As to the “social costs”, I’m not including solely the disruption to the family that is forced to move, but the external costs imposed on the neighborhood, the erosion of the property tax base and resulting hikes in other taxes, the overshooting of the price decline, and the inherent waste of perfectly good houses boarded up for many months or years.

[SD Realtor]

With respect to minimizing governments costs, there can be no argument about selling on the open market being cheaper.

Let me ask you this, how can one actually determine the true market value without putting the home on the market itself? An appraisal is just that, only an appraisal. Thus it is quite intuitive to me that not putting the home on the open market is actually reducing the potential for profit.

Honestly it does not matter what the trend line is, or if there is an overshoot due to massive inventory. Rather, this is the expectation with a huge influx of inventory. However it is simply a matter of rolling the program out in stages to help reduce that issue. In fact inventory can actually be controlled down to a local market level if this is done correctly. Similarly with the rate of recidivism being what it is, the cost to keep a homeowner current, then do it again in 6 months or a year is not trivial. Moreover, you have not addressed all of the other defaults that most people who have fallen behind incur including county taxes, hoa, and/or mello roos. Again, it seems to me that the current homeowner being bailed out of these defaults in addition to the mortgage does not make sense. Once more, it seems obvious to me that the free market should be tested to see who the new owner should be.

As for the erosion of the property tax base, this is a huge problem. How can it be legal for someone to live in a home that has been revalued at a much lower price then the assessed value? Any astute homeowner will indeed be petitioning a lower tax based on the true value of the home. The government is paying the default AND accrued interest penalty to catch the buyer up as well right?

If the house is put on the free market and sold why would the house be boarded up for many months or years?

As for punishing irresponsible lenders… that is not my goal. I don’t care about irresponsible lenders. The government has already been abundantly clear that they are going to bail out lenders, not punish them. As for my approach, once the home is on the market and sold, the government is out of the picture. The buyer found a lender and bought the home at market rate with a TRUE MARKET determined mortgage, not some government subsidized rate.

[SD Realtor]

With respect to minimizing governments costs, there can be no argument about selling on the open market being cheaper.

Let me ask you this, how can one actually determine the true market value without putting the home on the market itself? An appraisal is just that, only an appraisal. Thus it is quite intuitive to me that not putting the home on the open market is actually reducing the potential for profit.

Honestly it does not matter what the trend line is, or if there is an overshoot due to massive inventory. Rather, this is the expectation with a huge influx of inventory. However it is simply a matter of rolling the program out in stages to help reduce that issue. In fact inventory can actually be controlled down to a local market level if this is done correctly. Similarly with the rate of recidivism being what it is, the cost to keep a homeowner current, then do it again in 6 months or a year is not trivial. Moreover, you have not addressed all of the other defaults that most people who have fallen behind incur including county taxes, hoa, and/or mello roos. Again, it seems to me that the current homeowner being bailed out of these defaults in addition to the mortgage does not make sense. Once more, it seems obvious to me that the free market should be tested to see who the new owner should be.

As for the erosion of the property tax base, this is a huge problem. How can it be legal for someone to live in a home that has been revalued at a much lower price then the assessed value? Any astute homeowner will indeed be petitioning a lower tax based on the true value of the home. The government is paying the default AND accrued interest penalty to catch the buyer up as well right?

If the house is put on the free market and sold why would the house be boarded up for many months or years?

As for punishing irresponsible lenders… that is not my goal. I don’t care about irresponsible lenders. The government has already been abundantly clear that they are going to bail out lenders, not punish them. As for my approach, once the home is on the market and sold, the government is out of the picture. The buyer found a lender and bought the home at market rate with a TRUE MARKET determined mortgage, not some government subsidized rate.

[SD Realtor]

With respect to minimizing governments costs, there can be no argument about selling on the open market being cheaper.

Let me ask you this, how can one actually determine the true market value without putting the home on the market itself? An appraisal is just that, only an appraisal. Thus it is quite intuitive to me that not putting the home on the open market is actually reducing the potential for profit.

Honestly it does not matter what the trend line is, or if there is an overshoot due to massive inventory. Rather, this is the expectation with a huge influx of inventory. However it is simply a matter of rolling the program out in stages to help reduce that issue. In fact inventory can actually be controlled down to a local market level if this is done correctly. Similarly with the rate of recidivism being what it is, the cost to keep a homeowner current, then do it again in 6 months or a year is not trivial. Moreover, you have not addressed all of the other defaults that most people who have fallen behind incur including county taxes, hoa, and/or mello roos. Again, it seems to me that the current homeowner being bailed out of these defaults in addition to the mortgage does not make sense. Once more, it seems obvious to me that the free market should be tested to see who the new owner should be.

As for the erosion of the property tax base, this is a huge problem. How can it be legal for someone to live in a home that has been revalued at a much lower price then the assessed value? Any astute homeowner will indeed be petitioning a lower tax based on the true value of the home. The government is paying the default AND accrued interest penalty to catch the buyer up as well right?

If the house is put on the free market and sold why would the house be boarded up for many months or years?

As for punishing irresponsible lenders… that is not my goal. I don’t care about irresponsible lenders. The government has already been abundantly clear that they are going to bail out lenders, not punish them. As for my approach, once the home is on the market and sold, the government is out of the picture. The buyer found a lender and bought the home at market rate with a TRUE MARKET determined mortgage, not some government subsidized rate.

[SD Realtor]

With respect to minimizing governments costs, there can be no argument about selling on the open market being cheaper.

Let me ask you this, how can one actually determine the true market value without putting the home on the market itself? An appraisal is just that, only an appraisal. Thus it is quite intuitive to me that not putting the home on the open market is actually reducing the potential for profit.

Honestly it does not matter what the trend line is, or if there is an overshoot due to massive inventory. Rather, this is the expectation with a huge influx of inventory. However it is simply a matter of rolling the program out in stages to help reduce that issue. In fact inventory can actually be controlled down to a local market level if this is done correctly. Similarly with the rate of recidivism being what it is, the cost to keep a homeowner current, then do it again in 6 months or a year is not trivial. Moreover, you have not addressed all of the other defaults that most people who have fallen behind incur including county taxes, hoa, and/or mello roos. Again, it seems to me that the current homeowner being bailed out of these defaults in addition to the mortgage does not make sense. Once more, it seems obvious to me that the free market should be tested to see who the new owner should be.

As for the erosion of the property tax base, this is a huge problem. How can it be legal for someone to live in a home that has been revalued at a much lower price then the assessed value? Any astute homeowner will indeed be petitioning a lower tax based on the true value of the home. The government is paying the default AND accrued interest penalty to catch the buyer up as well right?

If the house is put on the free market and sold why would the house be boarded up for many months or years?

As for punishing irresponsible lenders… that is not my goal. I don’t care about irresponsible lenders. The government has already been abundantly clear that they are going to bail out lenders, not punish them. As for my approach, once the home is on the market and sold, the government is out of the picture. The buyer found a lender and bought the home at market rate with a TRUE MARKET determined mortgage, not some government subsidized rate.

[SD Realtor]

With respect to minimizing governments costs, there can be no argument about selling on the open market being cheaper.

Let me ask you this, how can one actually determine the true market value without putting the home on the market itself? An appraisal is just that, only an appraisal. Thus it is quite intuitive to me that not putting the home on the open market is actually reducing the potential for profit.

Honestly it does not matter what the trend line is, or if there is an overshoot due to massive inventory. Rather, this is the expectation with a huge influx of inventory. However it is simply a matter of rolling the program out in stages to help reduce that issue. In fact inventory can actually be controlled down to a local market level if this is done correctly. Similarly with the rate of recidivism being what it is, the cost to keep a homeowner current, then do it again in 6 months or a year is not trivial. Moreover, you have not addressed all of the other defaults that most people who have fallen behind incur including county taxes, hoa, and/or mello roos. Again, it seems to me that the current homeowner being bailed out of these defaults in addition to the mortgage does not make sense. Once more, it seems obvious to me that the free market should be tested to see who the new owner should be.

As for the erosion of the property tax base, this is a huge problem. How can it be legal for someone to live in a home that has been revalued at a much lower price then the assessed value? Any astute homeowner will indeed be petitioning a lower tax based on the true value of the home. The government is paying the default AND accrued interest penalty to catch the buyer up as well right?

If the house is put on the free market and sold why would the house be boarded up for many months or years?

As for punishing irresponsible lenders… that is not my goal. I don’t care about irresponsible lenders. The government has already been abundantly clear that they are going to bail out lenders, not punish them. As for my approach, once the home is on the market and sold, the government is out of the picture. The buyer found a lender and bought the home at market rate with a TRUE MARKET determined mortgage, not some government subsidized rate.

[sbd]

Those who view the current problems with foreclosures and mortgage backed securities need to stop calling those in foreclosure idiots who bought houses they could not afford. There might be some in that category that as stated above would lose their house if they can’t afford the new payments.

The current financial crisis has many distinct problems that this plan can address efficiently.

For instance, homeowners who don’t have upside mortgages will not lose equity in their homes due to foreclosure sales below market value. So even if you are not in foreclosure the foreclosures in your neighborhood will affect your property value. No one is untouched by this crisis.

Let’s assume you did everything right and are living within your means. Your job requires you to move to another state recently. The value of your house however has decreased over 30% which basically forces you to chose between losing your job or losing lots of money on the sale.

This plan would take care of the upside mortgage problem for anyone who submits a request. This includes all those borrowers who are upside down on their mortgage whether in foreclosure or not.

Wall Street will also benefit from this plan because all of those risky loans held as securities would be paid off to the investors. Right now, they don’t even know what, if any return they might get from these Securities.

Under the plan,the refinanced mortgages could then be re bundled at their true value and sold to investors. This will also solve the liquidity issue as the funds will continue to flow through each of the processes.

[sbd]

Those who view the current problems with foreclosures and mortgage backed securities need to stop calling those in foreclosure idiots who bought houses they could not afford. There might be some in that category that as stated above would lose their house if they can’t afford the new payments.

The current financial crisis has many distinct problems that this plan can address efficiently.

For instance, homeowners who don’t have upside mortgages will not lose equity in their homes due to foreclosure sales below market value. So even if you are not in foreclosure the foreclosures in your neighborhood will affect your property value. No one is untouched by this crisis.

Let’s assume you did everything right and are living within your means. Your job requires you to move to another state recently. The value of your house however has decreased over 30% which basically forces you to chose between losing your job or losing lots of money on the sale.

This plan would take care of the upside mortgage problem for anyone who submits a request. This includes all those borrowers who are upside down on their mortgage whether in foreclosure or not.

Wall Street will also benefit from this plan because all of those risky loans held as securities would be paid off to the investors. Right now, they don’t even know what, if any return they might get from these Securities.

Under the plan,the refinanced mortgages could then be re bundled at their true value and sold to investors. This will also solve the liquidity issue as the funds will continue to flow through each of the processes.

[sbd]

Those who view the current problems with foreclosures and mortgage backed securities need to stop calling those in foreclosure idiots who bought houses they could not afford. There might be some in that category that as stated above would lose their house if they can’t afford the new payments.

The current financial crisis has many distinct problems that this plan can address efficiently.

For instance, homeowners who don’t have upside mortgages will not lose equity in their homes due to foreclosure sales below market value. So even if you are not in foreclosure the foreclosures in your neighborhood will affect your property value. No one is untouched by this crisis.

Let’s assume you did everything right and are living within your means. Your job requires you to move to another state recently. The value of your house however has decreased over 30% which basically forces you to chose between losing your job or losing lots of money on the sale.

This plan would take care of the upside mortgage problem for anyone who submits a request. This includes all those borrowers who are upside down on their mortgage whether in foreclosure or not.

Wall Street will also benefit from this plan because all of those risky loans held as securities would be paid off to the investors. Right now, they don’t even know what, if any return they might get from these Securities.

Under the plan,the refinanced mortgages could then be re bundled at their true value and sold to investors. This will also solve the liquidity issue as the funds will continue to flow through each of the processes.

[sbd]

Those who view the current problems with foreclosures and mortgage backed securities need to stop calling those in foreclosure idiots who bought houses they could not afford. There might be some in that category that as stated above would lose their house if they can’t afford the new payments.

The current financial crisis has many distinct problems that this plan can address efficiently.

For instance, homeowners who don’t have upside mortgages will not lose equity in their homes due to foreclosure sales below market value. So even if you are not in foreclosure the foreclosures in your neighborhood will affect your property value. No one is untouched by this crisis.

Let’s assume you did everything right and are living within your means. Your job requires you to move to another state recently. The value of your house however has decreased over 30% which basically forces you to chose between losing your job or losing lots of money on the sale.

This plan would take care of the upside mortgage problem for anyone who submits a request. This includes all those borrowers who are upside down on their mortgage whether in foreclosure or not.

Wall Street will also benefit from this plan because all of those risky loans held as securities would be paid off to the investors. Right now, they don’t even know what, if any return they might get from these Securities.

Under the plan,the refinanced mortgages could then be re bundled at their true value and sold to investors. This will also solve the liquidity issue as the funds will continue to flow through each of the processes.

[Author]

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